BMW predicts further fall in 2019 profits

MUNICH: Upmarket German carmaker BMW predicted a further decline in profits on Wednesday as it embarked on a wide-ranging cost-cutting programme, including halting production of certain models, while increasing digitalization in vehicle development.

The Munich-based company insisted it would not be cutting jobs, in contrast with other German carmakers, as it sought to pare costs by 12 billion euros ($13.6 billion) during the next four years, Chief Executive Harald Krueger said.

Chief Financial Officer Nicolas Peter expressed dissatisfaction with last year’s figures, noting that the company had sold more vehicles, while seeing turnover decline slightly to 97.5 billion euros. Earnings before tax fell 8 per cent to 9.8 billion euros. Peter attributed the fall to conversion to: the new WLTP emissions standard; punitive duties imposed by China on BMWS assembled in the United States; vehicle recalls; and increased investment. BMW maintains a large assembly line in South Carolina.

Profits fell as much as 17 per cent to 7.2 billion euros, with a corresponding cut in the dividend. Peter foresaw difficult times ahead, with rising raw materials costs and the strong euro costing the company more than 500 million euros.

BMW needed to invest heavily in new models, electric drive trains and autonomous vehicles, he said. “Company profits before tax will be considerably lower than last year,” Peter predicted, irrespective of whether or not there was a hard Brexit or a worsening in the tariffs battle between the US and China. — dpa