No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - German carmaker BMW said it faced a 1bn hit from global tariffs this year as it reported a slump in annual profits amid weak demand in China.
Chief executive Oliver Zipse called the provision "conservative", with possible further tariffs to come from the European Union and US but added that "we also assume that all the tariffs that we have today won't remain until the very end of the year".
The company said the effect of tariffs imposed up to March 12 would result in a 1% hit to auto operating profit margins, reducing the range to 5-7% this year, below consensus estimates of 7.3%.
The US has so far imposed tariffs of 25% tariffs on steel and aluminium and on BMW's vehicle imports to the US to Mexico. BMW also faces EU levies on imports of its Mini brand from China. President Donald Trump has threatened higher tariffs on European vehicle imports from April 2.
Zipse said 56% of the one million cars made at its plants in Germany are exported outside the EU while one out of every two vehicles from BMW's plant in Spartanburg, South Carolina is exported at a value of more than $10bn.
"This makes the BMW Group the largest automotive exporter in the United States by value. We benefit from an integrated global economy, and that is why we continue to advocate for open markets and free trade," he said on an earnings call.
Group net profit fell 37% to 7.7bn with revenue down more than 8% to 142.4bn. The company said it expected pre-tax earnings this year to be flat.
"The continued challenging situation in China and tariff increases... are expected to provide headwinds," BMW said in a statement. US President Donald Trump has threatened the European Union with 25% tariffs and has frequently mentioned cars as a target.
BMW said its latest guidance takes into the account of tariff moves made so far and warned that further increases in duties "could have a negative impact".
Weakness in China, where European automakers have been struggling to compete with local rivals like BYD, was a major drag on BMW's 2024 earnings.
Vehicle deliveries in China fell 13.4%, while total deliveries of BMW group, which also includes Mini and Rolls-Royce, fell 4%.
Reporting by Frank Prenesti for Sharecast.com
The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.