German sports carmaker Porsche said it has significantly reduced its exposure to China as operating profit rebounded in the first nine months of the year despite falling revenue and vehicle deliveries.

The Volkswagen-owned company published its third-quarter earnings on Tuesday, announcing that operating profit was 1.74 billion euros ($1.94 billion) in the first nine months of 2026, compared with 40 million euros at the same time last year, when it booked around 2.7 billion euros in strategic restructuring costs.

Meanwhile, sales revenue fell 5.9% to 25.28 billion euros, while deliveries continued to decline, down 16% to 178,532. North America remained Porsche's largest sales region by volume.

China has historically been an important market for German luxury automakers, but they have struggled with growing competition from domestic brands, particularly in electric vehicles.

Porsche's China sales have fallen sharply in recent years amid intensifying competition from brands such as BYD, Geely and Xiaomi.

"Our geographically balanced sales footprint continues to provide resilience across different markets," Jochen Breckner, Porsche's chief financial officer, said in the earnings webcast on Tuesday.

"As you know, we have significantly reduced our exposure to China. This makes our overall business less dependent on developments from this challenging market environment."

Porsche shares were last seen trading 2.3% higher.

Porsche is also cutting thousands of jobs as part of a broader restructuring aimed at reducing costs and responding to weaker demand.

Citi: Porsche's underlying profit outpaces German luxury peers

Citi analysts said in a note Tuesday that Porsche's first-nine-month results were as expected, despite challenges including China.

"Despite challenging conditions, including exceptionally low deliveries, higher costs, and higher battery electric vehicle deliveries, Porsche's underlying EBIT remains very resilient and ahead of German premium peers," the analysts said.

They added that Porsche has laid out a plan to return to double-digit underlying operating profit margins, with recovery expected to start in 2028, and net cash flow expected to rebound to above its IPO levels by 2031.

"Whilst FY27 will remain a trough year, we still see a solid, well-supported and credible multi-year EBIT and net cash recovery starting financial year 2028 - unlike many peers," the analysts said.