German automaker BMW more confident despite Q3 slowdown
FRANKFURT AM MAIN — German car giant BMW fell short of expectations in the third quarter as spending on new models weighed on earnings Tuesday, but the luxury automaker still lifted its performance targets for the full year.
Between July and September, net profit at the group shrank 1.8% year on year to €1.8 billion ($2.1 billion), well short of the €1.95 billion predicted by analysts.
Operating, or underlying profit also fell 3.2%, to €2.3 billion, on the back of revenues up 0.3% at €23.4 billion.
The slightly disappointing results come as the group is “investing substantially in tomorrow’s mobility,” Chief Executive Harald Kruger said in a statement.
Meanwhile, unit sales of BMW, Mini and Rolls- Royce cars increased 1.2%, to 590,415.
Sales were driven by the success of the new BMW 5 series as well as brisk demand for the group’s popular X1 compact SUV, the group said.
Like other German car makers, the Munich-based firm is scrambling to catch up with competitors in high-tech fields like electric cars and autonomous driving.
The group expects to sell more than 100,000 hybrid or full-electric vehicles in 2017.
Meanwhile, Mr. Kruger highlighted € 400- million spending on expanding BMW’s research center to 5,000 employees and the opening of an autonomous driving center with partners including chipmaker Intel.
The group’s closely watched operating profit margin edged down to 8.3% of revenue from cars in the third quarter, from 8.5% a year earlier.
BMW said it will continue to spend heavily on research and new models in the fourth quarter, while it warned that a “politically volatile environment” worldwide could affect sales.
RECALL WOES
Looking ahead to the full year, BMW upped its forecast to a “solid” increase in underlying profit from 2016’s figure, where previously it had called for a “slight” boost.
It added that it expected its profit margin for the full year to remain within the 8% to 10% target range.
The confident outlook comes just days after the German titan was buffeted by a mass recall of some one million cars in North America due to potential fire risks.
BMW has warned the recall could possibly spread to other countries as well.
The company is also the target of an EU antitrust probe into alleged collusion between German car makers, and saw its Munich headquarters raided by investigators last month.
BMW shares shed 2.67% to trade at €87.57 by 1145 GMT, underperforming the DAX index of blue- chip shares which was up 0.04%. —