BMW has issued its second profit warning in a year, saying the cost of restructuring—including 8,000 planned job cuts in Germany—will weigh on its results. The carmaker now expects its profit margin this year to be between -0.5% and 0.5%, down from the 4% to 6% range it considered possible at the start of the year.
The company said fourth-quarter costs linked to the restructuring were a factor in the downgrade. BMW is also writing off parts of earlier vehicle and technology generations as it moves quickly to launch a new generation of electric vehicles.
Third-quarter pre-tax earnings fell 11% to €2.1bn, while revenue dropped 6% to €30.4bn. Sales in China were down 22% in the first nine months, a decline BMW said was in line with the wider downturn in that market.
The operating margin in BMW’s core automotive business narrowed to 3.4%, from 5.2% a year earlier. That was above analysts’ 3.1% forecast. BMW said the margin would have exceeded 2% without restructuring charges, keeping it within its previous forecast range.
BMW said it would speed up cuts to management functions as part of its restructuring. Chief executive Milan Nedeljković said the company would intensify and accelerate structural measures, adding that China remained a key focus. BMW’s Neue Klasse model rollout begins in China this month with the launch of the iX3.
BMW’s warning follows a downgrade by Mercedes-Benz last week. Western carmakers have faced competition from lower-cost Chinese rivals, contributing to weaker sales in China and increased exports to Europe. Volkswagen has also faced significant restructuring costs, while Porsche reported a slight rebound after heavy charges last year as it reshapes its model range and scales back in China.
Sources: The Guardian Business.