BMW warned on Tuesday that 2018 earnings, margins and profits would all be lower than previously thought, as the German carmaker battles both rising costs and trade headwinds.
The group cited a number of factors, including costs to implement new emissions standards known as WLTP, which has led to “significant supply distortions in several European markets.”
It also blamed the US and China trade tit-for-tat, citing “continuing international trade conflicts [that] are aggravating the market situation and feeding uncertainty.”
China is BMW’s biggest market, while its largest production plant is in the US, and from there it ships tens of thousands of premium SUVs to China.
The Munich-based maker of luxury cars said automotive revenues are now forecast to be “slightly below” 2017 levels, versus a prior forecast for a slight increase.
EBIT margins in the automotive segment are now are expected to decrease from 8.9 per cent in 2017 to “at least 7 per cent”, meaning BMW could miss the 8-10 per cent margin corridor it has met for every quarter since early 2010. Maintaining this high margin while it invests in new technology has been a key goal for the carmaker, and one that has tended to be reiterated every quarter.
Profit before tax is also expected to moderately decline, compared to an earlier projection for it to match 2017 levels.
The profit warning is not especially surprising. BMW’s chief rival, Mercedes-parent Daimler, cut its own targets in June. On Monday, the independent investment bank Evercore ISI said BMW was facing myriad headwinds and it cut back its own estimates.
“The BMW Group remains fully committed to its goal of leading the transformation of the industry,” said Harald Krüger, chief executive.
