By Dominic Chopping

Porsche AG shares slid toward the bottom of the Stoxx Europe 600 index Friday after the German sports-car maker warned that profits will be hurt this year as it spends more on expanding its line-up of new cars.

In a statement late Thursday, it said it would take an 800 million euro ($830.8 million) hit on operating profit this year as it invests in new models with combustion engines and plug-in hybrids, which will send costs higher and weigh on its margin.

Shares were 6% lower at 56.28 euros in early European trade.

Porsche last year scaled back its electric-vehicle ambitions and vowed to refocus efforts on gas-powered cars as the market transition to EVs was taking longer than expected.

Like many western carmakers, Porsche also struggled with challenging conditions in China where intense competition has pushed prices lower, while economic pressures have seen buyers in the country pare back on luxury spending.

Costs related to the expansion of customization capabilities, battery development and its corporate organization will also rise this year, it said. The company recently disclosed it is in talks to terminate the contracts of its finance chief and sales director.

It guided to a return on sales of between 10% and 12% in 2025, which falls short of consensus expectations and points to a drop from the 2024 level, which Porsche said would land at the lower-end of its 14% to 15% range.

Analysts at Deutsche Bank said consensus was looking for a return on sales of 14% this year.

The analysts said they had expected Porsche to go through a volatile adjustment phase this year, adjusting capacity to offset the China weakness, spending more on internal combustion engines again, increasing the customization share and changing its leadership.

"Last night, the company made a big step forward towards that; unfortunately also costing more than expected."

Porsche guided for 2025 sales to remain relatively unchanged on year at between 39 billion and 40 billion euros.

Separately, holding company Porsche Automobil Holding said it expects to book sharply higher impairments in 2024 based on the valuation of its stake in carmaker Porsche.

The holding company expects impairments to range from 2.5 billion to 3.5 billion euros in 2024 from a previous estimate of 1 billion to 2 billion euros.

As Volkswagen's top shareholder, the holding company also said it expects impairments from its stake in VW at the lower-end of its previous estimated range between 7 billion to 20 billion euros.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

February 07, 2025 05:14 ET (10:14 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.