German high-end carmaker BMW yesterday reported a steep drop in quarterly profit as new EU emissions tests, global trade tensions and costly recalls weighed on its bottom line.
The Munich-based group said that July-September net profit slumped 24 percent year-on-year to 1.4 billion euros (US$1.6 billion), falling short of analyst expectations.
Third-quarter revenues were up 4.7 percent to 24.7 billion euros, supported by brisk demand for the group’s vehicles, which include the compact Mini and luxury Rolls-Royce.
Photo: AP
The group had already issued a rare profit warning in September, when it was forced to lower its full-year outlook in the face of a series of setbacks.
Chief among them was the introduction of tough new EU pollution tests known as WLTP, which sent rival carmakers scrambling to shift non-compliant models before the Sept. 1 deadline.
This resulted in “unexpectedly intense competition,” BMW said.
The group has also been unnerved by US President Donald Trump’s trade row with China and his threats to slap steep tariffs on auto imports from the EU.
“The ongoing international trade conflicts had the effect of aggravating the market situation and feeding consumer uncertainty,” said BMW, which owns factories in Europe, the US and China.
The automaker also felt the pinch from a mass recall of diesel-powered cars over a fire risk in the third quarter, and increased spending on electric and self-driving cars.
“Particularly in these volatile times, we are maintaining our focus on the future and taking the decisions that will lead to tomorrow’s success,” chief executive Harald Krueger said.
BMW confirmed its trimmed outlook for this year, forecasting revenues from its car business “slightly lower” than last year, rather than the slight increase previously expected.
Group-wide profit before tax “is expected to show a moderate decrease” year-on-year, rather than staying around last year’s level of 10.7 billion euros, it said.
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