For the second time this year: BMW drastically reduces its profit target
Car business threatens to make a loss, shares fall in after-hours trading
Quick Look
- BMW is drastically lowering its profit forecast for the car business for the second time this year.
- Instead of a return of up to three percent, there is now a risk of a loss of minus 0.5 to 0.5 percent.
- The reasons are accelerated job cuts, structural measures and weaker vehicle sales.
AI-generated summary
Why It Matters
BMW had already lowered its profit forecast in the summer and announced thousands of job cuts in Germany. A severance program launched in early October was successful and closed after less than three weeks. The company previously expected total costs of around one billion euros for the job cuts program.
BMW is drastically lowering its profit forecast for the second time this year. Instead of a return of up to three percent, the car business is now even threatened with a loss. In addition to weaker sales, accelerated job cuts and further corporate restructuring are also having a negative impact.
The Munich car manufacturer BMW is cutting its forecast again. The profit margin in the car business will be between minus 0.5 percent and 0.5 percent, the company announced after the stock market closed. It is the second time this year that the company has lowered its forecast. Most recently, the people of Munich expected a return of one to three percent. The shares fell 3.4 percent in after-hours trading.
One reason for the forecast reduction is expanded and intensified “portfolio and structural measures,” the company explained. The staff cuts announced in the summer will be accelerated and completed more quickly than originally planned.
BMW announced in the summer that it would cut thousands of jobs in Germany. A severance pay program launched at the beginning of October was surprisingly successful, so much so that the car manufacturer closed it again after less than three weeks. Many exits - and thus their costs - are likely to come into effect in the current fourth quarter. According to previous statements, BMW had expected total costs of around one billion euros for the job cuts program.
In addition, given the strong demand for the New Class electric cars, some older electric models will be removed from the range earlier than originally planned. Before structural and portfolio measures, a return of more than two percent is still expected.
However, vehicle sales for the Munich-based company are also going worse than originally expected. The company now expects a moderate decline of five to almost ten percent in deliveries, whereas previously only a slight decline was predicted.
The group will announce details when it presents its figures for the third quarter on Wednesday morning.
What to Watch
AI outlook — possibilities, not facts
BMW will present detailed figures for the third quarter on Wednesday morning.
Very likely · Within days
Open Questions
- How high is the actual loss in the car business?
- What specific effects does the job cuts have on the workforce?
- Which older electric models will exactly be removed from the range?
