BMW Cuts Profits Forecast, Blames Trade Disputes and Emissions Costs

News | September 25th, 2018 by 3
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Earlier today, BMW updated its guidance for the current financial year. BMW warned investors its 2018 revenues and profits will likely fall due to the costs …

Earlier today, BMW updated its guidance for the current financial year. BMW warned investors its 2018 revenues and profits will likely fall due to the costs of implementing new emissions standards in Europe and rising uncertainty stemming from the escalating global trade war. The revenue is now expected to fall slightly from the 88.6 billion euros it generated in 2017. BMW had also previously forecast profits to be on par with last year, but now expects a “moderate decrease.”

“The BMW Group remains fully committed to its goal of leading the transformation of the industry,” stated Harald Krüger, BMW CEO. The company continues to strive for sustained high profitability as the foundation of its Strategy NUMBER ONE > NEXT. In addition to the continuation of the current product roll-out, ongoing cost and efficiency measures will also be intensified.”

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This revision is mainly due to the following factors:

  • The BMW Group implemented the requirements of the WLTP regulations early. The industry-wide shift to the new WLTP test cycle has, however, led to significant supply distortions in several European markets and an unexpected intense competition. Thanks to its flexible production and sales strategy, the BMW Group is responding to this increased competition and is reducing its volume planning to focus on earnings quality.
  • Increased goodwill and warranty measures are leading to significantly higher additions to the respective provisions in the Automotive Segment.
  • The continuing international trade conflicts are aggravating the market situation and feeding uncertainty. These circumstances are distorting demand more than anticipated and leading to pricing pressure in several automotive markets.

BMW had already expected 2018 to be a challenging year, due to the more than 1 billion euros in investments it is making in mobility, along with currency headwinds.

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