By Mauro Orru

Porsche Automobil Holding SE withdrew its profit forecast, citing in part billions of dollars in writedowns tied to its investment in Volkswagen.

Porsche SE said Friday that it is assuming an impairment between 7 billion euros and 20 billion euros ($7.33 billion to $20.93 billion) related to its investment in Volkswagen, in which it is the majority owner. Porsche SE also said it sees another charge between 1 billion euros and 2 billion euros from its ownership of the sports-car-maker Porsche AG.

Porsche SE said those estimates are tied to a number of factors, including an uncertain environment, lower demand than originally expected in various markets and increasing geopolitical tensions and protectionist tendencies.

Volkswagen has been battling a tough economic environment as it faces tepid demand for electric vehicles and increasingly fierce competition from lower-cost Chinese electric-vehicle makers. It also is contending with a costly domestic manufacturing footprint that hinders its competitiveness.

Earlier this month, Volkswagen Chief Executive Oliver Blume warned staff that the company must take urgent measures to secure its future. His comments came after nearly 100,000 workers, or about a third of its German workforce, staged walkouts to protest plans for potential factory closures and sweeping cuts to jobs and pay.

Porsche SE estimated the impairment charges on Friday after Volkswagen informed the holding company that Volkswagen's and Porsche AG's current planning isn't expected to be done by Dec. 31. Thus, Porsche SE can't rely on the results of their current approved plan for accounting purposes.

Due to the delay, Porsche SE's management board estimated the impairment charges, with a significant negative impact on after-tax profit. A final assessment of the charges will take place next year.

Porsche SE previously had expected after-tax profit between 2.4 billion euros and 4.4 billion euros for the year.

Porsche SE confirmed its forecast for the net debt as of the end of the year between 5 billion euros and 5.5 billion euros.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

December 13, 2024 15:09 ET (20:09 GMT)

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