BMW Cuts Earnings Outlook for 2018

Mobility investments and currency fluctuations hurting bottom line.

by on Sep.25, 2018

BMW CEO Harald Krueger said the company's 2018 financial results will be impacted negatively by investments in mobility programs and currency fluctuations.

The BMW Group cut its guidance for the current financial year, noting it had expected 2018 to be a challenging year, due in part to additional upfront investments of around one billion euros on mobility programs that will mature in future years.

In addition, currency headwinds in the mid-to-high three-digit million-euro range compared with 2017 will negatively impact the company’s bottom line, BMW said in its update to investors.

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In the Automotive Segment, revenues are now forecast to be slightly lower than the previous year, compared with the previous expectation of slight year-on-year increase.

The earnings before interest and taxes margin in the Automotive Segment is now expected to be at least 7%, compared to the previous guidance the had margins 8% to 10%.

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BMW's Automotive segment sales are expected to dip slightly, despite new products like the BMW X2 M35i putting out 302 horsepower from a 2.0-liter twin-turbo 4 cylinder.

The group’s profit before tax is expected to show a moderate decrease from the previous year, compared with the previous expectation that earnings would match those of last year.

Factors influencing the reduction included the industrywide shift to the new WLTP test cycle has led to significant supply distortions in several European markets and an unexpected intense competition.

Increased goodwill and warranty measures are leading to significantly higher additions to the respective provisions in the Automotive Segment.

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Continuing international trade conflicts are aggravating the market situation and ing uncertainty. These circumstances are distorting demand more than anticipated and leading to pricing pressure in several automotive markets.

“The BMW Group remains fully committed to its goal of leading the transformation of the industry,” stated Harald Krüger, chairman of the Board of Management of BMW AG. “The company continues to strive for sustained high profitability,” he said.

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In 2017, the BMW Group sold more than 2,463,500 passenger vehicles and more than 164,000 motorcycles worldwide. The profit before tax in the financial year 2017 was 10.655 billion euros on revenues amounting to 98.678 billion euros.

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