BMW hit by development costs and new-model production boost
Investments to develop electric and self-driving cars has weighed on earnings
German carmaker BMW will deepen cost cuts after higher development expenses contributed to a 27% drop in third-quarter operating profit, falling short of analyst expectations, with currency effects also taking a toll. Investments to develop electric and self-driving cars, as well as spending to boost production of new X5, X7 and 8-series luxury models, weighed on earnings when tariffs between China and the US and a price war in Europe were already eroding margins. BMW said capital spending would rise again in the fourth quarter owing to the start of production for a new version of its BMW 3 series. “Additional measures will be needed to support our profitability targets,” CFO Nicolas Peter said in a call to discuss earnings. He gave no details. “Despite the difficult conditions, we are still targeting a free cash flow of €3bn for the full year,” Peter said. “In the light of the current challenges, this will not be an easy task.” BMW’s earnings before interest and taxes of €1.75bn ca...
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