Good morning, and a very warm welcome to the annual press conference of 2026 of Porsche AG. We are delighted that you have logged in. I am Björn Scheib, and I will be the host for the next hour here. Together with me here in the studio is our CEO, Dr. Michael Leiters, and our CFO, Dr. Jochen Breckner. These two will give you an overview of the current situation at Porsche. This refers to, on the one hand, our financial results of the last financial year and the outlook to the current financial year, 2026. We will give you a first insight into our Strategy 2035. After that, we have enough time for your questions. If you have registered as a journalist, you can also register for the questions. You have been sent a li nk from us.
You can register your question and enter your question in writing, but you can also press star and one on your telephone. You are invited to join the call. All future-oriented statements are subject to the risks and uncertainties that we have mentioned in the safe harbor wording in our press r elease.
Well, a warm welcome also from me. Thank you for joining and attending our press conference. Now allow me to start with a few words about myself and my background. My career has taken me to Porsche, Ferrari, and McLaren. Now, all three companies have really shaped me. Most recently, as the CEO of McLaren, I led the company through a comprehensive restructuring and successfully launched several new models. Prior to that, I spent eight years as Chief Technology Officer at Ferrari, where I was responsible for R&D, the entire supply chain, the pinpointed use of capital, as well as the expansion of the highly successful product portfolio.
Now, my 13 years at Porsche at the beginning of my career were particularly important for me, because I learned how you streamline a manufacturing production, as it was prevalent at the time, towards efficiency, how you can optimize processes that lead to greater profitability, and how new profitable models can change the face of the brand in such a way that Porsche is perceived as a small and refined manufacturer of sports car, despite higher production volumes. Against this backdrop, I am particularly delighted that I have been able to take on the responsibility for this great company and its proud brand since the beginning of this year. You see, in my career, I have been fortunate enough to get to know a wide variety of companies, larger companies such as the Volkswagen Group and Porsche, or smaller ones as Ferrari and McLaren.
I have supported companies in growth phases and companies undergoing restructuring processes, which means I've been able to gain experience in both strategy development as well as its operational implementation. This allowed me to acquire a broad technological expertise as well as in-depth expertise in key areas such as corporate management, development, operations, quality and finance, all of which are very helpful to me today. Now, all of this has taught me important principles for success, which I will continue to pursue here at Porsche, namely a clear focus on the customer and to stay concentrated on products that inspire and thrill our customers. Secondly, a main focus on cost efficiency. This is a hygienic factor for any company, no matter how profitable the company is. Thirdly, to have an outstanding team held together by a clear vision and a functioning set of values.
Now we at Porsche are currently facing difficult times. In a politically and economically uncertain world, we're falling short of our own standards and the expectations of the market. We find that the many global upheavals that we're facing is something that we, at the moment, are unable to counter adequately ourselves. That means we must find a way to turn these challenges into opportunities for ourselves. Now, as an engineer, I want to get to the bottom of things, and it's important to take good decisions, sound and well-grounded decisions to improve things. That's the reason why I would have preferred to hold this press conference at a later date, because many among you, well, are expecting answers.
We are still within the famous first 100 days, and it's only natural that we do not yet have an answer to every single question or a solution to every single problem. For example, examining technical feasibility and holding discussions with our social partners simply take time. It's a time that we will take to develop a sustainable, resilient, and robust plan, because we only want to announce what we can actually deliver on. Since I took office, our management team has systematically analyzed the situation and taken immediate action. We have already initiated a series of initial targeted measures. These include the consistent application of our principle, value over volume, particularly in difficult market environments such as the one in China. The quality-oriented ramp-up of the production of the fully electric Taycan, and a stronger focus on our core business.
Further to that, of course, we are also working flat out to find the right solutions. The central fields of actions have been identified. Our plan, our Strategy 2035 will take shape step by step over these coming months, and then we will present all the details to the public in the fall of this year. Now, we have set ourselves no less a task than to comprehensively realign Porsche. We must make the company leaner, faster, and its products even more desirable, because only in this way will we be able to make Porsche financially resilient again and profitable. I have no doubt whatsoever that we will succeed in restoring Porsche to its former strength. This will not happen overnight. It will take time, and it will take discipline and determination.
We fully realize the magnitude of the challenge when we look at the financial development of our company, because the figures for the fiscal year 2025 clearly reflect the measures that were initiated under the leadership of my predecessor, Dr. Oliver Blume. Now, for this part, I will hand over to our CFO, Dr. Jochen Breckner. Please, Jochen.
Thank you very much, Michael, and good morning, ladies and gentlemen. I will now take you through the business performance in 2025 and show you the forecast for 2026. 2025 was an extraordinary year. This is also reflected in our operating performance. As you all know, we have pushed a comprehensive realignment and scaling of our business. These measures led to one-off charges totaling EUR 3.1 billion. What do these charges consist of? Essentially, of the realignment of our product strategy, of battery activities, and of organizational adjustments. These measures had a negative impact on our result, but we made a conscious decision to do so. I would like to emphasize these measures are necessary to ensure Porsche's long-term profitability, resilience, and strategic flexibility. We have been developing these initiatives since the beginning of the year.
Michael Leiters will later discuss Porsche's current position and give a first update on the status of the Strategy 2035. Let's take a look at the deliveries. Last year, deliveries to customers amounted to 270,000 vehicles. This is a decrease of 10% compared to the previous year. You know the main causes for this development. There are delivery gaps for the 718 Boxster and Cayman, as well as the, for the Macan with the internal combustion engine. This is primarily due to regulatory requirements. Out of our two most important individual markets, we had the following picture. North America remained our largest market with a stable 86,000 vehicles. In China, including Hong Kong, deliveries fell by 26% to just under 42,000 units. Why?
Well, there we are facing a difficult market environment in the luxury segment and intense competition, especially in the all-electric segment. We responded to this with a consciously value-oriented sales management. That means, in concrete terms, first, we have ensured a balanced regional distribution, and secondly, we have deliberately kept production below our dealer sales and customer deliveries. This discipline strengthens the Porsche brand in the long term and protects our pricing power as well. This brings me to the key financial figures. Last year, Porsche generated group sales of EUR 36 billion. This is a decline of 9.5%. I would like to emphasize an important aspect here. Our revenue fell less significantly than the delivery figures, and we were able to safeguard the quality of our revenues. The most important drivers for this were positive price effects and higher revenues in the financial services business.
The average turnover in the automotive area rose to 121,000 EUR per vehicle. This is 4,000 EUR more than in the previous year. This underlines our consistent approach to pricing and our clear focus on supporting our brand. Now let me turn to the cost development. Porsche in 2025 faced extensive increases in this area. The manufacturing costs rose by one and a half billion EUR to EUR 31.2 billion. We faced headwinds from external factors and additional burdens from our strategic realignment. In our core business, the three most important operating cost drivers were, first, the ongoing inflationary pressure along the supply chain. Secondly, the costs associated with the slower ramp-up of the electromobility, and this also includes compensation payments to suppliers. Thirdly, higher development costs recognized as expenses.
In addition to that, there were burdens outside of the current core business, primarily due to the U.S . Tariffs in the amount of EUR 700 million and the one-off effect from our strategic realignment, and these amounted to EUR 3.1 billion. We have taken countermeasures with our results program Push to Pass. Together with a strict expenditure discipline, this program saved around EUR 1 billion and thus worked against cost increases. The consolidated operating profit fell to EUR 413 million. This is an operating return on sales of 1.1%. Adjusted for the aforementioned one-off effects, the operating performance is solid overall, despite the macroeconomic challenges. This brings me to the development of net cash flow in the autom otive segment.
On the one hand, net cash flow was supported by our overall solid operating performance and our disciplined investments in the ongoing business. On the other hand, net cash flow was impacted by extraordinary cash outflows of around EUR 900 million in connection with our strategic realignment. We had customs-related expenses of around EUR 700 million. As a consequence, the net cash flow fell to EUR 1.5 billion. This is a net cash flow margin in the automotive segment of 4.7%. If here we exclude the one-off expenses for the strategic realignment and for the U.S. tariffs, totaling EUR 1.6 billion, then we had a strong net cash flow in the automotive segment. In other words, the high cash conversion of our core business underlines the strengths of the Porsche brand.
Now let me turn to capital allocation. Porsche reduced its total assets, and thus its tied-up capital, by around EUR 1 billion last year. This is due to significantly higher depreciation, amortization, and impairments. These are in line with our capital allocation strategy and strategic realignment. This puts Porsche in a strong financial position with a high net liquidity and healthy balance. This robust financial position is a stable basis for our future. It secures our strategic flexibility, resilience across market cycles, and the ability to continue investing in the brand, in products, and in technologies that create long-term value. This directly brings me to our dividend strategy. Our aim is to offer our long-term shareholders a reliable dividend this year and in the years to come.
Against this backdrop, the executive board for the financial year 2025 proposes the following dividend, EUR 1 per ordinary share and EUR 1.01 per preference share. This proposal underlines our commitment to long-term value creation and preserves our financial flexibility in the transformation. As you all know, the final decision on the dividend is taken by the annual general meeting. Now let me turn to our forecast. 2026, Porsche will continue to operate in an environment of profound transformation. The market environment continues to be characterized by difficult factors such as the slower ramp of electromobility and the subdued demand for Western luxury goods in China. Added to this is the more selective product range with restrictions on the 718 and Macan. We therefore expect in 2026 a lower vehicle sales.
Despite these effects, Porsche is maintaining its value over volume sales strategy. This means, in all regions, we continue to manage dealer inventories in a very disciplined manner. This ensures the strength of our brand and long-term value creation. Now let me specify the sales forecast. For the year 2026, we expect group sales in the range of EUR 35-36 billion. This is roughly the level of the previous year. Sales will be characterized by lower vehicle sales on one hand and supporting price effects and a stronger mix for our iconic 911 on the other hand. All in all, we therefore expect sales to develop better than the delivery figures. Now let's take a look at the costs. On the cost side, we continue to expect inflationary pressure, particularly with regard to the material costs.
This pressure is caused, among other things, by compensation payments to suppliers for BEV vehicles because our unit sales, of course, are lower than planned. On the other hand, our Push to Pass results program will have a positive effect. This program is aimed at our operating performance and cost efficiency. In addition to that, there is a possible second structural package. We are still discussing that with the employee representatives. Please understand that today I cannot give you an update on this. Our forecast is based on the current EU-US tariff framework and the existing luxury tax in China. It also assumes that geopolitical conditions will remain unchanged, but the current situation in the Middle East could have a negative impact, of course. These are not considered in the current forecast.
Based on these assumptions, we expect a return on sales for the group of 5.5%-7.5% and an automotive net cash flow margin of 3%-5%. Our forecast for the group return on sales continues to take into account extraordinary expenses due to our strategic realignment in the high three-digit million EUR range. This is a moderate increase compared to the previous assumptions. As Michael Leiters has said before, since the beginning of the year, we took several additional measures to secure Porsche adequate margins in the medium term and strengthen our resilience in the long run. In addition, the return forecast takes into account an effect of around EUR 700 million from the U.S. import tariffs.
With regard to the net cash flow, we expect in 2026, adjusted for one-off effects, a higher value than in 2025. Now let me briefly highlight an important measure that we have already taken as part of the realignment, our strategic adjustments in China. China is and remains an important strategic market for us, despite all the current challenges for the entire industry there. On the other hand, we have to adapt our presence in China to the new market conditions. This includes the optimization of our dealer network and the strengthening of our presence in regions with high demand. Originally, our plan was to reduce the dealer network in China by 2027 from around 150 to 100 dealerships.
We have adjusted this target further to around 80 dealerships by the end of 2026. At the end, I would like to stress once again, despite all the difficult framework conditions, Porsche is able, due to the aforementioned measures, to maintain its medium-term target, and this target is a group return on sales of 10%-15%, despite all the challenges. With that, I hand back to Michael Leiters. Thank you very much.
Thank you very much, Jochen. Well, as you can see, we are facing major challenges. Now I would like to outline to you what we're working on right now and how we're going about it. The basis for this are the results of a comprehensive analysis of the current situation, which we are conducting as we speak. We have divided our strategy into three pillars. The first pillar represents the brand and our customers, because Porsche is one of the most sought-after brands in the world. To strengthen this valuable brand, we will continue to follow our principle of value over volume. The long-term value of our vehicles is more important than short-term sales figures. It is a strategy that we will maintain even in a difficult market condition and environment, and also applies to China.
China is a market in which we continue to believe, but on a different level, because the demand for ICE engines will continue to offer us potential there. The market for battery electric vehicles is subject to a price war, which we will not engage in for economic and brand policy reasons. Likewise, in the United States, market conditions have changed as a result of the tariff policy. Despite the price increases we've been able to forward, demand is good and we are currently seeing stable market performance. Now, Porsche stands for both sporty luxury as well as sporty premium. Porsche is able to produce highly customized vehicles, including absolute one-off models, as well as exceptional sports cars that are also affordable to a slightly broader customer base. Exclusivity and accessibility give Porsche a unique and a clearly defined profile.
It is this positioning of our brand that does create unique opportunities for pricing, for high margin quality, as well as for high cash flows. Precondition for this price volume equation is to have the right products and right technologies in place, which brings us to our second pillar of our strategy. We at Porsche stand for uncompromisingly good sports cars that you want to drive yourself and that have a genuine Porsche DNA. The new 911 is an iconic vehicle that has broken many sales records in the high price segment, most recently in 2025. Now, other products, besides the two-door sports cars such as 911 and 718, have, in the last, well, almost two decades, complemented the brand and our portfolio in a valuable way and have been crucial for the strong development of our company.
However, it is equally true that new models and derivatives, new drive technologies and numerous derivatives have significantly increased the complexity for customers and within the company. Thus, our future product portfolio will be streamlined, and we do so to reduce complexity and the number of variants. At the same time, we are considering expanding our product portfolio in order to grow in higher margin segments. To this end, we are examining models and derivatives above our current two-door sports cars and above the Cayenne. Now, expanding into these segments will also allow us to further expand our high margin customization programs such as the Sonderwunsch program, and also thereby allow us to strengthen the exclusivity of our brand. Now, in addition to the question of future models, we will also have to answer the question of the right drivetrain technology.
With the Taycan, we were a pioneer in electric mobility and well ahead of our time. Now we can see that the market conditions have changed noticeably. The European customer embraces the transformation more slowly than we had initially planned. Other markets, such as the United States, have even created contrary conditions in terms of market policy and regulation. Thus, we are adjusting the ramp up and the portfolio of fully electric vehicles while we at the same time extend the life cycle of our ICE portfolio under hybrid offerings. We're doing that because we are technology open, and not just because we want and have to respond to regulations, but above all, we need to meet customer preferences and demands. This will also enable us to minimize overlaps and cannibalization in our product portfolio and thus increase our own capital efficiency.
Customer enthusiasm, high-margin products and technologies are thus fundamental pillars of our plan. The third pillar is equally essential, namely rigorous and tough cost management. To improve our margin structure significantly, we must create a competitive cost structure. In terms of products, this means both cutting and reducing upfront costs and direct costs. To this end, we are fundamentally rethinking the development of our sports cars. We are investigating whether we can leverage further synergies between our models, and we're examining how we can use platforms and industry solutions more flexibly, and thus make greater use of digital technologies. This explicitly includes the intelligent use of group modular systems. Because with Cayenne and the Macan, we have already proven in the past that we can master this recipe for success. Incidentally, this will also help us to reduce our own time to market.
On top of this, we need to improve our own organizational efficiency. To this end, already before my arrival, a program was initiated, which we are now intensifying across the entire board. That means we will streamline our management structure, dismantle hierarchies, and reduce and cut bureaucracy. It is our goal to take faster decisions and implement them consistently. Now, we at Porsche do have a motivated and committed team with great talent, albeit the organization, especially in the indirect area, has grown disproportionately to the development of our business. The planned streamlining of the company scheduled on paper so far is thus not sufficient under these changed conditions. Our corporate culture must adapt to this changed environment. What counts is performance in teamwork and for each individual.
It is this performance culture that will apply to all areas of our strategy and will help us thus to deliver top-notch level of excellence. Ladies and gentlemen, with our Strategy 2035, we'll create the framework for realigning Porsche anew. It is a comprehensive program to strengthen our competitiveness and our financial robustness, and it is the basis to achieve a sustainable, strong cash flow, strong results and Porsche adequate margins. Our program will necessitate difficult decisions and measures, but a crisis is always an opportunity. Porsche has proven this many times in its past, because at the end of the day, we will emerge from this crisis stronger than ever. Dr. Ing. h.c. F. Porsche AG, it is the sports car manufacturer, and that is the core of this brand. It is a promise, and it is our promise. We loo k forward to your questions.
Tha nk you very much.
Thank you, Dr. Leiters, and also thank you to you, Jochen. Thank you to all of you out there who have watched our live stream. This is the end of the public bro ad casting. Tha nk you.