TheChek News Flow

Man City found guilty of all serious financial breaches

Commission says schemes distort finances by over £900 million

City deny wrongdoing and plan appeal

LONDON, Sept 29 (Reuters) - Manchester City used "sham" commercial contracts as part of schemes to inflate revenue and understate costs by more than £900 million over nearly a decade, the Premier League said on Tuesday after an independent commission ruled the club guilty of serious breaches of ​financial rules.

The commission found City guilty of all charges relating to breaches of the league's financial rules over nine seasons, between the 2009-10 and 2017-18 campaigns, as well as ‌three of four charges concerning their failure to co-operate with the investigation.

The club, which denies wrongdoing, said in a statement it would appeal "on the basis that the opinion contains clear material errors, of law, principle and fact, and is unsafe".

No sanction has yet been imposed, leaving unresolved the potential consequences for a club that has dominated English football over the past decade.

A significant punishment could affect past and future title races, European qualification and the distribution of tens of millions of pounds in prize money. ​The case has also raised wider questions about financial governance, competitive integrity and the Premier League's ability to hold its most powerful clubs to account.

An independent commission found that City arranged “sham” contracts ​that misrepresented the true agreements with several commercial partners and relied on similar agreements with others to inflate their revenue and reduce costs artificially, the league ⁠said.

It found that several sponsors were required to pay only part of the fees recorded in the relevant agreements, with the balance supplied by the club's owner Abu Dhabi United Group Investment & Development Ltd (ADUG).

The commission also ​identified arrangements funded by ADUG that allowed City to record lower operating expenses.

The schemes inflated City’s revenue and reduced their costs, creating the appearance that the club complied with financial regulations, the league said.

The report also found ​that a number of the club's witnesses presented false evidence at the hearing, which ran for 42 days, and some knowingly misled the commission.

The commission concluded that City would have breached both the Premier League’s and UEFA's spending limits “by a very substantial amount” had the agreements been reported accurately.

“The core decision... details how the club systematically broke Premier League Rules for nearly a decade," said Richard Masters, the chief executive of the Premier League.

Masters described the case and decision as “the most significant in ​Premier League history” but said key elements remained unresolved, most notably the sanction to be imposed.

"Now we have the Commission’s decision, we are committed to moving swiftly through the remainder of the process, to provide certainty ​for the League, our clubs and fans,” he said.

City said they were disappointed and surprised by the commission's opinion.

"The Club is innocent of the accusations made by the Premier League and a comprehensive body of irrefutable evidence exists ‌in support of ⁠all of its positions, relating to this case," the club said.

"Manchester City FC will now pursue the appeal avenues open to it, on the basis that the opinion contains clear material errors, of law, principle and fact, and is unsafe."

The club has until Friday to lodge an appeal. When asked by Reuters whether an appeal by City would automatically suspend any sanction, a league representative said they could not "get into the process" due to confidentiality.

City chief executive Ferran Soriano addressed staff in a video in which he rejected the allegations and accused the commission of supporting the league's "conspiracy theory".

"The whole Premier League case against us is based ​on a single false accusation, that the owner's personal ​money was somehow and secretly put into the ⁠club via some sponsors from Abu Dhabi," Soriano said.

"This is just not true. Irrefutable evidence has been provided to the Premier League commission that shows it could not happen and that it did not happen."

The announcement came near the end of the European Football Clubs general assembly in Copenhagen, leaving representatives of English clubs ​checking their phones during the closing minutes.

Representatives of Arsenal and Nottingham Forest declined to comment when approached. A Manchester United representative also declined to comment when ​contacted by Reuters.

EFC Chairman Nasser ⁠Al-Khelaifi reserved judgment on the case and praised Soriano's work as an EFC board member.

"His knowledge, you know, throughout his career is fantastic. That’s why I think they did a lot of positive things also," Al-Khelaifi said.

British sports minister Lisa Nandy said the league's report was "incredibly stark" and called for a swift and fair conclusion to the case.

"This is not only causing a lot of concern for Manchester City fans. It's also obviously causing a ⁠lot of concern ​for all fans of Premier League football," she told the BBC.

"Premier League is one of our crown jewels. We need to ​see the investigation concluded swiftly and fairly, but swiftly particularly because we need to uphold the integrity of the game."

Yasin Patel, a barrister specialising in sports law at London's Church Court Chambers, said he expected City to fight "with all their legal might."

The IPO market appears to have stalled, which could be a problem for Anthropic. Fitness ring maker Oura’s postponement of its IPO on Tuesday, citing “uncertainty in the IPO market,” followed similar moves by metals producer Amaero last week and Holtec Nuclear Corp. the week before that. Then there’s SB Energy, the SoftBank-controlled power developer for data centers, which made public its IPO paperwork on Sept. 1 (two days before Oura did so) but hasn’t yet begun to market the offering.

You don’t have to be a rocket scientist to figure out what’s going on. In its statement explaining its IPO postponement two weeks ago, Holtec mentioned “headwinds” including rising energy costs, trade tensions, military conflicts and rising interest rates. In short, it’s the world we live in. On top of that, Holtec—which sells to data centers—cited “uncertainty over data center development.”

To be sure, companies with a risky story or overhigh valuation face a particularly tough time going public in a troubled market like this one. Oura, which claimed to be seeing “strong demand” from investors, had proposed a pricing range that implied a valuation arguably twice as high as it should have been. (Bloomberg reported Tuesday the valuation caused some investors to push back.) And as we pointed out on Sunday, Oura reminded some on Wall Street of other single-product hardware firms that had not done well.

SB Energy is in a different situation, one closer to that of Nscale which has also filed to go public. Both have ambitions to become major AI data center operators but are still very early in their development. As we pointed out in this piece, SB Energy doesn’t yet have any data centers in operation. Nscale‘s business isn’t quite as embryonic but as we outlined in this analysis on Tuesday, Nscale has to persuade investors of its ability to raise financing for the data centers it needs to build. A person with knowledge of the situation tells me Nscale is moving forward with the IPO process. While that may be true, I wouldn’t be surprised if we wake up someday soon to see the news that Nscale has decided to postpone.

What does all this mean for Anthropic, which had been expected to go public sometime soon, in hopes of raising close to $100 billion? A choppy market could complicate those aspirations. Moreover, the leak to Reuters on Monday night of Anthropic’s confidential IPO prospectus highlights the risks for the company. Anthropic, according to Reuters, warns in the filing that AI poses “existential risks to humanity.” It also details the financial risks. We already know debt investors are getting more picky about financing data centers and chips, which could complicate the data center build-out so important to Anthropic’s growth. All in all, the question now may be not whether Anthropic delays its IPO, but when.

It’s turning out to be a great year for venture exits—as long as you’re talking about M&A.

Take Monday’s news that Advanced Micro Devices would purchase Fei-Fei Li’s World Labs. The $8.2 billion all-stock purchase of the two-year-old AI startup adds to the growing list of such deals this year, which include SpaceX’s purchase of Cursor, Nvidia’s purchase of Hugging Face and Stripe’s acquisition of OpenRouter. The sale is also another win for Martin Casado’s infrastructure team at Andreessen Horowitz, which was World Labs’ largest shareholder and owns nearly 14% of the company, I reported.

An expected IPO gusher, on the other hand, is at serious risk of turning into a drought. On Tuesday, health-tracking wearable company Oura said it was delaying its IPO, previously expected to take place later this week, blaming “market uncertainty.”

There are definitely signs of uncertainty: The Federal Reserve just hiked rates to counter inflation; mortgage rates have topped 7%; and average gas prices have sprinted past $6 a gallon in states like California. Then there are some Silicon Valley factors. A lawyer who works with venture firms and startups told me today that AI leaders’ constant sounding of alarm bells on safety are also contributing to the market uncertainty.

But investors tell us that Oura’s decision may be more particular to how it structured its listing. One of Oura’s major investors, Forerunner Ventures, intended to fully exit its position—a roughly 9% stake—at the IPO, according to its filings. The intended sale, of over 28 million of shares worth about $1.2 billion at the midpoint of the proposed IPO price range, spooked potential investors in the IPO, who saw the sale as a bearish sign, our sources tell us. Indeed, no major shareholders sold when Cerebras listed at a $56 billion valuation in its IPO earlier this year. And major SpaceX shareholders like Valor Equity Partners and DFJ Growth also held onto all of their shares in the June offering.

Forerunner, known as a premier consumer investor before the AI boom, took its lumps when companies like makeup brand Glossier lost their sheen. It raised a $500 million fund, its seventh, in November 2024 and has since invested in AI companies like voice dictation company Wispr Flow and assistant startup Town. It’s not clear why Forerunner intended to sell its stake in Oura at the IPO. A representative from the firm didn’t respond to requests for comment.

But Forerunner’s planned sale wasn’t the only warning sign. The target valuation was too high for some prospective IPO investors, people familiar with the discussion said. As Martin wrote earlier this week, the mid-point of Oura’s expected $40 to $44 pricing range looked to value the company at nine times this year’s estimated revenue. That was much higher than other niche hardware makers like Sonos and about on par with the far more diversified Apple. Unhelpfully, Wall Street analysts had started to draw comparisons between Oura and GoPro, the action-camera maker that skirted insolvency earlier this year.

To be fair, Oura isn’t under the gun to go public: It reported $60.8 million in net profit on $1.2 billion in revenue in the nine months ended June, though it posted a loss in the June quarter. Most of what it would have raised in the IPO would go to satisfy tax payments related to employee stock awards.

Delaying its IPO could give Oura time to reconsider how much existing shareholders will sell in the offering, the person who has spoken to the company’s executives said. Oura could possibly still go public in the fourth quarter of this year—closer to the holiday season, when good tidings (and sales) may relieve the fall gloom. — Valida Pau contributed to this report.

Navy Chooses Boeing to Build Next-Generation Jet Fighter

The more than $20 billion award for F/A-XX adds to string of wins for company’s defense business

The Navy chose Boeing BA 1.78%increase; up pointing triangle to build its next-generation jet fighter, the latest in a run of contract wins at the aerospace giant’s military unit.

The deal, worth more than $20 billion, tasks Boeing with building the next-generation jets that will eventually replace the carrier-launched F/A-18 Super Hornet in the 2030s, the Navy said. Boeing beat Northrop Grumman NOC -0.24%decrease; down pointing triangle, its only rival in the competition after Lockheed Martin LMT -1.14%decrease; down pointing triangle dropped out of the running last year.

The jet, which the Navy calls F/A-XX will “deliver a decisive combat advantage for the warfighter,” Michael P. Duffey, undersecretary of defense for acquisition and sustainment, said in a statement.

The deal makes Boeing the sole provider of sixth-generation tactical fighters for both the Navy and Air Force. Sixth-generation aircraft will likely include more advanced stealth features than their fifth-generation predecessors, sensors that use artificial intelligence and be armed with lasers or hypersonic weapons, according to the Congressional Research Service. They will also likely have more advanced engines and operate alongside drones.

Lockheed Martin, which makes the F-35 stealth fighter, which is flown by the Air Force, Navy and Marine Corps, is the only maker of fifth-generation jet fighters for the U.S. military.

Boeing last year won a major award to build the next fleet of Air Force jet fighters, dubbed the F-47. The deal was announced by President Trump in the Oval Office alongside Defense Secretary Pete Hegseth and then-Air Force chief of staff Gen. David Allvin.

The decision could stretch the company’s already busy production lines. Boeing has struggled to build drones that could refuel other aircraft. The drone was supposed to fly for the first time in 2021, but didn’t have its first flight until April, according to a Pentagon assessment. It is not expected to begin operations until 2029, about 4½ years later than planned.

Boeing booked more than $5 billion of losses on its biggest defense contracts in 2024 and posted another $800 million loss in 2025. The losses include more than $2.7 billion in charges for its KC-46, a refueling tanker for the Air Force.

Executives have vowed to steer clear of fixed-price development contracts that risk burdening the company with especially steep costs. Boeing Chief Executive Kelly Ortberg earlier this month said the space and defense unit had improved dramatically but still had issues to address.

Northrop Grumman said in a statement that it “offered a highly survivable, digitally advanced sixth-generation fighter to the U.S. Navy. We look forward to receiving additional information about their selection.”

The Gap Between the Rich and the Very, Very Rich Is Getting Wider

The 0.1% holds about 15% of the nation’s total wealth, with average household wealth of over $200 million each

The ultrawealthy aren’t just pulling away from average Americans. Buoyed by a stock-market boom that has added trillions of dollars to their net worth, the extremely rich are even pulling away from other rich Americans.

The top 0.1% wealthiest Americans have seen their total wealth more than double since the end of 2019, according to new data from the Federal Reserve. The year the pandemic started was when the ultrawealthy began to pull away from other rich groups, according to a Wall Street Journal analysis of Fed data.

In dollar terms, the very richest Americans have gained a total of $14.5 trillion in wealth over that period, with most of that—about $10 trillion—coming from gains in stocks and mutual funds, according to the Fed data, which runs through the end of June.

The 0.1% now control about $28 trillion, or about 15% of the nation’s total wealth, which amounts to nearly $186 trillion. The average wealth for a household in this group is more than $200 million.

As of 2022, the minimum for the top 0.1% was $45.8 million, according to the most detailed data available from the Fed. With wealth among the group up by roughly 50% since then, that threshold is much higher now.

The people who fall into this group aren’t usually traditional salaried workers. Rather, they are much more likely to be the owner of a bunch of car dealerships or an heir living off investment income.

The ultrawealthy’s recent gains from the stock market dwarf the total wealth of the bottom 50% of all Americans, which is about $4 trillion. That bottom group has actually seen their wealth rise more than any other group on a percentage basis, thanks to a combination of rising home values and pandemic-era government relief that swelled bank accounts and helped pay down debt. Nevertheless, the bottom half’s share of total wealth, at an average of about $63,000 a household, comes to just 2.3% of the nation’s total wealth. The average household in the top 0.1% holds over 3,000 times as much wealth as a bottom-half household does.

In the top 0.1% by wealth, 37% earn most of their income from businesses, and 26% derive it from capital gains, according to an analysis of Fed data from economics professors Owen Zidar and Eric Zwick for their recent book “The Everywhere Millionaire.” Only 10% derived most of their income from wages and salaries.

The biggest factor in this phenomenon is that wealthy people simply own a lot of stocks. In the year ended June 30, when the S&P 500 gained 21%, the top 0.1% received nearly $4 trillion of new wealth from the market.

The roughly 137,000 households who make up the nation’s top 0.1% had already become richer in comparison to everyone else in recent decades, thanks to higher incomes and lower tax rates. Now the stock-market boom, driven by strong corporate earnings and highflying tech stocks, is powering their wealth even further.

By comparison, the rest of the top 10% of richest Americans gained $38.2 trillion in wealth over the same period, but it was split among nearly a hundred times as many households.

Americans more broadly have become richer over time, as rising wages for college-educated workers, entrepreneurship and the stock market have lifted wealth for millions of Americans. The housing market has also increased the wealth of Americans who own homes.

Yet many others have been locked out of prosperity, and entrenched inflation is pressuring even those with six-figure salaries. Growing wealth at the very top has become a political flashpoint, helping fuel the rise of Democratic socialist politicians such as New York City Mayor Zohran Mamdani.

Wealth is measured as a household’s assets, like stocks and home equity, minus their liabilities, like mortgages and credit-card debt.

“The stock market’s ripping, and so if you’re in the stock market more, it has been really great,” said Zwick.

Some wealthy people borrow against their booming stock portfolios to fund their lifestyle. But even investors who keep their money in the market often spend more when stocks go up, because they feel good about their personal finances, a phenomenon economists call “the wealth effect.”

The official manufacturing purchasing managers index returned to growth in September

China’s economy showed signs of improvement at the end of the third quarter, with official and private gauges of factory, services and construction activity all picking up.

Headline readings from four indexes came in above the neutral 50 threshold in September, pointing to resilient demand even as the war in the Middle East continues to disrupt supply chains and drive up costs.

Wednesday’s PMI prints are reassuring, said Capital Economics’ Nguyen Hoang Nam, attributing the pickup in momentum to China’s fiscal support starting to kick in.

Construction activity improved markedly as typhoon disruptions faded, while robust foreign demand continued to buoy manufacturing, the China economist said in a note.

The official manufacturing purchasing managers index returned to growth in September, ending a two-month streak of contraction. The headline figure rose to 50.1 from 49.8 in August, in line with economists’ forecasts in a Wall Street Journal survey.

The RatingDog PMI compiled by S&P Global—a private index that is more export-oriented—increased to 52.1 from 51.5. That marked a five-month high and a 10th straight month above the no-change threshold.

Total new orders grew for a 16th consecutive month, fueled by solid client demand and interest in building safety stocks as purchasing costs climb, said Yao Yu, founder of RatingDog.

New export orders indicated robust overseas market conditions too, though price pressures also strengthened, driven by raw-material prices, particularly for metals and oil.

A rebound in selling prices eased some of the margin pressure businesses have experienced in recent months, but cost inflation and continued supplier delays warrant attention, Yu said.

Meanwhile, China’s nonmanufacturing PMI, which covers service and construction activity, also swung back into growth territory, rising to 50.2 in September from 49.0 in August, the National Bureau of Statistics said.

The RatingDog services gauge pointed in the same direction, with growth accelerating for a second straight month, though at a modest pace.

Service providers were generally optimistic about the outlook for the year ahead, citing stronger market conditions, company expansion plans and new projects, the S&P survey showed. The degree of confidence rose from August and was the joint-highest recorded in the year to date.

Still, intense competition led services firms to discount prices in September, suggesting that it could be challenging to sustain the overall momentum in activity as demand remains fragile.

All told, Capital Economics views the PMIs in a positive light, showing better labor market conditions and more optimism among Chinese businesses.

“With policy support efforts ramping up, we expect a further recovery over the rest of the year,” said Nguyen.

Economists at ING noted that China’s State Council has already signaled more urgency in delivering stimulus, while the central bank has expanded its suite of targeted easing measures.

Further support is likely to be rolled out, which “should help China meet this year’s GDP target of 4.5%-5.0%,” said ING economist Lynn Song.

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Vanguard warns France is ‘degrading credit’ as borrowing costs surge

Iran war has exacerbated fiscal pressures on Paris as budget battle looms

Asset management giant Vanguard has warned that France’s “degrading” creditworthiness is likely to drive up its borrowing costs even further, as investor concerns mount over the government’s inability to bring down its budget deficit.

The firm, which manages $12tn in assets, warned that the presidential election in April could further darken the outlook for France’s stretched public finances if candidates from the far left to the far right refuse to back unpopular spending cuts, and the country could suffer more credit downgrades.

“People forget how bids in [debt markets] that become the centre of geopolitical issues can disappear in times of crisis,” Ales Koutny, head of international rates at Vanguard, told the FT, referring to demand from investors to buy the bonds.

“[At the election] next year you may have some political parties doing some grandstanding and that might lead to further ideas of fiscal loosening,” he added. The firm has a smaller-than-benchmark weighting in French government bonds.

Vanguard’s comments highlight France’s status as the new focal point for market concerns over European debt sustainability, with its bonds having suffered disproportionately in this year’s bond sell-off, amid investor concerns over the government’s ability to reduce the fiscal deficit to below the target of 5 per cent of GDP.

Its 10-year borrowing costs have suffered the biggest jump among the G7 since the Iran war began, rising from 3.2 per cent to a post-2008 high above 4.8 per cent, as concerns over its finances add to a broader sell-off in global government debt.  

French bonds’ so-called spread, or extra borrowing cost, over German debt reached above 1.1 percentage points this month for the first time since 2012, in a sign of mounting investor anxiety. It now pays about 0.2 percentage points more to borrow than former debt hotspot Italy, a record spread in data stretching back to the 1990s. 

Prime Minister Sébastien Lecornu is facing a budget battle in the coming weeks that could lead the opposition to topple his minority government, in a further sign of the political paralysis that has marred the end of President Emmanuel Macron’s last term.

A suggestion by far-left presidential hopeful Jean-Luc Mélenchon that France could “throw . . . into the fire”, or in effect cancel, some of its national debt held by the central bank has fuelled concerns about a lack of political appetite to rein in borrowing.

France was “a long-term degrading credit”, Koutny said, adding that its spread with Germany rising above 1.5 percentage points is “a strong possibility for us” if the fiscal situation worsens. He compared the situation to Italy’s spread widening by more than two percentage points following its inconclusive 2018 general election, in which populist parties surged in popularity. 

France was downgraded by Scope earlier this month to A plus from AA minus, with the rating agency citing “continued deterioration in the fiscal outlook, characterised by persistently high fiscal deficits, rising interest expenditure and a growing public debt burden”.

In a sign of the sovereign debt’s diminishing safe-asset status in the minds of investors, French yields have in recent years moved above those of big French multinationals such as LVMH for debt with similar maturities.

Mizuho strategist Evelyne Gomez-Liechti said that France was “increasingly trading more like a lower-rated sovereign than an A-rated” issuer, but that without a catalyst to stabilise the market, “few investors appear willing to step in front of the widening move”.

Viewed as one of the biggest victims of rising inflation and the global debt squeeze, bond investors have responded poorly to Lecornu’s recent proposal for next year’s budget, which includes a €54bn savings drive. His chances of passing it through a hung parliament also appear slim given that opposition presidential candidates have little reason to compromise, say analysts.

“Markets have grown increasingly anxious about fiscal metrics,” said Pooja Kumra, a rates strategist at TD Securities.

The government has said the deficit will widen to 5.5 per cent of GDP this year, well above target. Slowing economic growth — France now lags its neighbours — has also complicated efforts to improve its finances.

Nevertheless, some investors are buying the dip. Gareth Hill, a fund manager at Royal London Asset Management, said the firm had taken advantage of the recent jump in French yields to bet that the debt will outperform that of Italy and Germany. 

“We think a lot of the concerns over France are already reflected in the price,” he said, adding that some of the recent price action seemed to be driven by investors being forced to sell their positions as they hit internal risk limits.

In a note earlier this month, HSBC’s European rates strategist Chris Attfield said France’s debt was the cheapest it had been since at least 2008, whether judged against its Eurozone peers or on its debt-to-GDP metrics.

“A price will be found where the market clears, and it’s more a question of where that settles,” he added.

Agence France Trésor said in a statement on Tuesday that it planned to sell €340bn in medium- and long-term debt net of buybacks next year, while borrowing costs were expected to reach €72.9bn. 

Such an issuance would represent a record amount and a roughly 10 per cent increase from 2026.

Porsche boss rejects EV sceptic label as ‘unfair’ — just don’t expect an electric 911

Michael Leiters says carmaker’s focus on new combustion engine models means a more ‘balanced offer’ of electric and petrol cars

Porsche’s new chief executive has pushed back against concerns that the German sports-car maker was overcorrecting its electric strategy, arguing that it was “unfair” to label him an EV sceptic.

Since taking the helm of Porsche in January, Michael Leiters has slimmed down the Volkswagen-owned group to focus on developing new petrol models to revive profits hit by its ultra-ambitious shift to EVs.

To offset plummeting sales in China, Leiters is seeking to revive Porsche’s profits with a new combustion engine version of its best-selling Macan in 2028. For its new K1 luxury SUV, Leiters said the company had not decided which engines to choose, but added that there was “still more appetite for petrol cars” in the upper segments.

The costly and lengthy product reshuffle — combined with Leiters’ well-known reservations on EVs — has raised some concerns about Porsche’s long-term EV strategy at a time when Chinese premium carmakers are trying to make inroads into Europe.

However, Leiters told the FT, in his first interview with the international media, that his reputation as an EV sceptic was unjustified.

“I think that’s unfair,” he said, adding: “We have to recover our petrol strategy, but I’m very positive that once we have the Macan with the petrol engine, we have a very balanced offer for our customers on electric and petrol cars.”

The company is still going ahead with the electric version of its 718 sports car, which was already being developed when he took over. Still, when it comes to its signature 911 model, Leiters insists that “there won’t be a 911 electric”.

Porsche started scaling back its EV strategy before Leiters was appointed. However, those who have worked with him have noted that he had long seemed unconvinced that demand for electric models would take hold at the luxury end of the market. During his time as McLaren chief executive, Leiters told the FT that EV technology was not ready for sports cars.

Analysts have cautioned that Leiters needs to strike the right balance between reviving the popular petrol-selling models while ensuring that Porsche does not fall behind in the longer-term EV transition that is now increasingly led by BYD and other Chinese carmakers.

“We have to be careful,” Leiters said to ensure that the company was not making a “double investment” in petrol and EVs in the same vehicle segment. “That is one of the tricky questions for our future.”

In the case of Macan, for example, the consumer feedback has been explicit. Sales of the electric version fell 40 per cent year on year during the first half, while the combustion version rose 2 per cent, even as Porsche had stopped selling the petrol model in Europe over a failure to comply with EU cyber security regulations. 

Leiters said he was not concerned that Porsche would fall behind in EVs, especially with its access to VW’s technologies. Leiters said achieving cost parity between EVs and petrol models in the short term was unlikely, meaning higher EV sales would continue to be dilutive to Porsche’s margins.

Since taking over as chief executive, the German boss has streamlined non-core assets and reached a deal with unions to cut 9,000 jobs — or roughly 20 per cent of its workforce — by 2035. 

Leiters said the company needed to “dramatically” reduce its sales ambitions and scale, saying it had become “overblown” during two decades of growth fuelled by China demand.

“With a difficult environment, we have to rethink our business model and the scale of our organisation,” he added.

At its capital markets day next week, Leiters is expected to set out a far more realistic outlook on China, while he will “dramatically lower” its break-even point compared with when it had annual vehicle deliveries of about 320,000 and an operating profit margin of 18 per cent in 2023. Last year, its margin plunged to 1.1 per cent on sales of roughly 280,000 cars due to its China performance and costly retreat from EVs. 

Despite the swift restructuring measures Leiters has undertaken, sales in China have continued to suffer with deliveries falling 32 per cent in the first half. Volkswagen also recently issued a profit warning, blaming a €6bn writedown on the valuation of its stake in Porsche and a slowdown in the world’s largest car market.

Leiters said there were no additional job cuts planned and medium-term operating profit margin targets were unchanged at between 10 to 15 per cent, but warned China would continue to pose “a huge challenge”.

He predicted “an incredible inflation of product launches” in the Chinese market, with about two new products being rolled out every day. He called it “self-destroying” and predicts consolidation, but added, “the question is, how long will it take?”

Leiters has shut down the group’s electric bike, batteries and software subsidiaries, while selling off its IT consulting business to Tata Consultancy Services. Earlier this month, Porsche also raised about €1bn, selling its stakes in Bugatti Rimac — its joint venture with electric hypercar maker Rimac — and the Rimac Group.  

Porsche still faces a major product gap until the new petrol version of the Macan is ready in 2028. In the meantime, Chinese rivals such as BYD and Xiaomi are seeking to break into the premium market long dominated by German players.

Porsche and other German manufacturers would be able to match Chinese speed and cost, Leiters said, were it not for the big gap in labour and energy costs, as well as Europe’s regulatory environment.

“Fix that and we will be there,” he said, adding the strengths of European manufacturers should not be underestimated. “If we have an even playing field, we don’t have to fear any competition.”

Armani’s last wishes may sell his fashion empire short

The fashion house is set to kick off a three-way process with LVMH, L’Oréal and EssilorLuxottica for the sale of a minority stake

Successful dealmaking is all about reading the moment and the room. This is particularly hard to do, though, from beyond the grave. That’s a problem for fashion house Armani which, in accordance with the instructions left by its founder, is poised to kick off a three-way process with LVMH, L’Oréal and EssilorLuxottica for the sale of a minority stake.

In principle, Giorgio Armani’s request makes sense. His fashion group is potentially attractive to an outside investor. As one of the first movers in a now crowded space, it boasts strong name recognition and a classic look that appeals to a large audience. And, while one might quibble with the choice of “preferred buyers” — two out of three aren’t even in the fashion business — any one of them would help steady the ship upon its captain’s departure.

Trouble is, this isn’t a good time for Armani — which Lex has in the past calculated could be worth €6.5bn — to sell. The luxury slump has pushed LVMH’s share price down nearly 40 per cent this year and the sector bellwether has been trimming its portfolio, offloading Marc Jacobs earlier this month. Meanwhile, EssilorLuxottica has gone all in on Meta’s smart specs and L’Oréal has recently written a big cheque to Kering, potentially making them even less likely to want to leap into the fray.

Hence the idea currently doing the rounds of the preferred buyers splitting the 15 per cent of Armani on offer three ways. For a few hundred million euro each, EssilorLuxottica and L’Oréal would protect their licences for Armani glasses and beauty respectively, while LVMH, perhaps aided by the judicious use of call options, would stake out its territory for a potential future acquisition.

But while such a patchwork solution might suit the buyers and comply with the founder’s last wishes, it is by no means clear that it would be best for the company. Armani’s revenue declined 2.8 per cent in 2025 and, over time, the group has sprouted a whole host of more-or-less affordable sub-brands. It could do with some vigorous remodelling, which a consortium of heirs and minority investors is unlikely to deliver.

That’s a reminder to entrepreneurs the world over that being a visionary businessman and actually being able to see into the future are two very different things.

All roads lead to Nvidia’s balance sheet

Nvidia has met with insurance companies to see if they will take on some of the risk of lending against its chips, as the tech giant seeks to enlist ever wider parts of the financial world to help customers buy more of its semiconductors.

The chipmaker had approached insurance companies about structures that could allow it to shift some of the risk of semiconductor financing to insurers and other investors, people familiar with the talks told the FT.

One idea under discussion is insurance against losses on loans to cloud computing companies, in case these so-called neoclouds default and the Nvidia chips pledged against their debt cannot be resold for enough to repay lenders. But beyond that structure, people familiar with discussions said Nvidia had explored using insurance groups to syndicate risk to alternative investors such as hedge funds.

Nvidia’s head of financial solutions Ingemar Lanevi was leading the talks, people said, adding that they are at an early stage and may not result in any deals.

But the discussions illustrate how Nvidia is casting around for new channels of capital to finance its chips, experimenting with structures across Wall Street, private capital and now the insurance world as it tries to unlock demand from buyers beyond a handful of tech giants.

The talks come as insurers launch a flurry of products aimed at the AI infrastructure build-out, including coverage for credit risk and contract breaches caused by power outages.

Now some are also offering coverage against falls in chip values. Companies including Forward Compute and American Compute have sprung up to offer residual value insurance, covering clients against a decline in the value of tech equipment.