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BMW's profits slump as China sales and brake problems plague earnings

BMW's profits slump as China sales and brake problems plague earnings

BMW's 2024 net profit fell by more than a third to 7,68 billion euros, in line with the market expectation, due to weak sales in China, Germany, and delivery delays caused by brake problems.

It said that the premium carmaker expected its profit margins for cars to reach 5-7% by 2025. This is at best a small increase over last year's 6,3%. The company was anticipating intensifying wars in trade and continued tough competition in China.

The carmaker's forecast includes all tariffs that were imposed on March 12th, including increased tariffs for U.S. Steel and Aluminium imports, and a 25% duty placed on certain vehicles imported from Mexico, such as BMWs.

The group has proposed a payout ratio of 36.7% - one of the highest ever in its history - consisting of a 4.32 euro dividend per preferred share by 2024. This is still lower than the 6.02 euro dividend paid for the previous fiscal year.

Cut its 2024 Outlook

The drop in China sales, and the problems with Continental brakes that affect 1.5 million vehicles has caused the rate to fall from 8-10%.

The carmaker's warnings were confirmed by the drop in net profit of 41% for the fourth quarter.

In January,

Earnings would be affected by inflation and higher fixed costs due to unwinding of inventory in the last three months.

(source: Reuters)