CAPE TOWN - BMW AG is sticking with its annual profit targets, even as the German carmaker finds itself in the cross-hairs of a US-China trade spat.
The Munich-based manufacturer kept its forecast for the year when reporting second-quarter results yesterday, making it an outlier among a host of car companies - including top rival Daimler - that have cut financial targets as global trade tensions escalate and higher raw-materials prices weigh.
Group profit before taxes will be at the same level as last year, BMW said, while reiterating automotive revenue and unit sales would gain slightly.
While the company had previously said that profit would be “at least” level - implying it could rise - it still held to the goal, marking a contrast with the decision by Mercedes-Benz maker Daimler to lower its guidance.
President Donald Trump underscored the danger on Wednesday, when he asked US trade officials to consider increasing tariffs on $200billion (R2.65trillion) in Chinese goods.
“It’s all about what’s happening at the macro-level outside the company’s control,” said Frank Biller, a Stuttgart-based analyst with Landesbank Baden-Württemberg.
“BMW is shipping vehicles with strong margins from the US to China, and they’re hostage to the negative effect of the trade tensions.”
Shares of BMW fell 1.8percent to 80 at 9.42am in Frankfurt, with Daimler and VW also declining.
The stock is down 8.1percent this year, as the world’s second-biggest luxury carmaker grapples with shifts in global trade barriers.
After China said it would lower import tariffs from July 1, consumers held back on buying cars and demanded price reductions.
BMW said earnings before interest and taxes fell 6.3 percent in the period, flagging similar issues already reported by Daimler and Fiat Chrysler.
Trump’s trade spat with the Asian nation is having an ongoing impact.
Despite lowering import tariffs on cars from other nations, China has slapped retaliatory duties on US car imports, hitting BMW’s shipments of sport-utility vehicles it makes in Spartanburg, South Carolina.