By By Nick Carey
(Reuters) – BMW (ETR:BMWG) on Wednesday reported a 61% drop in its quarterly third-quarter profit that missed analyst expectations because of slumping China sales and brake problems, but said it was on track to meet its adjusted full-year financial outlook.
In a statement, BMW CEO Oliver Zipse said that after “extraordinary challenges in the third quarter … in the fourth quarter we are back on track for stronger earnings in order to
achieve our annual targets.”
BMW lowered its guidance for the year back in September citing sluggish Chinese demand and problems with a braking system supplied by Continental.
In October, the premium German automaker reported that its third-quarter sales in China had fallen by a third.
Rival German automakers Volkswagen (ETR:VOWG_p) and Mercedes-Benz (OTC:MBGAF) are also struggling with falling sales in China amid a weak economy and intense competition.
BMW said in September the brake issue affected over 1.5 million cars, with delivery delays expected for around 320,000 vehicles.
The company said on Wednesday it will hand those delayed vehicles to customers in the fourth quarter.
BMW posted an operating profit of 1.7 billion euros ($1.82 billion) for the third quarter, down 61% from the 4.352 billion euros in the same quarter last year. Analysts had expected an operating profit of 1.8 billion euros.
The automaker’s revenue fell 15.7% to 32.4 billion euros from 38.46 billion euros a year earlier, below analyst expectations of 34.3 billion euros.
The company said that it is still on track for a 2024 operating profit margin of between 6% and 7%. In the third quarter, BMW’s operating profit margin for its automotive segment came in at just 2.3%.
In a statement BMW chief financial officer Walter Mertl said that “with stringent management” BMW Group “remains on track” to hit its 2024 auto free cash flow target.
“In the fourth quarter, sequentially higher deliveries and a stronger product mix will support our earnings.”
($1 = 0.9179 euros)