BMW predicts a sharp decline in its profitsMarch 20, 2019
German automotive company Bayerische Motoren Werke AG (BMW) on Wednesday warned investors about the possibility of a significant reduction in profits in 2019 and announced a plan to reduce costs by 22 billion euros.
According to the company, pre-tax profit in 2019 may be reduced by more than 10% compared with 2018. Last year, this figure fell by 7.8%, to 9.82 billion euros.
The profitability of the automotive business will be from 6% to 8%, which is below the long-term benchmark of BMW (8-10%).
“Our industry is facing a rapid transformation. A consistently high level of profitability is vital if we want to continue to manage change,” said BMW Director, Nicholas Peter. He warned that forecasts for the current year could be reduced even more if things change for the worse.
However, BMW expects a small increase in the supply of cars at the group of companies, by about 1.1%.
Cost reduction is designed to offset the effects of trade disputes and the unprecedented cost of developing electric vehicles.
In addition, BMW plans to thin out the existing model range and reduce the time to develop new models by a third.
The number of staff this year will remain unchanged.
Currency fluctuations and rising prices for raw materials will have a negative impact on the company’s results this year, the report says.
In the second half of the year, BMW expects to improve sales, revenue and profitability thanks to such new models as the X7 SUV and the modified BMW 3 Series Sedan.
BMW shares fell 3.8% in Frankfurt trading on Wednesday. The company’s capitalization has decreased by 15% in the last 12 months, to less than 50 billion euros.
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