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Ladies and gentlemen. As Chairman of the Supervisory Board of Porsche AG, I hereby open today's Annual General Meeting and assume the Chair of the meeting. I warmly welcome you all, also on behalf of my colleagues on the Supervisory Board and the Executive Board. The Annual General Meeting is taking place at the Eisbach Studios in Munich. It is being held as a virtual Annual General Meeting. The virtual format ensures comprehensive communication with the management. The virtual Annual General Meeting is efficient and resource-friendly. It is primarily for these reasons that the Executive Board has decided to convene a virtual Annual General Meeting . I shall be guiding you through this Annual General Meeting. In the event that I need to leave the meeting, even briefly, I have appointed the Deputy Chairman of the Supervisory Board, Mr. Harald Buck, as my deputy for that period.
Furthermore, the Supervisory Board has elected Supervisory Board member Mr. Hans Dieter Pötsch as an additional deputy. All members of the Executive Board are present. Our new Chairman of the Executive Board, Dr. Michael Leiters, took up his post at the start of 2026. He has previously held senior positions at Porsche AG. Prior to becoming Chairman of the Executive Board at Porsche AG, Dr. Leiters was Chief Technical Officer at Ferrari and Chairman of the Executive Board at McLaren. Dr. Jochen Breckner is the Executive Board member responsible for finance and IT. Mr. Albrecht Reimold is responsible for production and logistics. Ms. Vera Schalwig has been responsible for Human Resources and Social Affairs since 19th August 2025. Prior to her appointment, Ms. Schalwig had also held senior positions at Porsche AG for many years.
Mr. Joachim Scharnagl has been a member of the Executive Board, responsible for procurement, since 19th August 2025. Prior to his appointment, Mr. Scharnagl had already spent many years in senior positions in the procurement division at Porsche AG. Dr. Michael Steiner is responsible for research and development. Dr. Steiner has also been Deputy Chairman of the Executive Board since 1st July 2025. Mr. Matthias Becker is responsible for sales and marketing. All members of the Supervisory Board are present in person. I would also like to welcome the notary public, Mr. Sebastian Härle, who is keeping the notarial minutes. The company's proxies are also present. Ladies and gentlemen, the Annual General Meeting has been convened in due time and form. The notice of the meeting was published in the Federal Gazette on 8th May 2026.
Information and documents relating to the Annual General Meeting can be found on our website under the Investor Relations section in the Corporate Governance area. We have not received any motions to amend the agenda. Shareholders and their proxies may follow the entire Annual General Meeting via the investor portal. The Annual General Meeting will also be interpreted into English. My opening remarks and the Executive Board's presentations will be streamed live on the company's website for all interested parties. My opening remarks and the Executive Board's report will also be available as a recording on the company's website once the Annual General Meeting has concluded. A written draft of the Chairman of the Executive Board's speech was also available there in advance. You may exercise your voting rights by electronic postal vote or by authorizing the company's proxies or those of third parties via the investor portal.
Only ordinary shareholders of the company and their representatives are entitled to vote at this meeting. You may also register to speak via the investor portal. This function is already available to you. Once you have registered to speak, you will be invited to the technical check shortly afterwards. I hereby stipulate that the right to information pursuant to Section 131, Sentence 1 of the German Stock Corporation Act may be exercised exclusively by means of video communication. Speakers' questions will be recorded for the purpose of answering them. If you intend to raise a point of order, I would like to ask you to give notice of this via the function provided for this purpose on the investor portal. This will enable us to record the motion in the proper manner.
This does not alter the fact that you must bring forward your motion orally as part of your speech. The same applies to countermotions and proposals for elections. Shareholders who had duly registered were also able to submit written statements in advance. We have received three statements that are available via the company's website. If you wish to object to a resolution passed at today's Annual General Meeting , you may also do so via the investor portal. This function has been available to you since the start of the Annual General Meeting and will remain active until the end of the meeting. You also have the option of submitting a complaint via the investor portal, if in your view, questions have not been answered at all or have not been answered sufficiently. Audio and video recordings of the Annual General Meeting are not permitted. Verbatim minutes will not be produced.
Ladies and gentlemen, I shall now turn to the Supervisory Board's report. The Executive Board will then present its report to you. Following this, Mr. Buck will speak on agenda item 9. This will be followed by the general debate. The votes will be taken after the general debate. At the outset of my report, I would like to take this opportunity on behalf of the entire Supervisory Board to once again express our special thanks and appreciation to the Executive Board, the management, and all employees of Porsche AG, and the staff of its affiliated companies. In the 2025 financial year, Porsche AG continued to face major challenges. The year was shaped by political tensions, difficult tariff structures, and ongoing cost pressure arising from the transformation of the automotive industry. We have addressed these challenges through far-reaching strategic decisions.
The Executive Board, management, and all employees have made a vital contribution to the cohesion and further development of the company through their commitment, passion, and sense of responsibility. On behalf of the Supervisory Board, I would also like to thank you, our shareholders, for your loyalty and support in 2025. Without all of you, this company would not be what it is today. Against the backdrop of these challenges and the strategic realignment, we completed the long-planned generational change on the Executive Board in the 2025 financial year. I would like to take this opportunity to thank Dr. Oliver Blume, who shaped Porsche AG in key areas over recent years and driven forward the structural reorganization. At the same time, I look forward to working with our new chairman of the Executive Board, Dr. Michael Leiters.
My thanks also go to Mr. Sajjad Khan, who took on responsibility for the company and stepped down from the Executive Board on 19th June. As part of the strategic realignment, the Supervisory Board has decided to discontinue the Car-IT area, for which Mr. Khan was responsible, and to integrate it into the research and development area under Dr. Michael Steiner, with effect from 1st July 2026. We will continue to benefit from Mr. Khan's technical expertise and his knowledge of our structures in the future. During the reporting year, Porsche resolutely drove forward the realignment of its product strategy so as to meet the full range of customer requirements in the future. Going forward, Porsche will focus on a portfolio comprising high-performance internal combustion engines, plug-in hybrids, and all-electric vehicles.
The decision to give these technologies greater priority once again, and thereby broaden our offering, is a deliberate commitment to our customers and their desire for a wider selection of dynamic and emotional powertrain options. Models such as the 911 Turbo S, an icon of our brand, the 911 Targa 4S, and the GT3 Touring Package, embody the essence of Porsche. At the same time, the Cayenne Turbo Electric, as an all-electric performance SUV, is setting new standards. The Macan GTS stands for all-electric GTS performance by Porsche. Both vehicles underscore the fascination of sporty e-mobility. In the 2025 financial year, the Supervisory Board once again fulfilled the tasks and duties incumbent upon it under the law, the articles of associations, and the rule of procedure, and dealt intensively with the situation and prospects of Porsche AG.
In doing so, the Supervisory Board monitored the Executive Board and the management of the business and advised it regularly on all key issues, always taking into account the recommendations and suggestions of the German Corporate Governance Code. I maintained regular, close, and trusting contact with the Executive Board, in particular with the Chairman of the Executive Board, and discussed matters of strategy, planning, and business development with him. The Chairman of the Executive Board informed me without delay of any significant events that were of material importance for assessing the company's situation and development, as well as for its management. Like the entire board, I was also closely involved in the Executive Board's strategic deliberations and decision-making.
In addition to the reports from the Chairman of the Executive Board, I received regular reports from the Chief Financial Officer and the Chief Sales Officer, as well as ad hoc reports from other Executive Board areas. The Supervisory Board held 10 meetings during the 2025 financial year. Overall, the attendance rate at plenary meetings was a pleasing 97.5%. At committee meetings, the attendance rate was as high as 100%. At its meetings, the Supervisory Board dealt in particular, in detail and comprehensively with the realignment of the product strategy, long-term corporate planning, including financial planning, personnel matters relating to the Executive Board, the current business situation, and investments in strategically important companies. In December 2025, the Supervisory Board, together with the Executive Board, issued the annual declaration of compliance with the recommendations of the German Corporate Governance Code.
The declaration of compliance and its supplement, dated May 2026, are available on the company's website. The Presidential Committee met 8x during the reporting year. The Audit Committee met 4x . The Nomination Committee, the Related Party Committee, and the Mediation Committee did not need to be convened in 2025. The Presidential Committee focused in particular on preparing for discussions and decision-making in the plenary session regarding personnel matters of the Executive Board and the calibration of targets for Executive Board remuneration, as well as on long-term succession planning for the Executive Board. The Audit Committee focused in particular on financial reporting, the audit of the financial statements, reports on risk management, compliance and internal audits, investment management, as well as the annual integrity report and new regulatory requirements.
A detailed account of the topics discussed at the meetings of the Supervisory Board and its committees can be found in the Supervisory Board's written report. I will now turn to the audit of the annual and consolidated financial statements. The statutory auditor, Ernst & Young, has audited the annual financial statements, the consolidated financial statements, including the non-financial statement for Porsche AG and the group for the financial year 2025, and has issued an unqualified audit opinion. The Supervisory Board has reviewed the documents and the audit reports from Ernst & Young. Based on its own review, the Supervisory Board concurred with the findings of Ernst & Young's audit. The Supervisory Board determined that there were no objections to raise. The annual financial statements are therefore adopted. The Supervisory Board also commissioned Ernst & Young to carry out an external review of the content of the 2025 non-financial statement.
The Supervisory Board independently reviewed the non-financial statement based on the findings of Ernst & Young. The Supervisory Board also concluded that there were no objections to raise in this regard. The Supervisory Board also resolved to prepare the remuneration report for the 2025 financial year together with the Executive Board. Ernst & Young has also reviewed the content of the remuneration report in addition to the statutory completeness check and issued an unqualified audit opinion. The remuneration report and the audit opinion have been available on the Porsche AG website since the Annual General Meeting was convened. Ernst & Young has also audited the report on relations with affiliated companies prepared by the Executive Board. The Supervisory Board has likewise reviewed this report.
It has declared that based on the outcome of its review, it has no objections to the Executive Board's statement at the end of the report regarding relations with affiliated companies. During the 2025 financial year and early 2026, there were several changes to the composition of the Supervisory Board. The Deputy Chair of the Supervisory Board, Ms. Jordana Vogiatzi, resigned from her position with effect from 31st May 2025. The Stuttgart Local Court appointed Ms. Tamara Hübner, second Authorized Representative and Managing Director of IG Metall Stuttgart, as her successor and a member of the Supervisory Board. Ms. Vera Schalwig resigned from the Supervisory Board with effect from the 31st of July 2025, following her appointment to the Executive Board. Ms. Katrin Feiler has served on the Supervisory Board as an elected substitute member in her place since 1st August 2025.
In September 2025, the Supervisory Board elected a long-standing member as a new Deputy Chairman of the Supervisory Board, Mr. Harald Buck. In addition, Dr. Christian Dahlheim resigned from his position as a member of the Supervisory Board with effect from 31st December 2025. By order dated 27th February 2026, the Stuttgart Local Court appointed Mr. Holger Peters as a member of the Supervisory Board, replacing Dr. Christian Dahlheim. As you will have noted in the agenda, the Supervisory Board proposes to the Annual General Meeting that Mr. Peters be elected as a member of the Supervisory Board with effect from the end of today's Annual General Meeting for the remainder of Dr. Dahlheim's term of office. That is, until the end of the Annual General Meeting in 2029. Mr. Peters will introduce himself to you personally later.
I would like to take this opportunity to once again express my sincere gratitude to all outgoing members of the Supervisory Board for their great commitment and their many years of successful work for Porsche AG on behalf of the entire Supervisory Board. You have played a decisive role in shaping Porsche's positive development during your term of office. Ladies and gentlemen, the 2026 financial year will remain challenging, characterized by volatile markets and difficult operating conditions, particularly in the U.S. and China. Our response to this is clear. We are focusing on discipline, clear priorities, and the consistent implementation of the necessary measures. These will be tangible and in some cases painful. However, they are essential to get us back on the path of success.
With the Strategy 2035, the Executive Board will set the direction. The Supervisory Board will closely monitor this process with a clear focus on profitability, cost discipline, and sustainable value creation. In doing so, we will keep a close eye on our products and the wishes of our customers. I can promise you this, a Porsche will always remain a Porsche. I am convinced that if we pursue this path with determination, Porsche will regain its strength.
I now hand over to our Chairman of the Executive Board, Dr. Michael Leiters, who will continue with his report. Dr. Leiters, please.
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Thank you very much, Dr. Porsche. Dear shareholders, ladies and gentlemen, I also would like to welcome you to the Annual General Meeting of Porsche AG. Now here you can see me at work, not doing my usual job, of course, but as you can imagine, I have also used my first few months here at Porsche to gain my very own impressions of many different areas of the business. Here, I undertook a short work placement in the 911 production line. For a number of hours, I worked alongside the team at the Zuffenhausen plant to assemble our iconic sports cars. I may have been a bit slow, but I do think that all in all, my colleagues were quite pleased and satisfied with my work in the end. Now, my task there was to fit this part here, the so-called center lock, on the wheel.
The center lock replaces the wheel nuts during assembly and is designed for quick wheel changes, as in motor racing. There's many of our customers who love this part, not only because it evokes the spirit of motor racing, but because it opens up a whole new range of possibilities for wheel rim design. That's why many customers buy their cars with a center lock and are happy and willing to pay a premium for it. The quick release lock looks quite simple and understated, yet it is a highly technical product, and it's just one of many parts in a 911. It epitomizes what makes Porsche special, engineering excellence at the very highest level, and it bears a very important inscription. It says, "Made in Germany." This little inscription stayed with me long after that day in the workshop.
Made in Germany was introduced in 1887 by the British Parliament under the so-called Trade Marks Act . The measure was intended to protect consumers from allegedly inferior imported goods from Germany, and this at a time when industrialization was really picking up speed and pace in this country. Back then, the land, as it was called, of poets and thinkers, was becoming a land of inventors and engineers, like Gottlieb Daimler, Wilhelm Maybach, Rudolf Diesel, or Nicolaus Otto , laid the foundations for the global industrial spread of the automobile with their creative ideas and daring, and thereby brought prosperity to our country. Made in Germany, originally created as a protectionist trade barrier, became the antithesis of protectionism. It became a seal of quality, an export hit that changed the world.
To this day, it still enjoys a level of international prestige that few other designations of origin can match. Yet, we as a company, we're under pressure because Made in Germany, which applies to a large extent to Porsche, sometimes actually seems like an obstacle today. It stands in contrast to a world that is increasingly characterized by conflict and protectionism. Can it be and continue to be the foundation for global success under these premises and circumstances? We at Porsche believe yes, because we define our brand essence through contrasts, and we resolve them. We create exclusivity while fostering a sense of community. Our sports cars combine performance with everyday practicality, design, and function. There's something else that comes on top, which is almost a rarity in the globalized business world. We have pedigree. We've got a history. We've got a track record.
If that sounds too backward-looking, feel free to call it identity, or as in English you would say, heritage. We combine history or heritage with identity and progress. That is what Made in Germany by Porsche means. It's an attitude, a standard we set to continually improve and turn innovations into success for ourselves. Anyone who manufactures products that are so polished they'd fit into any supermarket fails to generate any excitement. A product must be something you can grapple with. It is allowed to provoke contradiction and create contrast, but it must be unique, and that's how it is at Porsche. Of course, that alone is not enough to overcome all adversities. A brief look at our company's current situation makes this quite clear. 2025 was a challenging year for the entire automotive industry. The world has become even more volatile geopolitically, economically, and technologically.
In our, by far, most important markets, the U.S. and China, the operating environment has changed fundamentally. What's more, many of the original assumptions made about electric mobility have come, well, to hold not true. The transformation is slower, less predictable, and significantly more complex than we had assumed just a few years ago, this is forcing us to adjust our decisions and correct our course in some areas. All of this together is costing us a great deal of money, this is also reflected in our business performance throughout 2025. Across all model ranges, we delivered around 279,000 vehicles to our customers worldwide. That is around 10% fewer than in the previous year. Our group sales stood at just over EUR 36 billion, which is still a high level, but it is also almost 10% below the previous year.
The trend is even more evident if you look at the group's operating profit. It has fallen significantly. The operative profit margin stood at around 1%, following double-digit figures in the previous years. This reflects the important measures that were rightly already taken last year under my predecessor, Oliver Blume, which meant we had one-off charges of around EUR 3.1 billion. In addition, there was a further impact of around EUR 700 million resulting from the U.S. import duties in 2025, the tariffs. Despite these current challenges, Porsche is in a very sound financial position. Our high net liquidity and the strong balance sheet provide us with the necessary stability and flexibility. It enables us to shape the ongoing transformation under our own steam and consistently implement our strategic realignment. At the same time, it does make us resilient across economic cycles.
Above all, though, it gives us the leeway and freedom to invest specifically in what defines Porsche, namely our brand, our products, and technologies. This way, we are laying the foundations for sustainable success and long-term value creation. Which brings me to our dividend strategy. We aim to offer our long-term shareholders a reliable dividend. It is true for this year and in the years to come. The Board of Management and the Supervisory Board are proposing a dividend of EUR 1, EUR 0.01 for each preference share, and exactly EUR 1 for ordinary shares. This is clearly well above our target payout ratio of 50% of consolidated profit after tax. In absolute terms, the dividend is, of course, lower than in the previous year.
Nonetheless, with this proposal, we are making a responsible decision towards all stakeholders of Porsche AG, we are securing financial flexibility during this phase of transformation and are consistently supporting our strategic realignment, because it remains our aim to strengthen the robustness of our business model in a sustainable manner and to create long-term value. After all, the situation remains challenging as the first quarter of 2026 has shown. At around 61,000 vehicles delivered, we were 15% below the previous year figure. When you look at our group sales, it came to EUR 8.4 billion, a decline of 5%. The operating profit still clocked up 7.1% and thus was at the upper end of our forecast range for the full year. Our consistent cost control work is proving just as effective as our value over volume approach. That is our principle of prioritizing value over sheer volume.
We owe this development, however, quite simply also to the fact that there are fewer additional burdens arising from one-off factors. Thus, we remain in a challenging situation. We are consistently, consequently developing a strategy that will lead us to sustainable and healthy profitability. To this end, we are taking a very close look at our portfolio, at our costs, and our complexity. We are looking at processes, quality, and collaboration likewise. We are drawing clear conclusions from this that are necessary, even if they may be uncomfortable. We have not completed this assessment. In some areas, we are still right in the midst of it, but we have made sufficient progress to identify the key areas for action.
From this analysis, we are currently developing our Strategy 2035. It will provide the framework for what and where we will start, what we will change, and how we will strengthen Porsche's position again in the long term. It follows a structure based on three strategic pillars, underpinned by a shared foundation. Using this structure as a guide, I now would like to show you how we are going to realign Porsche step by step. It all starts with our brand and our customers. That's the first pillar. Because after all, our success ultimately hinges on the moment where customers make a conscious decision, namely, to choose and go for Porsche. Our brand is therefore our greatest asset. It stands for desirability, clarity, a standard that you can feel and need not explain to anyone.
Porsche is a promise. It is absolutely crucial that we consistently deliver on this promise with every product, at every point of contact, no matter where and when. To this end, we will focus even more strongly in future on what lies at the heart of Porsche and clearly sets us apart from the others. Namely, our sports car DNA, our genes, our identity defined by design, our performance, driving pleasure, heritage, and exclusivity. Porsche remains the brand for people who consciously choose to drive themselves, particularly in an increasingly automated world. We're not concerned with maximizing volume. We're concerned with value, desirability, profitability, because more cars do not automatically make Porsche stronger.
We become stronger when customers make a deliberate and conscious decision to choose and buy a Porsche, not because they absolutely need one, but they absolutely want one and are then quite happy to pay the price that reflects that. We must strengthen our ability to command premium prices and ensure the lasting value of our vehicles. Alongside our value over volume approach, the quality of our product and services will play a decisive role in this. To this end, we are setting ourselves very ambitious targets. We want to offer the highest level of appeal, functionality, and reliability. We want to set the benchmark in this regard. These products and technology behind them form the second pillar. Namely, our product strategy is the key lever for making Porsche stronger again, both economically and in terms of desirability.
Because Porsche stands for clarity and has always been very adept at resolving the tension between individualization and complexity. This is something that we must build upon once again. Our portfolio has become too complex, also when you compare it to the competition, that's why we are reducing the number of variants and will focus more. For example, in the U.S., we have withdrawn two body styles of the Taycan from the range. In doing so, we are tailoring our offering specifically to local customer preferences. At the same time, we are also thinking about expanding our product portfolio in areas that have command stronger margins. That holds true for derivatives and brands above our current two-door sports cars, as well the Cayenne.
In connection with this, we also have identified potential for further expansion of our highly popular and highly profitable personalization and bespoke programs such as the Sonderwunsch program. When it comes to the powertrain, we are not ideological or dogmatic. We believe in products that inspire and thrill customers, that's why we're investing in all three types of powertrains, ICEs, hybrids, and electric powertrains. We consider the hybrid powertrain not as a kind of stopgap technology. Quite the contrary. For the 911, for example, our in-house developed performance hybrid is a fundamental building block. It's a sort of elixir of life for our future because a fully electric 911 will not happen. We stand by that. Of course, we will continue to develop fully electric vehicles. In future, however, we will focus even more strongly on what sets us apart from the others.
A very good example of this is the Cayenne Electric, which will delight many people with its driving characteristics. I am convinced that it can play a key role for Porsche in the electric age and help to build a genuine heritage, BEV heritage. Ladies and gentlemen, even the best products and the strongest brand can only make an impact if the development, production, and sales functions behind them As efficiently as possible. That brings us to the third pillar. To significantly improve our margin structure, we must create a competitive cost structure. For products, this means that we must optimize both upfront costs, such as investments and R&D costs, as well as direct costs. To this end, we are fundamentally rethinking the development of our sports cars.
We are investigating currently where we can harness synergies between our models, we examine how we can make more flexible use of platforms and industry solutions. This explicitly includes the intelligent use of group modular systems. Of course, we have already demonstrated this in the past with the Cayenne and the Macan, that we can master this recipe for success. This should also lead to positive economies of scale when you look at terms of direct costs. If a future, few models will compete with one another in future, this will also likely to have a significant impact on our capital efficiency. What's more, we will, in future, base our R&D even more on digital methods and the use of AI to bring new products faster to market and to the customers.
All these measures are merged in a product strategy with ambitious but realistic targets. Right now, we're working out the economic and technical feasibility of these plans. We must also, of course, improve our performance in our markets. In the U.S.A., the high import duties and tariffs mentioned at outset are having a direct impact on our margins and are therefore placing a considerable strain on us. We have been able to counter this to some extent with price increases, yet we are still seeing stable, solid demand, and that demonstrates the enormous strength of our brand and our products there. The U.S.A. will therefore remain Porsche's most important market also in future. Let's look at China. Here, we are not experiencing just a short-term downturn. No, it's a radical structural shift. Customer expectations are changing.
Technology is seen and valued differently than in the rest of the world, digitalization is advancing at a breathtaking speed and pace. The cycles in which innovations come to market are significantly shorter than before, competition has also become considerably more dynamic. We opened up our own R&D center in Shanghai so that we can respond more effectively and specifically to the requirements and wishes of our Chinese customers. We are bringing our unique sports car identity and the specific requirements of the Chinese market together there. This holds true, in particular, when you look at digital applications such as infotainment, where we are already this year launching a new system developed in China. At the same time, we're also working intensively on applications for automated driving that are specifically tailored to China.
To reflect the changing customer behavior, we are also simultaneously optimizing our dealer network. On the one hand, we are significantly reducing it by around half, at the other hand, we are strategically strengthening our presence in regions with a high demand and high relevance to and for our brand. This also reflects our value over volume approach. Concrete opportunities for local production are, for us, a small manufacturer, not currently foreseen. For this three-pillar strategy to succeed, we need a stable foundation. To achieve this, we will focus our efforts more strongly on what defines Porsche at its core, namely our sports car, both with two and four-door models. We are consistently aligning our company to our core values and business. That was also the backdrop to the decision to sell our shares in the Bugatti Rimac and Rimac group shares.
To this end, we will also have Cellforce Group, Porsche eBike Performance, and Cetitec discontinued in future. These are painful cuts, yes, they're absolutely necessary and essential for our strategic realignment. Another key element of this foundation is that we're restructuring our organization, we're starting right at the very top. We are disbanding the Car-IT division, instead of eight, we now only will have seven board members on the management board. Also in the levels below, there will be a clear focus of future, less complexity, clearer lines of responsibility, and greater accountability in implementation. We will, across all levels, streamline our operations. At Porsche, we have a motivated and dedicated team with outstanding talent, we have also grown significantly. We have grown too much, particularly in what we call indirect sectors.
To safeguard our competitiveness in the long term, the streamlining of the company planned to date is therefore not sufficient. That's why we are currently in discussions with employee representatives about further adjustments to the number of staff and other factors that will make sure that our sites remain competitive. That we are going beyond what we have already agreed is something that we already announced back in March. The discussions are currently in full swing, and I, therefore, ask you for your understanding, I will not provide any details on this today. What I can say is we share a very similar view of the company situation, and we agree that action is needed and where it is needed. Now, what we need to discuss now is the best way forward, and we will do that frankly and openly.
What we need is a corporate culture adapted to our changed environment? What counts is performance, both in teamwork and from each individual. This will apply to all areas of our strategy, and it will help us to deliver the highest standards of excellence and quality. Ladies and gentlemen, such a comprehensive reorientation cannot be completed in a matter of months. That's why it is important to me that we share the same realistic view on the pace and the expectations. Over the short term, we will not see a return to the target margins we have seen in the past. This is because the significant improvement of our economic performance will come primarily from our future products, and that is the key lever and driver, and that takes time. Also, of course, the geopolitical conditions will not change that quickly.
What's more, for the current financial year, we are therefore confirming our forecast despite the environment that remains very challenging. That means we expect an operating return of sales of between 5.5%-7.5%, this figure takes into account extraordinary expenses of between EUR 800 million-EUR 900 million, as well as the custom duties and tariff duties of around EUR 700 million. In terms of deliveries, the phasing out of the 718 model range and the combustion engine Macan will have an impact. Ultimately, we will be below the 2025 level in this respect, this has already been factored into the forecast. At the same time, it is important to us to show to you clearly the direction we're heading to, we will do so in October at a Capital Market Date.
There, we will further flesh out our strategy. We will set out in detail how we are placing Porsche on a sustainable, strong footing, we will make it tangible in which direction we are headed. Which brings me to the end, once again, back to the claim or motto, Made in Germany. It is a label that today sometimes is seen as an obstacle. We're talking about rising costs, stringent regulatory requirements, we're seeing a new wave of protectionism emerging worldwide. That our operating conditions have become more challenging, both in Europe as a whole, but particularly for us here in Germany. That's something that shall not daunt us, because Made in Germany was designed to act as a deterrent, to be a disadvantage, quality, innovation, precision, and reliability have prevailed.
Yes, something we tend to forget these days is, well, hard work, diligence, merit principle has prevailed, and that is the pivot and crucial point for us. Of course, we can, and we must clearly identify and tackle obstacles. Yes, we need also the support from the world of politics, whether it concerns tariffs or the excessive regulation and bureaucracy here in Germany, at home. We do not want protectionism on our part, but we need a level playing field, and that's not the case at the moment. We need a review of the future CO2 fleet regulations to allow for greater flexibility. The so-called and recently presented Salini report, presented to the European Parliament recently, provides an important impetus for us. Quite irrespective thereof, we must consistently capitalize on our strengths. We must reinvent Made in Germany once again. We need to prove ourselves.
We need to prove our expertise as engineers, of our brand, of our name, which in itself is a promise. Dr. Ing. h.c. F. Porsche. That's the sports car manufacturer, and we need to prove our ability to create unique products. Sports cars that no one else can make quite like we do. That ultimately is what counts at the end, whether or not we will be successful. It will be our product, it will be our quality, it will be our efficiency, and that is our benchmark. Contradictions must not hold us back. We need to resolve them, and that is what you will be able to judge us on. Thank you very much.
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Thank you very much, Dr. Leiters. Ladies and gentlemen, also on today's agenda is the resolution to approve the amendment to a control and profit transfer agreement between Porsche AG and Porsche Financial Services GmbH. Our Chief Financial Officer, Dr. Breckner, will now speak on this matter. Dr. Breckner , please.
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Thank you, Dr. Porsche. Ladies and gentlemen, the shareholders. Under item 7 of today's agenda, the Executive Board and the Supervisory Board proposed that you approve the conclusion of an amendment agreement to the control and profit transfer agreement in place between Porsche AG and Porsche Financial Services GmbH. The German Stock Corporation Act stipulates that the Executive Board must explain the amendment agreement orally to the Annual General Meeting . Accordingly, I would like to briefly summarize the main reason for the intended conclusion of the amendment agreement and its key provisions. The control and profit transfer agreement has been in force since 1988 and was already amended once, and that was in the year 2019. The conclusion of the amendment agreement now serves primarily to bring the control and profit transfer agreement into line with regulatory requirements.
This has become necessary in the connection with internal changes within the financial services segment of the group. Following the granting of regulatory authorization by the Federal Financial Supervisory Authority, the BaFin, Porsche Financial Services GmbH, in addition to its existing activities, it is now to operate the regulated leasing business itself in future. The business is currently still held by the 100% subsidiary, Porsche Financial Services GmbH & Co. KG, but is already being managed by staff at the Porsche Financial Services GmbH. The amendment agreement ensures, in particular, that the control and profit transfer agreement complies with the regulatory requirements applicable to a regulated leasing institution. Among other things, it stipulates that Porsche AG may not issue any instructions to Porsche Financial Services GmbH, the execution of which would result in Porsche Financial Services GmbH or its convening bodies breaching regulatory requirements.
Any instruction from Porsche AG that contravenes supervisory law would be inadmissible under the amendment agreement. Apart from these regulatory requirements, the control and profit transfer agreement remains essentially unchanged and contains, as before, the standard provisions. Porsche Financial Services GmbH places its management under the control of Porsche AG, and Porsche AG is entitled to issue instructions within the limits permitted by law. In addition to that, Porsche Financial Services GmbH remains obliged to transfer all of its profits to Porsche AG, and in turn, Porsche AG assumes any losses incurred by Porsche Financial Services GmbH. As Porsche AG directly holds 100% of the shares in Porsche Financial Services GmbH, no compensation or settlement payments are required to be made to external shareholders. For the same reason, it was not necessary for the amendment agreement to be audited by an independent auditor.
Further details regarding the amendment agreement can be found in the joint report by the Executive Board of Porsche AG and the Executive Board of Porsche Financial Services GmbH on the amendment agreement. The report and the draft of the amendment agreement have been available on the company's websites since the convening of today's Annual General Meeting. This was the explanation. Thank you very much for your attention.
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Thank you, Dr. Breckner. Also on the agenda is the election of Mr. Holger Peters as a member of the Supervisory Board. As announced, Mr. Peters will now introduce himself to you. Mr. Peters, please.
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Thank you very much, Dr. Porsche. Ladies and gentlemen, my name is Holger Peters. I was born in 1968 in Beckum in North Rhine-Westphalia, and today live in Vaihingen an der Enz and in Prague. I'm delighted to have this opportunity today to briefly introduce myself and my candidacy for the Supervisory Board of Porsche AG today. My professional career combines in-depth financial expertise with many years of experience in the automotive industry. Following an apprenticeship in banking and a degree in the European Business Administration in Berlin and Cambridge, I began my career at Porsche in 1996 in the controlling department for subsidiaries. This was followed by roles as head of finance at the Porsche Retail Group in London, subsequently as head of controlling for subsidiaries in Stuttgart.
As of 2009, I stand responsible as Head of Controlling and Deputy Chief Financial Officer for key management functions at the Porsche AG. In 2017, I took over as Managing Director of Porsche Financial Services GmbH. In 2018, I was appointed spokesperson for the management board. At the start of 2022, I moved to Volkswagen AG as part of an intergroup secondment, where I oversaw, amongst others, the acquisition of Europcar Mobility Group SA. From February to May 2023, I also served as general representative of the Volkswagen Bank GmbH. Since 2023, I've been a member of the Executive Board responsible for finance, IT, and legal affairs at Škoda Auto a.s. in Mladá Boleslav. In addition, I serve as a member of the Supervisory Board of Green Mobility Holding S.A. and Europcar Mobility Group SA, and Chair the Audit Committee of Europcar Mobility Group SA.
With over 20 years of experience at Porsche, as well as my other roles within the Volkswagen Group, I have received and given me a comprehensive understanding of financial management, controlling, and governance of automotive companies. It's an experience I would like very much to continue contributing to the Supervisory Board work of Porsche AG. I do possess the necessary independence, both from the Porsche AG, as well as from the Volkswagen AG as the controlling shareholder. Because already at the start of 2023, that is more than three years ago, I left Porsche and have never been a member of the Board of Management AG of Porsche AG. There are no significant business relationships between Škoda and Porsche. Both companies cater to largely different customer segments and are not major competitors.
What's more, I'm neither a member of the Board of Management, nor the Supervisory Board of Volkswagen AG, nor do I hold any other positions there. This view is also shared by the shareholder representatives on the Supervisory Board. They have examined my independence in detail and in accordance with the guidance of the German Corporate Governance Code, consider me to be duly independent. I assure you that I can and will carry out my duties on the Supervisory Board independently, responsibly, and in interest of all shareholders of Porsche AG. I not only bring the necessary professional expertise, but also the necessary distance to monitor the work of the Board of Management critically and in a constructive manner. Thank you very much.
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Thank you, Mr. Peters. Ladies and gentlemen, let's continue with item number 9 on the agenda. Agenda item 9 concerns the approval of a settlement agreement with the D&O insurers of Volkswagen Aktiengesellschaft. I shall now hand over to my deputy, Mr. Buck.
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Thank you very much, Dr. Porsche. Ladies and gentlemen, agenda item 9 concerns a settlement agreement reached with Volkswagen's D&O insurance in connection with the diesel issue. Let me briefly explain the background. The so-called diesel issue relates to the development and use of certain software functions in the engine management systems of diesel engines. These software functions were in some cases classified by the authorities as illegal defeat devices. Porsche was affected by the diesel issue, even though Porsche itself did not develop or manufacture any diesel engines. However, Porsche sourced the relevant diesel engines from other companies within the Volkswagen Group, in particular from Audi. The engine management software that, as the authorities later established, contained illegal defeat devices, was developed by Audi and merely adapted for the use in Porsche vehicles.
Once Porsche learned about the diesel issue, the Porsche Supervisory Board commissioned a thorough investigation into the responsibilities for the diesel issue over a period of several years. In this context, the Supervisory Board commissioned the law firm Gleiss Lutz to examine whether members of the Executive Board had breached their duties. The Executive Board commissioned the law firm Linklaters to examine whether members of the Supervisory Board had breached their duties. The investigations revealed that the former Executive Board member, Mr. Hatz, had negligently breached his duties of care under company law in connection with the diesel issue. The Supervisory Board therefore resolved in March 2021 to claim damages from Mr. Hatz. No breaches of duty were found on the part of other former or current members of the Executive Board and Supervisory Board of Porsche.
In parallel, the Supervisory Boards and Management Boards of Volkswagen and Audi also commissioned investigations into the responsibilities relating to the diesel issue. In March 2021, they identified breaches of the duty of care under company law by a total of four former members of the Management Board of Volkswagen and Audi, and there decided to claim damages from these individuals. In June 2021, the Porsche Supervisory Board decided to conclude a liability settlement with Mr. Hatz. The liability settlement provides for a contribution from Mr. Hatz amounting to EUR 1.5 million. The Supervisory Boards of Volkswagen and Audi have also resolved to conclude liability settlements with the individuals against whom they have brought claims. At the same time, the Supervisory Boards and Executive Boards of Porsche, Volkswagen, and Audi resolved to conclude a coverage settlement with D&O insurers from Volkswagen.
This coverage settlement from 2021 was referred to as 2021 coverage settlement in the notice convening today's Annual General Meeting. As explanation, a so-called directors and officers liability insurance, that is the D&O insurance for short, is a form of liability insurance against financial losses that a company takes out for its Executive and Supervisory Board members, as well as for certain senior executives. If the company successfully brings a claim for damages against members of the Executive or Supervisory Board or senior executives, the D&O insurers are obliged to settle the claim up to the sum insured. It is standard practice for companies to take out D&O insurances. Volkswagen's D&O insurance covers the entire Volkswagen Group and also includes Porsche as an insured company. Therefore, Porsche was also involved in the 2021 coverage settlement.
On 14th of July 2021, Porsche's Annual General Meeting approved the 2021 coverage settlement and the liability settlement with Mr. Hatz. The Annual General Meetings of Volkswagen and Audi also approved the 2021 coverage settlement and the respective liability settlements with former members of the Executive Board of Volkswagen and Audi. Under the 2021 coverage settlement, the participating D&O insurers had undertaken to pay a total of EUR 270 million to the Volkswagen Group. After deducting the legal defense costs already incurred and the insurance benefits still to be paid, Volkswagen had undertaken to pass on 14.5% of the sum to Porsche. Berkshire, one of the D&O insurers, had not participated in the 2021 coverage agreement. Porsche, Volkswagen, and Audi in July 2025, were able to conclude a supplementary coverage settlement with Berkshire for EUR 7.7 million. Volkswagen in turn, undertook to pass on 14.5% of this EUR 7.7 million to Porsche.
As customary in practice, the D&O insurers demanded a comprehensive settlement of the insurance claim. Porsche, Volkswagen, and Audi therefore undertook in the 2021 coverage settlement not to assert on a permanent basis any claims against members of the Executive and Supervisory Board, as well as against other insured persons in respect of whom no breaches of duty had been established. These so-called waivers of liability, in addition to the diesel issue, covered other matters which, in the view of the D&O insurers involved, were linked to the diesel issue. In Porsche's case, the liability waivers covered all former and current members of Porsche's Executive and Supervisory Board, with the exception of Mr. Hatz. Any financial disadvantage was not entailed for Porsche in connection with the waivers of liability.
This is because the Supervisory Board identified only one claim against Mr. Hatz. Other than that, neither the Supervisory Board nor the Executive Board identified any claims against members of the Executive or Supervisory Board or against any other insured person in connection with the matters to which the waivers of liability related. Therefore, Porsche has not waived any claims that actually existed. Ladies and gentlemen, Volkswagen shareholders took legal actions against the resolution passed by the Volkswagen Annual General Meeting, approving the 2021 coverage settlement. The Regional Court of Hanover and the Higher Regional Court of Celle held that the claims were unfounded in every respect and fully upheld Volkswagen's legal position.
Following an appeal by the plaintiffs, the Federal Court of Justice declared the resolution passed by the Volkswagen Annual General Meeting approving the 2021 coverage settlement to be null and void in its judgment of September 30th, 2025. The Federal Court of Justice did not identify any substantive flaws regarding the contents of the 2021 coverage settlement. Its decision is rather based on formal reasons. The Federal Court of Justice is of the opinion that it was not sufficient merely to refer to the liability waivers in the supplementary information to the agenda of the Volkswagen Annual General Meeting. This should have been indicated in the agenda of the Volkswagen Annual General Meeting itself. As a consequence of the Federal Court of Justice's decision, the 2021 coverage settlement has become invalid. The same applies to the supplementary coverage settlement with Berkshire.
The liability settlement with Mr. Hatz, however, is not affected by the invalidity of the 2021 coverage settlement and remains in full force. Against this background, Porsche, Volkswagen, and Audi concluded on March 10th, 2026, a new coverage settlement with the D&O insurers, which in the invitation of the Annual General Meeting, is referred to as 2026 coverage settlement. The D&O insurers already party to the 2021 coverage settlement, as well as Berkshire, are parties to the 2026 coverage settlement. In substance, the 2026 coverage settlement corresponds to the 2021 coverage settlement. Under the 2026 coverage settlement, the D&O insurers have undertaken to pay a settlement amount of around EUR 278 million. This sum comprises the settlement amount under the 2021 coverage settlement of around EUR 270 million and the amount under the Berkshire coverage settlement of EUR 7.7 million.
Technically speaking, these sums do not need to be paid again by the D&O insurers involved. Rather, the payments already made remain with Porsche, Volkswagen, and Audi. The conclusion of the 2026 coverage settlement is necessary so that Porsche, Volkswagen, and Audi can retain the total amount of around EUR 278 million. With regard to the 2026 coverage settlement, it is clear from the agenda of today's Annual General Meeting itself that like the 2021 coverage settlement, it contains the waivers of liability relating to former and current members of the Executive and Supervisory Board of Porsche, as already explained. We are taking into account the view of the Federal Court of Justice that a corresponding notice is required to be included in the agenda of the Annual General Meeting itself.
The waivers of liability set out in the 2026 coverage settlement correspond to those already contained in the 2021 coverage settlement. The scope of the liability waivers is set out in the agenda and in the report of the Supervisory Board and the Executive Board on agenda item 9. We have published the report on agenda item 9 in the notice convening the Annual General Meeting, and also on our website. Ladies and gentlemen, since the conclusion of the 2021 coverage settlement, no relevant new findings have emerged from Porsche's perspective in the course of addressing the diesel issue. With the support of Gleiss Lutz, the Supervisory Board has continued to examine whether there are any indications of further or more serious breaches of duty by members of the Executive Board, and this was not the case.
It is true that Mr. Hatz has since been convicted by the Munich II Regional Court in a final judgment. This conviction does not relate to his role on the Executive Board at Porsche, but to his previous role as a Senior Executive at Audi. The liability settlement with Mr. Hatz remains unaffected by the conviction and continues to be valid. Following a further review by Linklaters, no new evidence of breaches of duty by former or current members of Porsche Supervisory Board has come to light since the investigations in 2021. In the report by the Supervisory Board and the Executive Board on agenda item 9, we have set out further details regarding the proposed resolution, in particular, the reasons for it. This report on agenda item 9, as mentioned, is included in the notice convening the AGM, and it is also available separately on the website.
Ladies and gentlemen, we are today seeking your approval of the 2026 coverage settlement. The 2026 coverage settlement is intended to bring the diesel issue at Porsche to a close from the perspective of a director's liability and insurance law. This would confirm the conclusion already reached in 2021. It is now more than 10 years since the diesel issue at Porsche and across the entire Volkswagen Group has come to light. Responsibilities relating to the diesel issue have been thoroughly and meticulously examined within the Volkswagen Group and therefore also at Porsche over many years. Against the backdrop of this comprehensive review, we are convinced that the conclusion of the 2026 coverage settlement is the best possible solution in Porsche's corporate interest.
The payments already made by the D&O insurers, which have been allocated to Porsche on a pro-rata basis, do not need to be repaid, but will remain with Porsche. The alternative to concluding the 2026 coverage settlement would be to return the payments already made by the D&O insurers and to pursue the claims through the courts. This would entail considerable costs and is likely to take many years. Pursuing the claims through the courts would also involve significant litigation risks. In our view, Porsche's interest in resolving the diesel issue with regard to the civil liabilities of the members of the Executive and Supervisory Board members swiftly and with legal certainty as proposed, therefore clearly outweighs any other considerations. We propose to the Annual General Meeting that it approve the 2026 coverage settlement.
Ladies and gentlemen, thank you very much for your attention. I hand back to Dr. Porsche.
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Thank you very much, Mr. Buck. Ladies and gentlemen, at this point, I would like to say goodbye to those who have been following the public webcast. I would like to thank you very much for your interest in Porsche AG.