Porsche restructuring starting to pay off, says CEO

By Rachel More

BERLIN, July 29 (Reuters) - Porsche's restructuring measures have begun to pay off, it said on Wednesday, allowing Volkswagen's embattled luxury brand to keep its profit guidance unchanged despite cost pressures in Germany and declining sales in China.

The Stuttgart-based maker of the 911 sports car brought in Michael Leiters as chief executive at the start of the year to oversee one of the most severe restructuring cases in a German automotive sector contending with the costly transition to electric vehicles, intense Chinese competition and tariff woes.

"The progress we have made so far gives me confidence that we will achieve our goals," he said as the company reported half-year results on Wednesday. "But there is still a great deal of work ahead of us."

Porsche said on Wednesday that it expects to book between €300 million ($342 million) and €400 million in charges relating to the axeing of 20% of its staff by 2035 while focusing on cost discipline at German factories.

A similar charge is expected in 2027, with the measures leading to positive effects from 2028, finance chief Jochen Breckner said.

Shares in the company spiked by as much as 4.8% after Wednesday's announcement but pared gains to be almost unchanged from Tuesday at 0809 GMT.

Parent Volkswagen announced group figures on Friday, including a 9.5% fall in second-quarter operating profit, but analysts welcomed some signs of stabilisation.

Both are ramping up cost cuts. Volkswagen CEO Oliver Blume has proposed another 50,000 job cuts across the group and the possible closure of four German factories, saying that the need for change has been made more urgent by the advances made by Chinese rivals in Europe after ending the company's dominance in China.

Once a highly lucrative market for Porsche, the brand's sales in China have more than halved since their peak in 2021.

Porsche's operating return on sales hit a record low of 1.1% in 2025 but improved to 7.8% in the first half of this year, above its targeted range of 5.5% to 7.5% for the full year.

Leiters said Porsche was now pursuing a "conservative" approach in China while focusing more on German production that boosts its brand power.

"Porsche is different from many of our peers. We operate in a premium luxury segment and are less dependent on China," Leiters said.

He brushed off concerns about increased Chinese competition in Europe, saying this was an issue for the mass-market segment.

(Reporting by Rachel MoreEditing by Linda Pasquini and David Goodman)