BMW delivers 2019 profit warning and plan to cut costs by 12 bln euros
Published on: March 21, 2019 09:00 (EAT)
BMW expects group pretax profit to fall by more than 10 percent this year, it said on Wednesday as it announced a sweeping 12 billion euro ($13.6 bln) savings and efficiency plan to help offset higher technology investment and currency costs. The German carmaker reported a 7.9 percent fall in 2018 operating profit last week and said it would step up efficiency measures in anticipation of a difficult year in a sector grappling with the shift toward electric vehicles amid continuing Brexit uncertainty and global economic worries. Group earnings before tax are expected to be significantly below 2018 levels, the company said at its results news conference in Munich on Wednesday. “Depending on how conditions develop, our guidance may be subject to additional risks; in particular, the risk of a no-deal Brexit and ongoing developments in international trade policy,” said Chief Financial Officer Nicolas Peter. BMW continues to expect an orderly Brexit and said operational disruptions from a disorderly Brexit would be likely to normalize after four to six weeks. “If tariffs are in the range of zero and 5 percent, the business case would not dramatically change,” BMW production chief Oliver Zipse said, referring to the group’s production network and exports of Mini vehicles from Oxford in England to the European Union. BMW said it would expand group-wide efforts to increase efficiency and lower costs but ruled out forced redundancies. About 1,500 staff have taken early retirement and another 2,500 are eligible for retirement and early retirement, the company said. By the end of 2022 the company expects the efficiency program to deliver savings of more than 12 billion euros, it said in a statement.