BMW reports second-quarter earnings slump as it cuts jobs
- The company on Thursday reported quarterly pre-tax earnings of €1.7 billion
BERLIN: German premium carmaker BMW said it was steeling itself for tougher competition with workforce reductions as pre-tax earnings slumped by over a third in the second quarter due to Middle East headwinds and weakness in China.
The company on Thursday reported quarterly pre-tax earnings of €1.7 billion ($1.95 billion), compared with analysts’ forecast of €1.6 billion in a company-provided consensus.
The operating margin in the core automotive business narrowed to 2.3%, beating analysts’ forecast of 2.2% but down from 5.4% a year earlier.
“The automotive industry is faced with rapidly escalating challenges – intense global competition, increasing regional regulatory requirements and the implications of geopolitical conflicts will shape our business model in the years ahead,” CEO Milan Nedeljkovic said.
BMW confirmed its full-year guidance, targeting an operating margin for cars in the range of 1% to 3%, after a shock profit warning in June which triggered negotiations with workers over cuts. The company now plans to axe 8,000 jobs under an agreed voluntary redundancy programme, a source said on Wednesday.
“Competition in the global automotive market has sharpened noticeably,” finance chief Walter Mertl said.
A downturn in the Chinese car market, the world’s biggest, has increased pressure on foreign carmakers there while Chinese rivals barred from the US now look to Europe for growth.
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