BMW plans massive cost cuts to keep profits from sputtering

BMW’s total number of employees is set to remain flat at around 135,000 worldwide, and new recruits would be IT specialists. (AFP)
Updated 20 March 2019
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BMW plans massive cost cuts to keep profits from sputtering

  • ‘Our business model must remain a profitable one in the digital era,’ chief executive Harald Krueger said
  • Total number of employees is set to remain flat at around 135,000 worldwide

MUNICH: German high-end carmaker BMW warned Wednesday it expects pre-tax profits “well below” 2018 levels this year as it announced a massive cost-cutting scheme aimed at saving $13.6 billion (€12 billion) in total by 2022.
A spokesman said that “well below” could indicate a tumble of more than 10 percent.
The Munich-based group’s 2019 result will be burdened with massive investments needed for the transition to electric cars, exchange rate headwinds and rising raw materials prices, it said in a statement.
Meanwhile it must pump more cash into measures to meet strict European carbon dioxide (CO2) emissions limits set to bite from next year.
And a one-off windfall in 2018’s results will create a negative comparison, even though pre-tax profits already fell 8.1 percent last year.
Bosses expect a “slight increase” in sales of BMW and Mini cars, with a slightly fatter operating margin that will nevertheless fall short of their 8.0-percent target.
“We will continue to implement forcefully the necessary measures for growth, continuing performance increases and efficiency,” finance director Nicolas Peter said at the group’s annual press conference.
BMW aims to achieve €12 billion of savings in the coming years through “efficiency improvements” including reducing the complexity of its range.
“Our business model must remain a profitable one in the digital era,” chief executive Harald Krueger said.
This year, most new recruits at the group will be IT specialists, while the total number of employees is set to remain flat at around 135,000 worldwide.
Departures from the sizeable fraction of the workforce born during the post-World War II baby boom and now reaching retirement age “will allow us to adapt the business even more to future topics,” BMW said.
All the firm’s forecasts are based on London and Brussels reaching a deal for an orderly Brexit and the United States foregoing new import taxes on European cars.
“Developments in tariffs” remain “a significant factor of uncertainty” in looking to the future, finance chief Peter said, adding that “the preparations for the UK’s exit from the EU will weigh on 2019’s results as well.”
In annual results released ahead of schedule last Friday, BMW blamed trade headwinds and new EU emissions tests for net profits tumbling 16.9 percent in 2018, to €7.2 billion.


US won’t send officials to China’s Belt and Road Forum

Updated 3 min 41 sec ago
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US won’t send officials to China’s Belt and Road Forum

  • Leaders from 37 countries and officials from dozens more are expected to attend the Belt and Road Forum from Thursday to Saturday
  • Chinese Foreign Minister Wang Yi told journalists at a briefing last week that US diplomats, state government representatives and members of the business community would be attending the forum

BEIJING: Washington will not send officials to a Beijing summit on Chinese President Xi Jinping’s signature global infrastructure project, the US embassy said Wednesday amid a raft of disputes between the two powers.
Leaders from 37 countries and officials from dozens more are expected to attend the Belt and Road Forum from Thursday to Saturday, but Washington has dismissed the initiative as a “vanity project.”
“The United States has no plans to send officials from Washington to the Belt and Road Forum,” a US embassy spokesperson told AFP in an email.
“We call upon all countries to ensure that their economic diplomacy initiatives adhere to internationally-accepted norms and standards, promote sustainable, inclusive development, and advance good governance and strong economic institutions,” the spokesperson said.
Chinese Foreign Minister Wang Yi told journalists at a briefing last week that American diplomats, state government representatives and members of the business community will be attending the forum.
At the first Belt and Road summit in 2017, the US was represented by White House adviser Matt Pottinger.
Since then, more countries have signed up to Belt and Road, most notably Italy, which became the first G7 nation to join the global scheme that aims to link Asia to Europe and Africa through massive investments in maritime, road and rail projects.