By Rachel More
BERLIN, Nov 4 (Reuters) – Premium automaker BMW reported an 11% drop in third-quarter pretax earnings on Wednesday, hours after warning that restructuring costs would hit results later this year and all but erase its core operating margin.
The German company issued its second profit warning in less than five months late Tuesday, blaming fourth-quarter costs tied to a restructuring programme that includes 8,000 layoffs in its home market.
Third-quarter pretax earnings came in at €2.1 billion ($2.4 billion), in line with analysts’ expectations in a company-provided consensus.
The operating margin in BMW’s core automotive business narrowed to 3.4%, beating analysts’ forecast of 3.1% but down from 5.2% a year earlier.
BMW now forecasts a margin of between minus 0.5% and plus 0.5% this year. Excluding restructuring charges, the margin should remain within its previous forecast range of above 2.0%, it said.
The company said it planned to cut management functions more quickly under its restructuring drive.
“Current developments in our industry call for decisiveness and swift implementation. We will therefore specifically intensify and accelerate structural measures,” CEO Milan Nedeljkovic said.
Revenue fell 6% to €30.4 billion in the third quarter, hurt by declining sales in China, the world’s largest auto market, where Western carmakers have struggled to keep pace with lower-cost domestic rivals.
BMW’s sales in China fell 22% in the first nine months of the year. The company said this was in line with a broader downturn in the local auto market.
($1 = €0.8905)
(Reporting by by Rachel More. Editing by Thomas Seythal and Mark Potter)
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