* Porsche CEO plans shift to high-margin sports cars for

recovery

* Sales in China fell over 25% due to local competition

* Porsche forecasts modest recovery in operating return

on sales for 2026

(Writes through, adds CEO quotes, details on strategy)

By Rachel More and Ilona Wissenbach

BERLIN, March 11 (Reuters) - Porsche's new

CEO announced plans on Wednesday to draw on high-margin sports

cars, such as the iconic 911, to recoup losses from a turbulent

2025 marked by tariff costs, electrification missteps and the

collapse of its sales in China.

In his debut earnings report since taking the helm in January,

new CEO Michael Leiters gave the first hints of his plan to

revive the struggling Volkswagen subsidiary,

pledging a shift to higher-margin products and intensified cost

cuts.

"You can well imagine that over the last 70 days or so, I've

worked hard with my team to delve into every detail of our

strengths and weaknesses," Leiters told investors, after the

company reported a 93% slump in operating profit in 2025.

The initial strategy, to be "pursued with urgency as the next

few months unfold", will target a simplified model lineup while

assessing options priced above two-door sporty models, such as

the 911 and 718 and the Cayenne SUV, where personalised features

can boost margins further.

"We have to be leaner, that's for sure. We are not looking at

volume," Leiters said.

Porsche today offers a six-model global lineup covering

everything from the entry-point compact Macan SUVs to

high-performance sports cars and EVs.

This includes China, once a highly profitable market for

Porsche but where sales plunged by more than a quarter in 2025

as local rivals, such as BYD and Xiaomi, built their market

share with more affordable, tech-driven luxury SUVs.

Porsche's new CEO said the Chinese market still offered

potential in a shrinking market for combustion engines, but

stressed that the carmaker would not compete in the EV market,

where a brutal price war continues.

Globally, Porsche delivered 10% fewer cars in 2025, with

declines across all regions except the U.S., where they

stagnated.

Porsche forecast a modest recovery in its group operating return

on sales in the range of 5.5% to 7.5% in 2026, after it

collapsed to 1.1% in 2025 from 14.1% a year before.

The company cut its proposed dividend for the past year to 1.00

euros ($1.16) per ordinary share and 1.01 euros per preferred

share, after earnings were hit by 3.9 billion euros in

extraordinary charges.

These included around 2.4 billion euros in charges from a

strategic pivot away from electric cars as well as around 700

million euros in tariff costs.

The strategic reversal was announced by Leiters' predecessor

Oliver Blume prior to his departure.

Blume, who remains CEO of Volkswagen, already negotiated almost

4,000 job cuts at Porsche, with a second package of planned

measures falling on Leiters, who said this initial reduction was

"not sufficient".

Leiters, who built his early career at Porsche before stints as

Ferrari's chief technology officer and CEO of McLaren,

promised further details on his strategy in the autumn.

($1 = 0.8593 euros)