BMW reports second-quarter earnings slump as it cuts jobs
BMW Faces Financial Challenges Amid Global Competition
By Rachel More
Second-Quarter Earnings Overview
BERLIN, July 30 (Reuters) - German premium carmaker BMW said it was steeling itself for tougher competition with workforce reductions as pre-tax earnings slumped by over a third in the second quarter due to Middle East headwinds and weakness in China.
The company on Thursday reported quarterly pre-tax earnings of €1.7 billion ($1.95 billion), compared with analysts' forecast of €1.6 billion in a company-provided consensus.
Operating Margin Performance
The operating margin in the core automotive business narrowed to 2.3%, beating analysts' forecast of 2.2% but down from 5.4% a year earlier.
Industry Challenges and Company Response
CEO’s Perspective on Market Conditions
"The automotive industry is faced with rapidly escalating challenges – intense global competition, increasing regional regulatory requirements and the implications of geopolitical conflicts will shape our business model in the years ahead," CEO Milan Nedeljkovic said.
Guidance and Workforce Reductions
BMW confirmed its full-year guidance, targeting an operating margin for cars in the range of 1% to 3%, after a shock profit warning in June which triggered negotiations with workers over cuts.
Job Cuts and Voluntary Redundancy Programme
The company now plans to axe 8,000 jobs under an agreed voluntary redundancy programme, a source said on Wednesday.
Competitive Landscape
"Competition in the global automotive market has sharpened noticeably," finance chief Walter Mertl said.
Impact of the Chinese Market
A downturn in the Chinese car market, the world's biggest, has increased pressure on foreign carmakers there while Chinese rivals barred from the U.S. now look to Europe for growth.
($1 = 0.8733 euros)
(Reporting by Rachel MoreEditing by Ludwig Burger)
