BMW ‘closely monitoring’ trade war tensions as it reports lower profits for second quarter | City A.M.
BMW has warned that rising political tensions between the US and China could take a toll on its profits in the coming months, as the car maker revealed reduced sales and profits for the first half of this year.
In a call with reporters following the release of its first half results, Chief Financial Officer Nicolas Peter said BMW was “very closely” monitoring the fraught relationship between the world’s two biggest economies. “If conditions deteriorate any further, we cannot rule out effects on our guidance,” he said.
“BMW has a strong footprint in the US, China and Europe and is well positioned for these times with a lot of flexibility, especially in production.”
Today the Trump administration confirmed it would hit $200bn worth of Chinese imports with a 25 per cent tariff, increasing the rate from an original 10 per cent levy.
Read more: BMW counts the cost of China’s retaliatory tariffs
China responded by vowing to retaliate, as it did when Trump imposed tariffs on $50bn worth of its goods in June.
The news comes as BMW reported reduced sales and profits for the first half of this year but struck an optimistic tone as it unveiled plans for long term growth.
Earnings before income and tax fell 6.3 per cent to €2.75bn, while net profit was squeezed to €2.1bn. Revenue, meanwhile fell to €25bn.
BMW, which licenses the Mini and Rolls-Royce brands, sold 637, 878 cars in the second quarter, down 0.7 per cent from a year ago.
BMW was keen to emphasise long-term investment in future mobility. It pummelled more than €2m into research and development during the second quarter, with full expenses likely to reach up to seven per cent of group revenue this year.
The car giant stuck said it was on track to deliver more than 140,000 electric cars this year, with the aim being that 25 electrified models will be on the roads by 2025, half of which will be all electric.
BMW also announced it was adding a new plant in Hungary. “The decision to construct this new plant highlights the BMW Group’s prospects for growth,” said chief executive Harald Krüger. “This new location will also produce vehicles powered by combustion engines and electrified drivetrains on the same production line.”
Kruger said: “We continue to focus on following our own path and remain firmly on course. We are consistently preparing ourselves to meet the demands of tomorrow. This approach enables us to remain a reliable partner – all the more important during challenging times.
“The BMW Group has more than 100 years of experience in dealing with volatility in a changing world. Our vision remains clearly on long-term prospects. It is crucial that we remain focused on the key issues of profitability, growth and innovation to ensure our competitive edge going forward.”
Read more: BMW says tariffs on EU cars would harm investment