BMW Q2 earnings slip on China, costs for new models

Second-quarter group Ebit at BMW fell 3 percent from a year earlier to 2.53 billion euros ($2.77 billion).

BMW AG, the world’s biggest maker of luxury cars, said a sharp slowdown in Chinese demand might lead it to rethink profitability goals at its automaking division. However it warned of a possible slow growth due to fierce competition in automobile markets, rising personnel costs, challenges related to the normalisation of the Chinese markets, the precarious state of the Russian market and macroeconomic uncertainties in Europe.

BMW brand worldwide sales volume rose 4.9 percent to 480,465 units, and sales of MINI vehicles grew 23.8 percent to 91,6268 units from previous year.

On Tuesday it also reported a 3 percent slide in its second-quarter operating profit as it sold a higher proportion of low-margin cars and invested in new models.

BMW has developed in-car features to cater specifically to the Chinese market.

“It will definitely not be double digit growth”, Eichiner further said. Profit matched the 2.54 billion-euro average of 10 analyst estimates compiled by Bloomberg.

The company said it still expects new records for sales and pretax profit in the full year even though earnings momentum was slowing.

Shares in BMW were indicated 1.3 percent lower ahead of the 0700 GMT (0800 BST) Frankfurt market open. While BMW’s China sales dropped 0.1 percent in June, sales of rival Mercedes-Benz passenger cars jumped 38.5 percent.

BMW is bringing out a new version of the 7-Series as part of a drive to refresh its model line.

It said it still expected a profit margin in the automotive division of 8-10 percent this year, compared with 9.6 percent last year and, as a result of changes in exchange rates, a “significant increase” in revenues from last year’s 75.173 billion euros.

Munich-based BMW had earlier reported that its second-quarter profits fell by one percent, a figure that nevertheless was better than analysts predicted.