BMW Group announced its financial results for the January-September period and the third quarter of the year. Accordingly, the German manufacturer's financial results fell sharply due to the recession in the Chinese market and costly corporate restructuring processes. The company also revised its financial outlook downwards for the second time this year.
In the July-September period, which covers the third quarter of the year, BMW Group's revenues decreased by approximately 6 percent on an annual basis, falling to 30.4 billion euros. The company's operating profit in this period decreased by nearly 30 percent to 1.59 billion euros.
The third quarter profit margin before interest and tax in the automotive segment, which is closely followed by capital markets, fell to 3.4 percent with a loss of 1.8 points. While the third quarter net profit decreased by 15 percent to 1.45 billion euros, the company's pre-tax profit was recorded as 2.1 billion euros, decreasing by 11 percent compared to the same period last year.
The lowest level was seen since 2020 in the January-September period
In the January-September period, the company's operating profit decreased by 35.2 percent compared to the same period last year, falling to 5.2 billion euros. This figure was the lowest level recorded since 2020, when the Covid-19 epidemic was effective. The company's 9-month net profit decreased by more than 24 percent to 4.3 billion euros, and its total revenues decreased by 7.3 percent to 92.7 billion euros.
The luxury manufacturer's results were particularly weighed down by its core business, the automotive division. The 9-month operating profit in the automotive segment decreased by nearly 44 percent to approximately 2.9 billion euros, reaching the lowest level in the last 6 years. The 9-month profit margin before interest and tax in this section also decreased to 3.5 percent from 5.9 percent last year.
Year-end profit margin target lowered
BMW Group lowered its year-end profit margin expectation before interest and taxes for its automotive division, which was previously expected to be 1 to 3 percent, to the range of minus 0.5 percent and plus 0.5 percent. With this revision, it is predicted that the company may declare a loss in the last quarter of the year in its main field of activity.
The company also updated its global delivery target, which it had previously estimated as a "slight decline", and announced that a "moderate decline" between 5 and 10 percent is expected. After the profit warning, BMW shares lost 3.4 percent in the stock market.
Huge blood loss in the Chinese market
In parallel with the crisis in the German automotive industry in general, BMW is also paying the price for the sharp contraction in China, its largest single market. The company's deliveries in China have fallen nearly 22 percent since the beginning of the year compared to the same period last year.
8 thousand jobs will be reduced in Germany
High amounts of depreciations, impairments and provisions expected to be recognized in the fourth quarter were effective in lowering the financial forecasts. The company stated that due to the high demand for new generation electric vehicle models, it will remove old generation electric vehicle technologies from production earlier than planned and write down value for these models.
In addition, BMW is carrying out a layoff and restructuring program targeting non-production departments in its operations in Germany and covering 8 thousand employees. The company also plans to restructure management levels and eliminate approximately one-fifth of the departments and department heads who report directly to the board of directors.
BMW Group Chief Executive (CEO) Milan Nedeljkovic, whose views were included in the statement, said, "Current developments in our industry require determination and rapid steps. In this direction, we will further intensify and accelerate our structural measures. The positive response to the employment program offers us an additional potential to simplify our structures faster." made his assessment.
