Profit warning: the BMW Group reduces Outlook for 2018

The BMW Group adjusts its Outlook for the current year is 2018 and revised the forecasts downwards. The group’s earnings before taxes in 2018 will therefore lie on the same level as the Record level of the previous year, but just below it. Consequently, the EBIT margin drops and falls out of the target corridor of 8 to 10 percent, according to the updated forecast, the BMW Group is expected to be only “at least 7 percent.” For sales in the Automotive Segment is now expected to reach a value slightly below the previous year.

The reasons for the reduced forecast are clearly named: In the Wake of the WLTP conversion other manufacturers press their cars with high discounts in the market, which is why the BMW Group would be forced to make appropriate reductions, if the original goals are to be achieved. Instead, BMW has reduced the volume of planning and puts the focus on the medium term, the more important the quality of results. Added to this are higher provisions for ex – gratia and warranty issues, particularly in the Diesel-recall due to fire hazard and possible Soft – and Hardware upgrades are likely for the older Diesel in Germany are meant to be. More uncertainty to bring the world’s simmering trade conflicts.

With the words of the BMW Group, the Situation is as follows:

Today’s new estimate was made Mainly due to the following circumstances:

  • The BMW Group has early implemented the requirements of the WLTP Regulatory requirements. However, the sector performs far required changeover to the new test cycle WLTP on several European markets significant Supply and unexpectedly high intensity of competition. In the context of its flexible production and sales strategy, the BMW Group is responding to this by reducing their volume planning with a focus on the quality of earnings.
  • A higher volume of ex – gratia and warranty measures leads to significantly higher allocations to the corresponding provisions in the Automotive Segment.
  • In addition, the ongoing international Trade disputes provide for a worsening of market situation and uncertainty. These circumstances lead to stronger-than-expected distortions in the demand and pressures in the pricing environment on multiple automotive markets.

Against this Background, the BMW Group adjusts its Outlook for fiscal year 2018 is as follows:

  • In the Automotive Segment now expects sales to be slightly below the prior-year figure (previously: slight year-on-year value).
  • The EBIT margin in the Automotive Segment is now expected to at least 7 percent (previously 8 to 10 percent).
  • The group’s profit before tax is moderately below the prior-year figure (previously: level with the previous year). Possible positive effects on Earnings from a regulatory approval and a Closing date in the year 2018 for the planned Joint Venture for mobility services are not still included in this custom view.

These circumstances will have an impact both in the third quarter than in the fourth quarter to consolidated earnings before taxes and the EBIT margin in the Automotive Segment.

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