BMW warns if significant profits fall in 2019, seeking $ 13.6 billion in cost reductions
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An employee installs interior accessories inside a BMW X4 sports car on the assembly line at the BMW assembly plant in Greer, South Carolina.
On Wednesday, BMW said it is expected that group winnings deserve to fall by more than 10 percent by 2019, announcing a costly $ 12 billion ($ 13.6 billion) cost savings and efficiency plan to offset higher technology investments and currency costs.
Last week, BMW said it would increase cost cuts in anticipation of a difficult year, as it reported a decline of 7.9 percent in operating profit in 2018.
Pre-tax consolidated profit is expected to be significant during 2018 levels, so the Munich-based car manufacturer.
"The high volatility makes it difficult to give a clear forecast," says BMW.
"Depending on how the conditions develop, our guidance may be subject to additional risks, especially the risk of a non-contractual and ongoing international development trade policy, "CFO Nicolas Peter said.
BMW said it would expand group efforts to increase efficiency and reduce costs.
" By the end of 2022, it expects to exploit potential efficiencies of over EUR 12 billion, "BMW said. in a statement.
Part of it would come from tearing up digital simulations as a way to reduce development times with new vehicle models by as much as a third.
"Among other things, savings, digital simulations, and virtual validation could eliminate the need for around 2,500 expensive prototype cars by the year 2024, BMW said.
The high price of developing electric and self-driving cars will still be a burden on earnings.
MW said it expects the operating margin in the automotive industry to fall to between 6 and 8 percent this year, below the company's target of 8 to 10 percent. Last year, BMW's operating margin was 7.2 per cent.
