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BERLIN – Actions in
BMW
AG
BMW -5.46%
Luxury car manufacturers have warned that emissions-related costs, product recalls and fierce price competition in global trade disputes would reduce profits this year.
BMW said the main reason for the decline in the outlook was the cost of adapting to the new global rules for emissions tests to measure pollutants, greenhouse gas emissions and greenhouse gases. 39, fuel economy. This test, called WLTP (test procedure for harmonized light vehicles worldwide), came into force in Europe in September and BMW incurred significant costs at the beginning of the year to adapt its vehicles to the new regime.
The profit warning comes as other companies in the sector, such as
Daimler
AG
and supplier
Continental
AG
, who denounced the disruption of global markets and supply chains due to political tensions and the trade dispute between China and the United States.
Several industry analysts saw BMW's unexpected warning as a watershed in the industry, signaling that regulatory challenges and the volatility of global trade would affect sales more and hurt corporate profits. Analysts expected the performance of the auto sector during the three months to October to improve at the end of the year, but now they fear that it will continue. .
"Today's warning has extinguished the idea that the sector would rebound after a well-established third quarter," said Patrick Hummel, automotive analyst at UBS.
Analysts have reduced their profit outlook for BMW by about 1.2 billion euros (1.4 billion US dollars), bringing back consensus estimates to about 9.7 billion euros.
When BMW set its initial targets for 2018 early in the year, it was planning a difficult year because of the initial costs of about 1 billion euros for the development of new technologies and headwinds in the fork . "
This assessment now seems optimistic.
The company now expects pre-tax profit for the full year for the entire company "which will show a moderate decline" over the previous year and the turnover of its automotive business "slightly inferior".
Previously, BMW had forecast a slight increase in auto sales and pre – tax earnings at about the same level as last year. In 2017, pre-tax income was 10.7 billion euros and the automotive business accounted for 88.6 billion euros.
The Munich-based automaker also lowered its profit margin forecast in the automotive sector to "at least 7%," compared to an earlier estimate of 8% to 10%.
The company also reported an increase in goodwill and warranty costs related to product recalls and the impact of price reductions on vehicles sold in China as a result of the US trade dispute. and China. However, BMW has refused to quantify the total financial impact of these problems.
The warning sent the company's shares down 5.7% to 78.75 euros in the mid-afternoon trading in Frankfurt. They then recovered at € 80.35, down 4%.
All major European automakers have abandoned today's earnings following BMW's profit warning. The biggest loser was
Peugeot
HER,
which dropped 2.5% after the news, while
Fiat Chrysler Automobiles
NV was the least affected, down 0.5%.
Write to William Boston at [email protected]
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