German automaker BMW says its profits this year will be “well below” last year’s due to higher raw materials prices, the costs of compliance with tougher emissions requirements and unfavorable shifts in currency exchange rates.
The Munich-based automaker also said Wednesday it faces increased uncertainty due to international trade conflicts that could lead to higher tariffs.
The company forecast a profit margin of 6 to 8 percent for its automotive business, short of the long-term strategic target of 8 to 10 percent, which it said still “remains the ambition” for the company given “a stable business environment.” The company said it had no plans for layoffs.
BMW made 7.2 billion euros ($8.2 billion) in net profit last year, down 17 percent from 2017, when it booked a gain of $1 billion from U.S. tax changes. The company faced headwinds from increased tariffs on vehicles exported to China from the United States. It also suffered from turmoil on the German auto market when companies faced bottlenecks getting cars certified for new emissions rules.
BMW faces uncertainty from ongoing U.S.-China trade tensions that could result in new tariffs if talks do not result in an agreement. U.S. President Donald Trump has also threatened to impose auto import tariffs that would hit EU automakers, but has held off for now.