BMW shares fall as R&D investment weighs on Q3 performance

BMW shares are lower Wednesday, as the German car maker reported disappointing third quarter earnings.

BMW shares fall as R&D investment weighs on Q3 performance

BMW shares are lower Wednesday, as the German carmaker’s third quarter earnings results disappointed. The luxury car manufacturer said that currency headwinds, higher cost of raw materials and investment into electric mobility R&D all hit profits in the most recent quarter’s performance.

By 0945 BST, BMW shares were 1.20% lower at €76.00. The stock has been a little mixed lately, but turning broadly higher, more recently.

BMW Q3 earnings

BMW said its third-quarter operating profit slid 27% to €1.75 billion, while its earnings margin slumped to 4.4%, down from 8.6% in the third quarter of 2017 and also well below the firm’s own forecast of between 8-10%.

Higher sales worked to boost revenues, however, which grew 4.7% to hit €24.7 billion. Meanwhile, earnings per share sank 9% to €8.69-70 in the first nine-months of the year, from €9.55-9.56 in the same period a year earlier. The car maker also made a €679 million provision for vehicle recalls.

“Our forward-looking approach has absolute priority. Particularly in these volatile times, we are maintaining our focus on the future and taking the decisions that will lead to tomorrow's success,” said BMW chairman, Harald Krüger.

BMW’s CFO added that BMW isn’t the only auto firm facing tough times right now.

“We remain an ambitious company, setting ourselves challenging targets,” CFO Nicholas Peter said. “However, along with the rest of the industry, we are increasingly confronted with adverse external factors, the negative impact of which cannot be fully offset.

Outlook

BMW said that the car maker had already hit its expected R&D investment level of 7% of group revenues for the year, by the end of the first nine months. However, it continues to plan further investment, particularly into the electric mobility sector.

The group also confirmed its full year 2018 outlook:

  • Automotive segment revenues are expected to be slightly below the previous year's figure.
  • An EBIT margin of at least 7%.
  • Group profit before tax is expected to show a moderate decrease from the previous year.
  • BMW also expects to see a slight increase in vehicle deliveries compared with 2017.

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