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BMW quarterly profit slumps on US$1.6b antitrust provision
[MUNICH] BMW AG's first-quarter profit slumped after car sales in key markets slowed and the manufacturer revised a provision for a potential fine for alleged collusion to US$1.6 billion.
Earnings before interest and tax declined 78 per cent to 589 million euros compared to a year earlier. BMW last month made a provision of more than 1 billion euros for a potential fine from the European Union's investigation into alleged collusion on cleaner-emission cars.
BMW is experiencing a weak start to the year due to pricing pressure, trade tensions and trouble from new emissions tests in Europe that started last year. The carmaker has announced a 14 billion-euro savings plan, culling models and cutting development time.
The second half of the year should brighten with sales of the revamped 3-Series sedan getting underway, as well as the full-size X7 SUV. BMW in April reduced an already-lowered Ebit automotive margin target to as low as 4.5 per cent because of the EU provision.
Trade tensions are on the rise again, after U.S. President Donald Trump on Sunday threatened more tariffs on Chinese goods that could prompt retaliatory actions. BMW exports SUVs from its plant in the U.S. to China that are already hit with increased tariffs.
BMW fell 2.2 per cent to 74 euros at Monday's close. The stock has gained 4.7 per cent since the start of the year, while the STOXX 600 Autos & Parts Index is up 18 per cent.