BMW’s first quarter 2019 financials were “heavily impacted” by the provision of around EUR1.4bn made in connection with antitrust allegations by the European Commission.

“The statement of objections leads us to believe that it is probable that the commission will issue a fine,” finance chief Nicolas Peter said.

“This led us to recognise a provision in the first quarter in line with the International financial Reporting Standards.”

He added that, on the operational side, the BMW group has started the year as expected, “in a business environment that remains challenging and volatile”.

He added: “We are firmly convinced and would like to underline that the allegations made by the EU Commission are unwarranted!

“We regard these proceedings as an attempt to equate the permissible coordination of industry positions regarding the regulatory framework with unlawful cartel agreements.

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“The BMW Group will contest the EU Commission’s allegations with all the legal means at its disposal if necessary.

“The [commission] also clearly stated that the ongoing investigation is not related to the use of illegal defeat devices.

“Regarding the diesel discussions, which are completely separate, I would like to emphasise again: a deliberate and systematic illegal manipulation of exhaust emissions is, for us, not acceptable.”

Peter said the the provision in connection with the antitrust allegations alone reduced the EBIT margin in BMW’s automotive segment for the first quarter by around seven percentage points to -1.6%.

“As previously announced, we have adjusted our guidance for the year to reflect this effect,” he said.

Separately, Peter said: “Changes in the legal framework allow for a condensed quarterly reporting for the first and third quarter of the financial year. Starting with Q1 of 2019, we will utilise this option. As a result, our future reporting for those periods will be more concise, without significantly reducing the information content.”

Group revenues for the first quarter totalled EUR22.46bn, on par with the previous year while net profit fell to EUR173m due partly to changes in interest rates that had a negative effect on market valuation of related derivatives.

Pre-tax earnings were EUR762m.

EBT margin was 3.4%. Without the provision, the figure was 9.6%.

“As previously announced, due to model changeovers for some of our major model series, we expect the first half-year to be slightly weaker overall,” Peter said.

Automotive Segment deliveries to customers remained stable in a declining overall market, as expected. Due to model changeovers and the “highly competitive environment particularly in Europe”, segment revenues remained on par with last year at EUR19.21bn.

The segment’s operating loss of EUR310m was impacted by the EUR1.4bn provision and the EBIT margin plunged to negative 1.6%. Without the provision, the figure was 5.6%, as planned, Peter said.

Peter added: “Group earnings before tax will be significantly lower than the previous year, also as a result of the announced decrease in the financial result. Our guidance assumes that political and economic conditions will not change significantly. We expect the second half year to benefit from the strong product momentum generated by the many new and updated models currently ramping up and ready for launch.

“However, conditions will remain volatile. For one thing, there is lingering uncertainty over the future course of trade policy and the UK’s withdrawal from the European Union. We will also continue to monitor economic developments worldwide very closely. Weaker development in southern Europe, in particular, could affect our business in the coming months. 

“Thanks to our high degree of flexibility, we are capable of responding quickly to new developments and can steer production as needed. We will continue to work on all factors we can actively influence. This includes reducing complexity, improving efficiency and continuing to optimise processes and structures.”

BMW’s full Q1 2019 financial statement is here