BMW issues profit warning as restructuring costs bite
BMW has cut its full-year outlook for its core car division, warning it could post an operating loss as restructuring costs weigh on the business. The German automaker said the car division’s operating margin is now expected to range between -0.5% and +0.5% for the year, down from a previous forecast of 1–3%. The warning came hours before third-quarter results showed pre-tax profit fell 11% and net profit dropped about 15% to €1.45 billion. Revenue declined almost 6% to €30.45 billion. The car division’s operating margin narrowed to 3.4% from 5.2% a year earlier.
Costs linked to restructuring, including 8,000 layoffs in Germany, could push the car business to break-even or a loss for the year. CEO Milan Nedeljkovic said: “Current developments in our industry call for decisiveness and swift implementation.” He added: “We will therefore specifically intensify and accelerate structural measures.”
BMW’s challenges mirror those of rivals Mercedes-Benz and Volkswagen as lower-cost Chinese competitors expand in Europe. Deliveries in China fell 24.8% in the quarter, while global deliveries dropped 6.3%. European and US deliveries rose 2.6% and 2.5% respectively. BMW plans to localise more of its supply chain in China to regain share.
