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(Sharecast News) - Shares in BMW plunged in Frankfurt on Wednesday after the German auto giant warned that profits would fall this year after adjusting its outlook for weaker sales in China and the impact of US trade tariffs.
In its automotive division, the company said that it now expect the earnings before interest and tax margin for 2025 to be between 5-6%, at the lower end of its 5-7% guidance, while the return on capital employed target has been cut to 8-10% from 9-13%.
Meanwhile, group earnings before tax are now predicted to "decline slightly", compared with earlier guidance of an unchanged result from last year.
While vehicle volumes have grown in Europe and the Americas over the year to date, targeted volume growth in China has remained below expectations.
"Additionally, the impact of a significant reduction of commissions from local Chinese banks in connection with the brokering of financial and insurance products to end customers requires financial support to strengthen dealer profitability," the company explained.
BMW also said that its auto free cash flow target for 2025 has been halved to just 2.5bn, from 5bn previously.
This is due to the weaker profit outlook and a delay in expected reimbursements of customs duties from American and German authorities from 2025 to 2026, given the company's prediction that the EU will retroactively lower tariffs from 10% to 0% on imported vehicles and parts into the EU.
The stock was down nearly 9% at 79.80 by 1216 CEST.
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