BMW has issued its second profit warning in less than five months, saying costs linked to a restructuring programme will weigh on fourth-quarter results and leave its core automotive operating margin close to zero for the year. The programme includes 8,000 job cuts in Germany.
The German automaker reported third-quarter pretax earnings of €2.1 billion, down 11% from a year earlier and in line with analysts’ expectations. Revenue fell 6% to €30.4 billion.
BMW’s automotive operating margin narrowed to 3.4%, compared with 5.2% a year earlier. That was above the 3.1% forecast by analysts, but the company now expects a full-year margin between minus 0.5% and plus 0.5%. Excluding restructuring charges, it expects the margin to stay within its previous forecast range of above 2.0%.
The company said it would accelerate planned cuts to management functions. CEO Milan Nedeljkovic said BMW would intensify and speed up structural measures in response to developments in the industry.
Declining sales in China, the world’s largest auto market, contributed to the revenue drop. BMW’s sales there fell 22% in the first nine months of the year. The company said the decline was in line with a broader downturn in the Chinese auto market, where Western manufacturers have faced competition from lower-cost domestic rivals.
Sources: Investing.com News.