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BMW Cuts FY Outlook Hurt By Global Trade War

German auto giant BMW (BMW.L,BAMXF.PK,BAMXY.PK) Tuesday lowered its earnings and revenue guidance for the full year 2018, hurt largely by emissions-related costs, product recalls and ongoing global trade war.

Automotive segment revenues are now expected to be slightly lower than the previous year. Earlier, BMW expected slight year-on-year increase in automotive segment revenues. The EBIT margin in the automotive segment is now expected to be at least 7 percent, compared to the prior outlook of 8 percent to 10 percent.

The company now projects annual group profit before tax to show a moderate decrease from the previous year. Earlier, the company expected group profit before tax at the previous year's level. The company earned 10.7 billion euros in 2017.

"The continuing international trade conflicts are aggravating the market situation and feeding uncertainty," BMW said in a statement. "These circumstances are distorting demand more than anticipated and leading to pricing pressure in several automotive markets."

Trade relations between US and China have soured after Trump administration imposed a 10 percent import tariff on another $200 billion worth of goods made in China, bringing the total to more than $500 billion. The tariffs are set to increase to 25 percent in 2019.

The luxury car maker also said the guidance cut was driven by the industry's shift to a new laboratory test for emissions, the Worldwide Harmonised Light Vehicle Test Procedure.

"The industry-wide shift to the new WLTP test cycle has, however, led to significant supply distortions in several European markets and an unexpected intense competition," the company said.

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