Pole Position: UBS European & US Autos Daily

Research evidence excerpt

Pole Position: UBS European & US Autos Daily

pzig could be financially advantageous for

Porsche, because its under-utilised owned facility would benefit while Bratislava is not

Porsche-owned capacity (financial details of the deal with VW are not disclosed). FAZ’s

comment about 4-digit headcount cuts in white-collar areas are consistent with what

we wrote in our upgrade to Buy report from earlier this month. We think the elements of

the turnaround are becoming increasingly visible: (1) Better-fit product portfolio:

missteps of the past (too strong a BEV focus) are being addressed; new (top-end)

products with ICE/hybrid powertrains are lined up. (2) Better execution: New

management is showing determination to clean up (non-core asset sales, leaner

organisation) and focus on product quality. (3) Right-sizing: We expect a leaner "new

Porsche" to emerge after a period of less effective efficiency measures, with a right-sized

organisation for ~250-280k annual volume (vs. ~350k targeted at the time of the IPO).

We expect restructuring to be announced with Q2 results. We think the CMD in October

(date tbc) will likely bring it all together: By 2030, we expect Porsche to return to a 13%

OP margin, resulting in €4.2 EPS (11x P/E) and €3.7bn FCF (9% yield). We believe the

return to 13% OPM by 2030E (from 7% in 2026E) will be fuelled by (1) new product and

better mix (return of ICE Macan in 2028, new high-end SUV in 2029, new sports car in

2030); (2) cost savings and (3) the non-repeat of strategic realignment costs; higher

commodities are taken into account. After losing ~70k units from the peak (mainly in

China), we see potential for cutting workforce-related costs by >€1bn. Cash conversion

should improve substantially so that automotive FCF could almost reach pre-crisis levels