BMW says weak China demand could hurt full-year earnings

German automaker BMW said on August 04 that weaker demand from China could weigh on its full-year earnings, as it reported a slight drop in its second-quarter profits. Chief financial officer Friedrich Eichiner said the world's most populous country, a robust source of growth for German car manufacturers in recent years, was now a riskier market.
"The second half will be more heavily burdened by investments, development costs and personnel costs," Eichiner told a telephone conference.
"If the challenges in the Chinese market increase, we cannot rule out an impact on our forecasts."
BMW said it had sold 230,700 cars in China during the first half, a modest increase of just 2.3 percent compared with the same period last year.
Germany's Volkswagen, which recently pipped Toyota for the world's biggest automaker title, last week lowered its global sales forecast for 2015 citing falling demand from China and other key markets.
China remains the world's biggest car market but a slowing economy, rollercoaster stocks and car plate restrictions in some cities to reduce pollution have hurt demand. China's overall auto sales reached 23.49 million vehicles last year, jumping 6.9 percent from 2013, but its Association of Automobile Manufacturers expects the increase to slow to around three percent this year.
Munich-based BMW had earlier reported that its second-quarter profits fell by one percent, a figure that nevertheless was better than analysts predicted. The group saw its net profits slip to 1.75 billion euros ($1.92 billion) from April to June against 1.77 billion euros for the same period last year.
Analysts polled by Bloomberg had predicted net profits of 1.66 billion euros. Sales of its main BMW brand cars grew by 4.9 percent on last year, while the company said it sold almost a quarter more of its Mini cars. However, sales of its luxury Rolls-Royce cars were disappointing, falling back 7.7 percent in the second quarter. Overall turnover grew by a fifth to nearly 24 billion euros, exceeding market expectations.
BMW said it was counting on "solid growth" in global sales and pre-tax profit for 2015, with a profit margin of between eight and 10 percent for its automobile division.