Chairman Kruger is facing some challenges this year but BMW will remain in the black

Chairman Kruger is facing some challenges this year but BMW will remain in the black

BMW Group has lowered its guidance for full year 2018.

In its automotive segment, revenues are now forecast to be slightly lower than the previous year versus a previously forecast slight year-on-year increase.

EBIT margin is now expected to be at least 7% (previously 8 to 10%).

Group profit before tax is expected to show a moderate decrease from the previous year (previously on par with 2017).

Possible positive earnings effects from a regulatory approval and closing of the planned mobility services joint venture in 2018 are still not reflected in the adjusted outlook.

"The company always expected 2018 to be a challenging year, due in part to additional upfront investments of around EUR1bn for future mobility and currency headwinds in the mid to high three-digit million-euro range compared with 2017," BMW said in a statement.

"Despite this starting position, based on its strong operating performance, the group had forecast pre-tax earnings on a par with last year's record level."

Revision was due mainly to implementing the requirements of the WLTP regulations early.

BMW said: "The industry-wide shift to the new WLTP test cycle has, however, led to significant supply distortions in several European markets and an unexpected intense competition. Thanks to its flexible production and sales strategy, the group is responding to this increased competition and is reducing its volume planning to focus on earnings quality.

"Increased goodwill and warranty measures are leading to significantly higher additions to the respective provisions in the automotive segment.

"The continuing international trade conflicts [read: US tariff wars and Brexit] are aggravating the market situation and feeding uncertainty. These circumstances are distorting demand more than anticipated and leading to pricing pressure in several automotive markets."

"The BMW Group remains fully committed to its goal of leading the transformation of the industry," chairman Harald Krueger said.

In addition to continuing new model launches, ongoing cost and efficiency measures will also be intensified, the automaker added.

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