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BMW shares sink on profit warning amid trade conflict concerns

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BMW shares are in the red Tuesday, after the German car maker warned its full year profits will likely be lower than previously expected. The lowered guidance is due to concerns over the ongoing US trade demands for higher import tariffs and broader price pressures in the market.

By 1525 BST, BMW shares were 5.23% at €79.13. The stock has been climbing in recent weeks.

BMW profit warning

BMW said earlier Tuesday, that it has adjusted its full year profit guidance amid a number of developments. Among the most prominent are the US trade tariff dispute, where US President Trump remains insistent over the requirement for higher import tariffs for goods sold in his country.

The German car maker added that broader price pressures and competition have had an effect on its potential profit, too.

“The BMW Group is updating its guidance for the current financial year. The company always expected 2018 to be a challenging year, due in part to additional upfront investments of around one billion euros for future mobility and currency headwinds,” BMW said in a press release.

Supply distortions due to WLTP regulations has resulted in “unexpected intense competition”, BMW said.

“The continuing international trade conflicts 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 car manufacturer added.

Updated outlook

BMW said it had revised its full year outlook for the automotive segment to be slightly lower compared with the previous year, from slightly higher. It added that it now sees the EBIT margin at 7%, compared with 8-10% previously.

“Group profit before tax is expected to show a moderate decrease from the previous year (previously: on a par with previous year),” the BMW said.

It did add, however, that “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.”

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