BMW reported a 61% drop in third-quarter profit on Wednesday, falling short of analyst expectations due to weak sales in China and issues with its brake systems. However, the automaker reaffirmed that it remains on track to meet its revised full-year financial targets.
In a statement, BMW CEO Oliver Zipse acknowledged the “extraordinary challenges” of the third quarter but expressed confidence that the company would achieve stronger earnings in the fourth quarter to hit its annual goals.
Shares of BMW were indicated to open 3.1% lower at 07:37 GMT, underperforming other German carmakers. Zipse noted that conditions in China remain difficult, a challenge faced by all market participants.
Back in September, BMW had lowered its full-year forecast due to sluggish demand in China and ongoing issues with a braking system supplied by Continental. The company reported a 33% decline in third-quarter sales in China.
BMW’s competitors, Volkswagen (ETR:VOWG_p) and Mercedes-Benz (OTC:MBGAF), are also grappling with declining sales in China amid a weak economy and growing competition.
The brake issue, which BMW disclosed in September, affected over 1.5 million vehicles, with delivery delays expected for around 320,000 cars. The company announced on Wednesday that these delayed vehicles would be delivered to customers in the fourth quarter.
For the third quarter, BMW posted an operating profit of €1.7 billion ($1.82 billion), down 61% from €4.35 billion a year earlier. Analysts had forecasted an operating profit of €1.8 billion.
BMW’s revenue declined by 15.7%, dropping to €32.4 billion from €38.46 billion a year earlier, missing analyst expectations of €34.3 billion.
Despite the revenue drop, the company confirmed it remains on track to achieve an operating profit margin of 6% to 7% for 2024. However, in the third quarter, the operating profit margin for its automotive segment was just 2.3%.
In a statement, BMW’s Chief Financial Officer, Walter Mertl, emphasized that “with stringent management,” the company “remains on track” to meet its 2024 target for automotive free cash flow.
Mertl added, “In the fourth quarter, higher sequential deliveries and a stronger product mix will help support our earnings.”
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