AsianFin -- Porsche AG has revised its profitability target downward after a sharp decline in earnings, driven by slumping sales in China and weakening demand for electric vehicles (EVs).

The German luxury car manufacturer now forecasts a return on sales of 15% to 17% in the medium term, down from its previous target of up to 19%, according to Chief Financial Officer Jochen Breckner.

The revision follows a 23% drop in Porsche’s operating profit for 2024, which fell to €5.64 billion ($6.2 billion), down from the previous year.

Since its 2022 IPO, Porsche has struggled to meet the ambitious profit margins it set. Falling sales in China, reduced EV demand in Europe, supply chain issues, and delays in model launches have all contributed to the company’s challenges. As a result, Porsche has repeatedly revised its financial outlook downward.

In response, the company has adjusted its EV targets and committed to investing €800 million in the development of more combustion engine and plug-in hybrid models. Additionally, Porsche is replacing key management board members and considering job cuts.

Sales for Porsche dropped 1.1% to €40.08 billion in 2024, with the return on sales at 14.1%, at the lower end of its projected range. Despite this reduction in its medium-term profit target, Porsche is maintaining a long-term goal of achieving more than 20% return on sales.