By Adria Calatayud
BMW shares climbed after the German automaker signaled it was on track to hit its targets despite an earnings hit in the first quarter from fierce competition in China and global tariffs.
Executives at BMW voiced confidence in a recovery from recent weakness in China, the world's largest auto market, throughout the year and that U.S. tariffs on European Union imports would remain at current levels despite President Trump's threat to raise them.
The company on Wednesday reported profitability at its closely watched automotive segment that held up better than analysts expected, even if sales and earnings for the group as a whole fell and missed forecasts.
Shares in BMW jumped as much as 7.4% in European morning trading, recouping part of their year-to-date losses.
The Munich-based auto group is preparing for a leadership transition, with production head Milan Nedeljkovic set to replace longtime chief executive Oliver Zipse at a time when the auto industry is grappling with challenges on multiple fronts. The war in the Middle East adds to tariffs, competition from Chinese players for Western carmakers and a slower-than-expected shift to electric vehicles.
BMW--which also owns the Mini and Rolls-Royce brands--is also refreshing its car lineup with a new generation of software-first cars. It touted strong European demand for the first model of that range, the iX3 sports-utility vehicle, with Zipse telling reporters the company added a second production shift to its Debrecen plant in Hungary to reduce wait times.
The company hopes its new models will help it regain ground lost to local rivals in China, where the auto market deteriorated more than anticipated in the first quarter and prompted downgrades to industry forecasts.
BMW said it still expects auto deliveries for the full year to be on par with last year and pretax profit to be moderately lower.
Intense competition across major auto markets, particularly in China, hurt prices and sales volumes, weighing on BMW's earnings, the company said. Currency headwinds and raw-material prices also hurt results, it added.
Net profit for the quarter fell to 1.62 billion euros ($1.89 billion) from 2.10 billion euros for the same period last year, BMW said.
Group earnings before interest and taxes fell 36% to 2.00 billion euros. Analysts had forecast EBIT at 2.26 billion euros for the group, according to consensus estimates provided by the company.
At BMW's auto segment, a quarterly EBIT of 1.345 billion euros beat consensus expectations of 1.28 billion euros.
Group revenue dropped 8.1% to 31.01 billion euros, compared with analysts' expectations of 32.24 billion euros. BMW last month reported a decline in quarterly vehicle sales due to weakness in the U.S. and China.
Write to Adria Calatayud at adria.calatayud@wsj.com
(END) Dow Jones Newswires
05-06-26 0535ET
