It is 8:00 A.M. Central European Time. Welcome to all of you to Porsche's pre-close call, and thank you for joining us today. Following the release of our Q3 year-to-date 2026 delivery figures last Friday, today's call is designed to provide analysts and investors with a comprehensive update. We will summarize key data from the sales release and highlight recent public statements made by management at road shows, conferences, and our most recent Capital Markets Day at Weissach. We will also reiterate selected messages from our Q2 2026 earnings call, other communications, and our back-to-school discussions after the summer break. Please note that this is our only pre-close communication ahead of our earnings release. After this pre-close call, we will enter into our quiet period immediately.
If you receive questions during the Q and A session that go beyond the scope of our latest public disclosure, we kindly ask you that you understand that we will address those in conjunction with our Q3 2026 earnings release on Tuesday, October 27. This will be before the market open. Before we begin, please note that today's presentation contains forward-looking statements, and our Safe Harbor language and cautionary notes provided on this slide apply to all statements made during this call. We encourage you to review this disclaimer carefully. To start, the macroeconomic environment remains challenging and volatile. Inflationary pressures persist, geopolitical uncertainty remains elevated, and the market environment in China continues to be highly competitive. Against this backdrop, we remain focused, as we outlined also at our Capital Markets Day, on what we can control, building resilience, structurally improve our cost base, and maintaining strict execution discipline.
Deliveries to customers in the third quarter 2026. Our delivery performance in the third quarter 2026 remains fully consistent with our disciplined value over volume approach. Global deliveries reached around 56,000 vehicles. This is 15% below the prior year period. Please note, we are talking about the third quarter now, not the year-to-date numbers. This decline reflects the gap in our product portfolio, in particular. Against this challenging market backdrop, particularly in China, we continue to carefully balance supply and demand rather than pursuing volume for its own sake. Importantly, the quality of our product and sales mix remains a key strength. The 911 continued with strong momentum, while GTS, Turbo and GT derivatives maintained a high share of our overall deliveries.
Together with the successful start of the Cayenne Electric in our customer deliveries, this demonstrates the continued desirability of our products and reinforces our confidence in price and mix as important drivers of our financial performance, not only now, but also going forward. Wholesale. Quarterly wholesales are expected to be broadly in line with retail sales, with a comparable mix. Our globally balanced sales footprint continues to support resilience across different market environments, particularly given the challenging conditions in China. At the same time, with the start of the electric Cayenne and the continued ramp-up towards the year-end, we expect the BEV share in our wholesales and retail to increase in Q3 and Q4 compared with the first half of the year, and to be significantly above the prior year level. Incoming orders. Customer demand remains resilient despite the challenging macroeconomic and geopolitical environment.
The continued appeal of our product and the high degree of individualization in our order book underscores the enduring strength and desirability of the Porsche brand across the portfolio. Incoming orders are well-aligned with our value over volume strategy and our focus on qualitative growth. At the same time, incoming orders also reflect the current gaps in our product offering. Group revenues. As communicated during our recent engagements, third quarter 2026 revenues are expected to reflect significantly lower wholesales, favorable pricing, supportive mix effects, and are expected to partly offset the volume decline. This means we will see a less pronounced decline in revenues than in wholesale volumes. Something that should sound familiar to you because we also outlined similar sequence during our capital markets day about the developments going forward. Expenses. Looking at the cost base, we continue to face a number of headwinds.
Inflationary pressure across the supply chain and other cost categories is expected to remain elevated, while lower-than-anticipated BEV volumes continue to result in supplier compensation payments. D&A is also expected to remain elevated, reflecting the significant product launches and investments of recent periods. This includes our expectation that R&D capitalization will remain below depreciation amortization on capitalized R&D for the time being. In addition, our disciplined value over volume approach, combined with the temporary gaps in the product portfolio, is expected to result in continued unfavorable fixed cost absorption. CO2-related cost and foreign exchange are expected to add further headwinds compared to 2025. As outlined at our CMD, we are actively addressing these pressures through the levers within our control. This means the continued execution of our Push to Pass initiatives and the implementation and execution of the Zukunftspaket. Both are expected to support our future operational performance.
Now, let's give us some transparency on the burdens in connection with the strategic realignment and the focusing on our core business. In the third quarter, we expect, as said before, around EUR 300 million of extraordinary burdens in EBIT. These are related to the strategic realignment, and these EUR 300 million include alone, EUR 200 million for the Zukunftspaket. So the EUR 300 million in the third quarter are fully consistent with our previous statements that we expect EUR 800 million - EUR 900 million extraordinary burdens in EBIT in our full year return on sales guidance. Now let's come to automotive net cash flow. Automotive net cash flow in the third quarter is expected to include several extraordinary items, EUR 100 million -EUR 200 million of cash outflow related to the strategic realignment. Around EUR 900 million proceeds from the Bugatti Rimac transaction and EUR 250 million of an extraordinary pension contribution.
Taken together, these items are expected to provide a net positive contribution of around EUR 500 million to automotive net cash flow in the third quarter. We will continue to systematically review our portfolio and will further assess opportunities to sharpen our focus on our core business. This may also include potential divestments of additional non-core participations. Importantly, underlying cash generation remains solid, demonstrating the cash generation strength of our core business despite the significant external headwinds and the current extraordinary transitional effects. Operating performance in the third quarter. Overall, the quarterly pattern in the underlying business remains intact. What does this mean? Usually, Q3 typically is showing a seasonally lower profitability than the second quarter. But this is totally normal because this reflects the summer break. Let's now come to the outlook 2026.
Reflecting the more challenging market development in China and our disciplined value over volume approach, we have revised our full-year China sales assumption from previously around 30,000 units to around 25,000 units. This is expected to have a corresponding impact on revenue, pre-tax earnings, and cash flow. Against this backdrop, despite the continued challenging macro and geopolitical environment, we recently confirmed our 2026 guidance at the Capital Markets Day. We continue to expect a group operating return on sales of 5.5%-7.5%. This guidance includes EUR 800 million- EUR 900 million of extraordinary net expenses related to the strategic realignment. We talked about this a couple of minutes ago. For automotive net cash flow, we expect a margin of 5.5%-7.5%.
This includes for the full year 2026, EUR 1.3 billion of extraordinary cash outflows related to the strategic realignment, including the Audi license payment in the high triple-digit million range. This reflects that we expect a small tranche of the payment to be shifted into 2027. Around EUR 500 million of pension contributions and around EUR 900 million of net cash flow relevant inflows related to the Bugatti transaction. Taken together, the extraordinary items are expected to provide a net cash outflow for the fiscal year 2026 of around EUR 700 million- EUR 800 million. Now, let's also repeat our statements on 2027 from our most recent back-to-school discussions. Looking into 2027, there are several important moving parts to consider. On the positive side, the EUR 800 million- EUR 900 million of extraordinary EBIT burdens related to the strategic realignment expected in 2026 will not repeat.
In addition, we expect the benefits from the structural cost initiatives, including the Zukunftspaket, to increasingly support earnings. At the same time, 2027 will be a homework year with several transitional headwinds. Here, related to the Zukunftspaket, we expect around EUR 400 million of charges. The run out of the ICE Macan will represent another significant headwind in the middle triple-digit million euro range, and this will also lead to a temporary underutilization of our Leipzig plant, despite the flexible labor measures we are taking. In addition, we expect headwinds from foreign exchange and higher D&A, including from previously capitalized R&D and the upcoming launch of the electric 718. Combined, these effects are expected to represent a low triple-digit million euro burden. In China, we expect the market environment become even more challenging in 2027, and we also expect a higher BEV share for our business as a whole.
Overall, 2027 will be characterized by a broad set of transitional headwinds. Importantly, most of these headwinds are expected to be behind of us in 2028, when increasing benefits from our structural cost measures and improving product availability should provide a clear foundation for a meaningful earnings improvement. You see all the statements that we shared with you unchanged, are fully intact and reflect all of our previous communications. Now, the upcoming IR events. Porsche's Q3 2026 results will be published on Tuesday, October 27, before the market open. The analysts and investors call with our CFO, Jochen Breckner, will take place at 8:00 A.M. Central European Time. Following this pre-close call, we will send out a template for your estimates to compile our company consensus, which we will be happy to share afterwards.
Please send us your estimates based on the statements of today's call and the currently existing tariff regime. We would appreciate your support and kindly ask you to return your estimates by Wednesday, October 14, around noon. With this, let's see if there's a couple of questions open.
Thank you, Björn. The first one in the line is Patrick.
Yep, thanks. Good morning. Thanks for doing this call. Two questions from my end. The first one, Björn mentioned the lower China assumption, 25,000 instead of previously 30,000. I don't think that's a brand-new statement. This has been talked about already for the last couple of months, but just to understand how it sits within the full-year guidance range, has there been any positive volume offset elsewhere, or does it just take the top-line guidance towards the lower end of the corridor? The second question is the Cayenne mix in the third quarter, 7,000 electric Cayennes. That's a quite large number. You managed expectations quite carefully on that one, citing relatively low demand in that segment for electrified or fully electric cars.
Is that something that is representative of a future run rate, that 7,000, or is it just basically pushing a first wave of product to the dealers and then it should level off relatively quickly? In that context, the ICE Cayenne also looked relatively weak. Is that driven by China, or do we really see a mix shift towards EVs in that segment? Thank you.
First of all, you have not been hearing any update on our revenue guidance, and you may remember our revenue guidance being at the lower end of the bracket at around EUR 35 billion. From that point of view, it is absolutely fair to expect that this revenue guidance remains unchanged. Obviously, we are right now not at the upper end, reflecting the statements that we just gave. To your point, the company is pursuing a quite conservative approach to the degree of supply and demand management. As we said, this is at the moment in the macroeconomic framework, obviously not the easiest world. Therefore, this company obviously would be not in a position to push vehicles on short notice to single destinations just to offset a certain challenge coming, for example, from China.
From that point of view, I fully understand your question, but please understand we cannot be more specific on the revenue guidance, but to point you to the previous statements. Second, you are absolutely right. This quarter, we had the start of sales of the electric Cayenne. The ones of you who joined us for the product presentation in Portugal could experience the product.
The ones of you who may have ordered it or had the chance to experience the product, obviously will recognize that this is an absolute unique and quite strong product, which is also reflecting in the unit sales. This is, if you read between the lines, also our expectation that this is not a blip, that we see volume at that level right now because we implied to you with our previous statements that we not only expect in the third, but also in the fourth, but also in the fiscal year 2027, that the BEV share should be higher than it used to be beforehand. From that point of view, we see some demand for the electric Cayenne, but to be absolutely clear, we position the electric Cayenne at the right price with the right supply to market.
This is obviously not the volume that everybody expected a couple of years ago, but with the electric Cayenne, we hold a quite sizable share in the exclusive segment of products of that category, and very important, at that price, and without saying too much, the mix and the individualization on that vehicle is also pretty satisfying.
Björn, allow me to follow up on that. If you assume that this could be the run rate for the E-Cayenne going forward, is that going to be a significant negative mix driver then? Because obviously it is not coming on top. Judging by the Q3 figures, it has eaten into the ICE Cayenne sales. The overall Cayenne family is not up. Just to understand.
I saw this question. Okay, now I get it. We got that question before when people ask us about the third quarter performance. We always point people that you should not read too much into a monthly sales performance, and you should not read too much into a quarterly sales performance. From that point of view, we would highly recommend more focus on longer trends and not too much to read into short-term developments. Quarterly and monthly sales performance can be influenced by product availability and other factors. With this,
Thanks, Björn.
we would now come to the next question.
Thank you, Patrick. Next one on the line is José.
Thank you. Two questions, please, and very good morning. The first one, when it comes to obviously the comments you have been providing in the past weeks, was there any comments with regards to the third quarter and whether we're trending towards the lower end or the midpoint or upper end of the margin range? Bearing in mind all the comments you have provided here. I think you mentioned Q3 seasonally weaker, maybe towards the lower end of the margin range. Were there any comments at all on this topic? Then second, Björn, thank you very much for that 2027 bridge. Were there also any comments? I know there's no guidance obviously for 2027. Very helpful. Thank you on those building blocks for 2027.
Are we trending sort of sideways on EBIT or were there any comments with regards to maybe a slight EBIT improvement in 2027 versus 2026? If there were any comments in the past weeks. Thank you.
Look, first of all, just to be ultra clear on this call to everybody, today's call did not give a quarterly return on sales guidance. Only we said that the third quarter usually is a seasonal weaker quarter compared to the second quarter, but this is in any year. By the way, this is also with most of the other companies in the sector because of the summer break. This is the only what we pointed to, but we didn't imply any specific margin range, nor any underlying margin range. You heard from my previous statements, the company guidance is fully intact, and we also implied with this call that the cash generation of this company unchanged is pretty robust. Now, for the fiscal year 2027, please understand, we point you to the driving forces that are transitional and temporary impacting our results in the fiscal year 2027.
This is obviously no surprise, but the guidance will be provided with the full year disclosure of the fiscal year 2026. Why this? It would be absolutely premature to give any guidance now because in this macro environment, the driving forces that impact our business are unchanged, very volatile. We could be dealing with a complete different macro environment in the beginning of 2027. It would be absolutely premature now to provide you with any guidance here. By the way, this is the same what you also ask us during the Capital Markets Day, if you would be already in a position to give you guidance on 2028. Please apologize here our crystal balls are not better than yours, and this is the reason why this company opts more for a conservative approach.
This finally is the more reliable, and in the current environment where we sit, we believe this is the more prudent approach.
Very helpful. Thank you, Björn.
Thank you, José. Next one on the line is Daniel.
Thank you. Can you hear me?
We can hear you.
Yes, loud and clear.
First question would be, you mentioned orders reflect the gap, or the order intake reflects a gap in the portfolio. Is that similar wording as in previous quarters, or you see because of bigger gaps, more impact on the order intake? Second would be, you mentioned the impact on earnings from amortization of capitalized R&D. Is the net impact amortization of capitalized R&D and new capitalization similar negative as what you've seen in the second quarter? Lastly, you mentioned the FX headwind in 2027 that's baked in, or that you expect, and that we should expect. Does that assume the current U.S. dollar rate or a weaker U.S. dollar rate, or is it locked in with hedging anyway, independent where the dollar is moving?
Yeah. From that point of view, to your first question, yes, this was exactly meant because we recognized that a couple of people overlooked that the ICE Macan is running out, and that the ICE Macan cannot be ordered at the moment in any region globally, which finally will also have its effect on the wholesales in the fiscal year 2027. This was only a service to point to this because we recognized by today there's a couple of investors and some analysts who still don't have the run out of the ICE Macan globally in their numbers, and unchanged expect that it's possible to order the product, which is not the case. The second is, you're absolutely right. The D&A in our capitalized R&D. First of all, the capitalization rate unchanged will be around the 40s.
You're absolutely right that the D&A unchanged should be at similar level. At the same time, we also pointed a couple of times that the company is pursuing a quite disciplined spending policy. From that point of view, yes, capitalization is the same as in the previous quarter, and the D&A is more or less at the same level. To the degree of R&D, we pointed you that the company is with a disciplined approach. Last but not least, hedging. Yeah, you're right. We recognize at the moment a temporary strengthening of the U.S. dollar against the euro, which also our colleagues from treasury have in mind and make use of the opportunities. At the same time, hedging is not a one-year business. Hedging is a business that you usually enter within a three years time horizon.
This means we already have contracts on our books that we entered at an earlier stage, because at Porsche, we are not gamblers. We run a disciplined, structured approach to the degree of the hedging of the major currencies. But you're absolutely right. If the dollar should stay stronger for longer, then this could be an opportunity. But as you have been hearing to our most recent Capital Markets Day, the company expects different and expects that we rather face more headwinds from currencies instead of expecting tailwinds.
Thank you, Björn. Alex.
Thank you, Daniel. Next one in line is Horst.
Yes, good morning. Just two small questions are left. First one is, Björn, you mentioned the supplier cost compensation. Not sure if you could maybe quantify that or that is a significant item. The second one is on the deconsolidation effects related also to MHP, because it should be booked now as an asset held for sale, if that has got any impact on the P&L figures. On cash flow, obviously not yet, but any comment would be useful. Thank you.
First of all, Horst, thank you very much for the question. We hope for your understanding that because of competitive and antitrust reasons, we are unable to share more information on the supplier compensations. But it's absolutely fair to expect, if the company is pointing to such burdens, then they obviously have to be meaningful. Otherwise, we would not talk about these. But it's obviously pretty simple to understand because the company gave quite ambitious BEV penetration goals a couple of years ago, and usually these ambitions are underpinned by certain volume expectations, product planning, and as in any company, these are related then also to supplier contracts. And in the situation that you ask suppliers not to deliver, then there's two inroads. First is negotiation, which usually leads to some success, but obviously not everything can be negotiated.
As such, there's some burden remaining, and this is what the company pointed to, but we hope for your understanding that we are unable to quantify. On the matter of MHP-
Just a quick follow-up, but it's usually more a matter for Q4, right? It shouldn't be significant.
No
number in Q4. It's more year end.
No. This is something which is spreading across the entire year. It's not that you have one-time payment in a single quarter. This is spreading across all quarters because you should not expect that we have lump sum or one-time payments in one quarter or at the end of the year. This is nothing like dealer compensation or dealer support payments. This is something.
Okay. Thank you.
which is spreading across all quarters. To the point of MHP, you are absolutely right. MHP is signed but not closed yet. MHP, once closed, will deliver a low triple-digit million EBIT effect, will translate into around EUR 300 million of cash inflows. For your numbers, you should reflect MHP with a high triple-digit million revenue number. In the situation the transaction is closed, MHP will be gone. You take this number from the revenue line, and you should take out 4,500 employees from the Porsche employment number. To summarize, you have been hearing from the Zukunftspaket 5,000. These are coming on top to the initially 4,000 and the four and a half thousand MHP come on top. You will also see 500 people leaving our balance sheet in connection with the focusing on the core business.
Sorry, this we forgot earlier because we didn't give you the numbers of the people leaving.
The revenue numbers, et cetera, that's of course more full year number and we divide that by four.
That's a full year number, correct. This is something that you need to deduct in the situation that transaction is closed. For the time being, MHP is in our numbers. Even if you haven't asked, Bugatti Rimac was never reflected in our operational numbers, so this didn't have any effect on the revenue line. The Bugatti Rimac transaction will be reflected in the financial income in the third quarter with a mid triple-digit million earnings effect. Anthony is next in row.
Anthony, go ahead. Thank you, all.
Yes. Hi, thank you. Couple of questions on my side. The first is on the extraordinary expenses, so EUR 300 million expected in Q3. I think that brings the year-to-date total to EUR 400- million. The full-year guidance is EUR 800 million -EUR 900 million. Just wanted to know how we're getting there. What's to remain in Q4? Is it additional expenses from the Zukunftspaket or is it something else? Should we expect the lower end of that range considering where we're tracking below the full-year number at this stage? Second question is on the 911. You made some comments on the overall order intake. Just wanted to know how that translated to the 911. If you could comment on the orders and the waiting lists for that car. The third one is on the 718. You didn't mention it at all in your 2027 bridge.
I know it's a smaller project, but still, should we expect a tailwind or a headwind from that car in 2027? I think it's probably due towards the beginning of next year, so maybe full ramp-up during the year. Just wanted to know how that will impact your financials next year and beyond. Thank you.
First of all, coming back to the charges on EBIT in the third quarter. As you have been hearing, we expect around EUR 300 million for the strategic realignment. Out of the EUR 300 million alone is EUR 200 million from the Zukunftspaket. The remaining EUR 100 million are spreading across the other areas, which is product, battery, and a couple of other smaller topics. Now, it's absolutely fair to expect that in the fourth quarter then, you obviously will get then the remainder in order to come up to the EUR 800 million- EUR 900 million that we told you for the burden of the strategic realignment for the fiscal year. We told you the Zukunftspaket in the second half of 2026 will be around EUR 400 million. The major driver of charges in the fourth quarter, again, will be the Zukunftspaket.
Now, this is obviously the best transparency that we can give you on this one. With 911, obviously pretty satisfying. We hope for your understanding that we don't provide single data on single product derivatives or single markets. But on the matter that we pointed you may remember that we showed you a couple of months ago the GT3 S/C, which obviously got a quite nice reception, and the ones of you who had the opportunity to test drive it at the one or other of our events will fully understand why it had a very strong customer reception. In the meantime, we are sold out, and there's no opportunity to offer that product any longer. From that point of view, as we said also earlier in our discussion, we see quite supportive and resilient mix, which is across Turbo, GTS and the individualization.
You should not read that this is the 911 only. This also applies to a couple of our other products, and you heard me talking about the electric Cayenne. Electric Cayenne also at the moment is with a quite satisfying mix and individualization. You're right, we haven't talked about the 718, but this is crystal clear. This is on purpose, because the product is only to be launched, and from that point of view, you should stay tuned. The communication by our press colleagues will obviously start in the course of the couple of next weeks, and then you will also see how we're going to position the vehicle and what the product will bring to our customers.
The ones of you who had the opportunity to test drive it at our most recent Capital Markets Day together with Walter Röhrl, obviously still feel dizzy, and if you listen to Walter, with his attitude towards electric, driving now the 718 at least has changed a little bit. We are quite confident that this will also nicely resonate with a couple of customers, but it's obviously also crystal clear that the 718 is no fundamental driver of the operating performance of Porsche. The product, because of the change in the cell, you may remember that we had a cell supplier that should have provided us with the cells for the battery, needed to be changed because there was some financial distress. We are talking about Northvolt, and from that point of view, this obviously had an effect on that product.
Unchanged, the product is very satisfying, and from that point of view, we are also very convinced that the customers will appreciate it a lot. But please understand that from today's perspective, we stay on the 718 little tight-lipped because the official communication will only start in a couple of weeks.
Thank you very much.
Perfect. Thank you, Anthony. Thank you, Björn. I think that's-
Thank you very much-
Beautiful day
for the discussion this morning. Alex and the team will send out the Excel for the consensus data in the morning. For the ones of you who are in Paris, enjoy Paris, have good meetings over there, and we very much look forward to our Q3 discussions. Last but not least, we will also send out the save the dates for the Icons of Porsche at the end of November. As last year, we are going to be hosting a small capital markets day down there. We will have Jochen, Dr. Leiters, and a couple of other colleagues joining. If you have never experienced Icons of Porsche down there, you should be going because it is best to see how that brand resonates with the customers, and what is the underlying strength of a brand to customer. With this, thank you very much.
Enjoy your days, and we speak soon.