Porsche SE faces a steep decline in profits

Porsche Automobil Holding SE is facing one of the toughest moments in its history, after reporting a dramatic fall in earnings and lowering its outlook for 2025. To adapt, the Porsche-Piëch family’s holding has decided to diversify into the defence industry, in line with the rising wave of European and German military spending.

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In the first half of 2025, adjusted net profit stood at €1.1 billion, a 48% drop from €2.1 billion in the same period of 2024. Profit after tax was hit even harder, falling to €300 million compared to €2.1 billion the previous year. The company revised full-year guidance down to a range of €1.6–3.6 billion, far below the earlier forecast of €2.4–4.4 billion.

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Amid challenges in the automotive sector,  from Chinese competition and the electric transition to US tariffs and geopolitical risks,  Porsche SE announced a dedicated defence fund to invest in startups working on satellite surveillance, reconnaissance, sensor systems, cybersecurity, and logistics. The group already has exposure in this field through Volkswagen’s joint venture with Rheinmetall and Porsche SE’s stake in drone maker Quantum Systems.

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The move comes as Europe prepares to inject hundreds of billions into defence and infrastructure, a trend that could reshape industrial priorities. The decision also carries historical echoes, as Ferdinand Porsche, founder of the sports car brand, was involved in military projects during World War II.

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Financially, Porsche SE reduced net debt from €5.2 billion to €4.9 billion, creating space for new investments. Investors responded positively: the stock gained over 1%, ranking among the best in the DAX40. While shares had suffered earlier in the year due to auto-sector weakness, the shift towards defence technology   supported by EU initiatives and German government approval, has helped restore market confidence more than traditional automotive prospects.

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