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BMW profit dips in 'volatile' times

AFP  |  Frankfurt Am Main 

German high-end carmaker on Wednesday posted a steep drop in quarterly profit as new emissions tests, global trade tensions and costly recalls weighed on the bottom line.

The Munich-based group said net profit between July and September slumped 24 per cent year-on-year to 1.4 billion euros (USD 1.6 billion), falling short of expectations.

Third-quarter revenues rose 4.7 per cent to 24.7 billion, supported by brisk demand for the group's vehicles which include the compact Mini and luxury

The group had already issued a rare profit warning in September when it was forced to lower its full-year outlook in the face of a series of setbacks.

Chief among them was the introduction of tough new EU emissions tests known as WLTP, which sent rival carmakers scrambling to shift non-compliant models before the September 1 deadline with considerable discounts offered to buyers.

This resulted in "unexpectedly intense competition", said.

The group has also been impacted by US Donald Trump's festering trade row with China, which has seen both sides impose tit-for-tat tariffs, and his threats to place steep duties on auto imports from the

"The ongoing international trade conflicts had the effect of aggravating the market situation and feeding consumer uncertainty," said BMW, which owns factories in Europe, the US and

The automaker likewise felt the pinch from a recall of diesel-powered over a fire risk, for which it had to set aside 679 million euros in the third quarter.

Also sapping earnings was BMW's increased spending on electric and self-driving as the industry pivots to cleaner, smarter vehicles after the "dieselgate" emissions cheating scandal.

"Particularly in these volatile times, we are maintaining our focus on the future and taking the decisions that will lead to tomorrow's success," said

As part of those efforts said it planned to secure "the highly sought-after" raw materials needed to make battery cells, like cobalt, itself in the future and then make those available to suppliers.

BMW shares dipped 1.8 per cent to 75.55 euros by 1050 GMT in Frankfurt, underperforming a index that was up 1.1 per cent. The group confirmed its trimmed outlook for 2018, forecasting revenues from its business "slightly lower" than last year.

Profit before tax "is expected to show a moderate decrease" year-on-year, rather than staying around last year's level of 10.7 billion euros.

Looking further ahead, warned in a conference call that the WLTP fallout would likely continue "into the first half of 2019".

"The volatility is not over yet," he told reporters.

BMW did not suffer the same production bottlenecks that the new EU rules caused at rivals and Volkswagen, but the price war to get rid of non-WLTP models has proved painful for all carmakers in a sector crucial to the German economy.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, November 07 2018. 18:50 IST
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