By Victoria Waldersee

BERLIN (Reuters) -Porsche said on Wednesday that its extensive restructuring, as well as trade tensions and intensifying competition in China, will weigh on 2025 earnings, even before accounting for possible higher U.S. tariffs on EU imports.

The luxury carmaker, whose shares dropped sharply last month when it warned its margin this year would hit just 10-12% because of investments in new internal combustion engine and hybrid models, is in the midst of a cost-cutting drive, shrinking its workforce by just under 4,000 jobs and planning further cuts.

Its margin forecast, based on expected sales revenue roughly equal to 2024 at 39 billion-40 billion euros, does not factor in new tariffs that Donald Trump may impose on car imports from Europe, a move that threatens to undermine Porsche's sales in its biggest single-country market.

'PERSISTENTLY CHALLENGING'

Porsche, which at its stock market debut in 2022 was valued higher than its parent company Volkswagen AG, has fallen from grace since, struggling in particular with low sales in China, where sales dropped 28% in 2024.

Still, the luxury carmaker will keep its dividend for 2024 at the previous year's level despite a 30.4% drop in net profit, according to Reuters calculations.

Like Volkswagen, which warned on Tuesday that margins would remain flat in 2025 as it battles to reduce costs, Porsche is also downsizing in an attempt to boost profitability toward its long-term target of 20%.

But in the meantime, it pared back its medium-term margin target to 15-17% from 17-19%, citing a "persistently challenging environment".

Porsche's operating profits fell 22.6% last year to 5.6 billion euros, yielding a return on sales of 14.1% despite revenue remaining roughly on the previous year's level, as renewing five out of six of its model lines weighed on earnings.

With EV demand lagging, the carmaker promised to offer a range of combustion engine, hybrid or electric models "well into the 2030s" and was evaluating the launch of a new SUV model line with combustion and hybrid options towards the end of the decade.

($1 = 0.9172 euros)

(Reporting by Victoria Waldersee, Ilona Wissenbach; Editing by Rachel More, Lincoln Feast and Gerry Doyle.)