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BMW Q1 Net Profit Plunges, Backs Weak Profit View For FY19; Stock Down

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Shares of BMW AG (BMW.L,BAMXF.PK,BAMXY.PK) were losing around 1 percent in the morning trading in Germany after the luxury carmaker reported Tuesday sharply lower profit in its first quarter, hurt by a hefty provision related to ongoing antitrust proceedings, as well as slightly lower revenues. Going ahead for fiscal 2019, the company continues to expect Group profit before tax to be well below the previous year.

As expected earlier, the latest first-quarter results included a 1.4 billion euros of provision on the basis of the Statement of Objections received from the EU Commission in connection with ongoing antitrust proceedings. The Commission is investigating that the German automakers are allegedly colluding to delay the rollout of cleaner-emission cars.

According to the company, the Statement of Objections leads the firm to conclude that it is probable that the EU Commission will issue a significant fine.

BMW said that if necessary it will contest the EU Commission's allegations with all the legal means at its disposal.

For the first quarter, Group net profit fell 74.2 percent to 588 million euros from 2.28 billion euros last year. Earnings per share fell to 0.85 euro from 3.44 euros a year ago.

Group profit before tax amounted to 762 million euros, down 75.7 percent. Profit before financial result or EBIT fell 78.2 percent to 589 million euros. The EBT margin came in at 3.4 percent, compared to 13.8 percent last year.

Automotive segment reported a loss before tax of 27 million euros due to the provision, compared to prior year's profit before tax of 2.28 billion euros. The segment's EBIT margin fell by approximately seven percentage points.

First-quarter research and development expenses totaled 1.40 billion euros, up 8.4 percent on the previous year.

Group revenues declined 0.9 percent to 22.46 billion euros from 22.67 billion euros in the prior year. Automotive segment revenues edged down 0.6 percent to 19.21 billion euros.

However, BMW Motorrad revenues grew 11.8 percent to 586 million euros and Financial Services segment revenues grew 8.9 percent to 7.15 billion euros.

First-quarter deliveries of BMW, MINI and Rolls-Royce brand vehicles edged up 0.1 percent to 605,333 units, mainly influenced by the contribution from BMW Brilliance Automotive joint venture in China..

BMW brand delivered 519,307 units, up 0.4 percent units, and Rolls-Royce brand delivered 1,206 vehicles, up 49.4 percent. Meanwhile, deliveries of MINI brand dropped 1.8 percent to 84,820 units.

BMW Motorrad increased deliveries of its motorcycles and maxi-scooters by 7.7 percent to 38,606 units.

Looking ahead for the year, BMW Group continues to expect an EBIT margin in the range of 8 to 10 percent within a stable business environment. Without the effect of the antitrust provision, the company maintained EBIT margin view of 6 percent to 8 percent.

BMW expects a margin in the Automotive segment for 2019 between 4.5 percent and 6.5 percent.

The company also said it is confident of a slight increase in deliveries in the Automotive segment.

By the end of 2022, the company expects to realise potential efficiency savings in excess of 12 billion euros.

In Germany, BMW Group shares were trading at 73.04 euros, down 1.30 percent.

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