Yahoo Finance BMW plans cost-cutting drive as profits crash by 78%
Profits at BMW have nosedived by 78% after the German firm ploughed money into its electric car business and put aside cash for a potential fine.
The carmaker saw its operating profit tumble to £503m (€589m) in the first quarter, despite higher deliveries of luxury cars.
The firm said it would begin a cost-cutting drive to deal with rising costs, planning more than £10.25bn (€12bn) of savings by 2022.
It comes as the firm awaits the outcome of an EU investigation into alleged collusion between German car firms over emission-filtering technology.
BMW was forced to set aside £1.2bn (€1.4bn) to cover a possible fine if the European Commission decides its actions amounted to anti-competitive behaviour.
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The company denies making secret agreements with rivals, and said it would fight the allegations.
The other key drag on profits was its heavy investment in converting its factories to manufacture electric vehicles. Spending on property, plants, and equipment was up by 36%.
The company’s first-quarter profits were lower than expected by analysts in a Reuters poll, which had forecast earnings of £569m (€666m).
Overall revenue was down 0.9% to £19.25bn (€22.5bn).
The automotive division would have posted a 5.6% operating profit without the money set aside for any fine by regulators, according to the firm.
It also announced it would cut back the number of engine and gearbox combinations it offers customers by 50%.
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