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BMW maintains its guidance despite profit decline and Trump's tariffs

BMW Germany maintained its full-year forecast on Thursday, despite U.S. Tariffs and a drop in quarterly earnings of a third. It argued that its large manufacturing footprint in the country gave it an advantage over its rivals.

Volkswagen and Mercedes-Benz, on the other hand, have reduced their outlooks.

The European automakers have yet to digest a new 15% auto tariff that was agreed upon between the European Union (EU) and President Donald Trump. Although this is lower than the existing rate of 27,5%, it still represents a significant obstacle for their export-focused business.

BMW, which has its largest plant in the United States, and is Germany's leading auto exporter based on value, continues to expect that 2025 earnings will be comparable to the previous year, when it recorded just under 11 billion euro ($12.6 billion).

This is despite the fact that it issued its initial forecast before Trump imposed tariffs for auto imports.

The company has forecast that its automotive segment will have an EBIT margin of between 5.0-7.0%.

In a press release, Walter Mertl, CFO of Mertl & Company said that "our footprint in the U.S. helps us limit the impact on tariffs."

He added that "thanks to precise financial controls, based upon calculated forecasts, our year-end targets are on track."

BMW said it also assumed that tariff negotiations are ongoing and that its forecast factored in some mitigation measures.

The group anticipates that in 2025 the impact of tariffs on its automotive division's profit margin will be around 1,25 percentage points. The impact on the automotive segment was around 1.5 percentage points in the first half of this year.

The second quarter saw a 32% drop in pretax profits to 2.6 billion euro, mainly due to currency effects, and a decrease in sales from China. The sales in China dropped by 15.5% in the first half.

Analysts had expected a slightly lower quarterly profit result.

The EBIT margin of its auto division was 5.4%. This is just a little below the 5.5% analysts had predicted in a poll conducted by the company, but still within its target range for 2025: 5.0% to 70%.

(source: Reuters)