BMW blames going green for slump in earnings
Exchange rates also blamed for car-maker reporting profits falling by a fifth in Q2BMW has defended second-quarter earnings that fell by a fifth on exchange rate moves and pressures to invest heavily in both pure-electric and hybrid-powered vehicles to comply with stricter emissions limits.
Despite the Q2 dip, the German car-maker announced to markets that there was no need to issue profit warnings as it remained confident of meeting its earlier full-year forecasts.
BMW says that its earnings (before interest and taxes) fell to €2.2 billion ($A3.6b) in Q2, but reported that investments in new property, equipment and plants, including a new factory in Mexico, had seen its investments increase over the same period by 39 per cent.
More worrying for those investing in BMW, the car-maker said its operating margin for cars had fallen to 6.5 per cent, from 8.6 per cent the year before – despite a sales increase of 1.5 per cent year-to-year.
Only yesterday, news emerged that BMW would slash models and cut costs to boost profit.
The need to plough billions in developing hybrids and zero-emission battery-powered vehicles, plus other new tech like autonomous driving aids, accompanied by Brexit and a trade war between the US and China, have taken their toll on the entire car industry and the news that BMW will stick to its original forecasts has been welcomed by the industry.
In contrast, analysts were also quick to point out that even at 6.5 per cent, BMW's current operating margin is considerably healthier than the 3.6 per cent Mercedes-Benz currently enjoys.
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