BERLIN, May 7 (Xinhua) -- Operational profits (EBIT) of BMW amounted to 589 million euros (659.6 million U.S. dollars) in the first quarter (Q1) of 2019 fiscal year, marking a decline of 78.2 percent, while turnover decreased slightly by 0.9 percent to 22.5 billion euros, the German luxury car maker announced on Tuesday.
BMW's results were impacted by provisions of approximately 1.4 billion euros made by the German car maker for cartel proceedings. Currently, the European Commission is investigating whether German car manufacturers cooperated to restrict competition in the development and roll-out of emission-reduction technologies.
"The BMW Group has made it clear that if necessary it will contest the EU Commission's allegations with all the legal means at its disposal," the German car maker announced.
In addition to the provisions, higher manufacturing costs caused by the "high proportion of electric vehicles" had a negative impact on BMW's Q1 figures as well. Higher expenses for research and development and increased investments in property, plant and equipment also burdened on BMW' first quarter business.
According to BMW, the car maker's earnings in the automotive segment were particularly affected by the higher expenses and the cartel proceedings. EBIT in BMW's automotive segment amounted to around minus 310 million euros, meaning a profit margin of minus 1.6 percent. In the same period last year, BMW had achieved a positive margin of 9.7 percent.
Car sales of BMW remained almost unchanged at 605,333 cars sold in Q1, mainly backed by the German car maker's joint venture BMW Brilliance Automotive in China where BMW's car sales increased by 10.2 percent to 168,663 cars.
"In operational terms, we remain firmly on course and expect business to benefit from tailwinds, especially in the second half of the year, as numerous new models become available," commented Harald Krueger, chief executive officer (CEO) of BMW.
For 2019, BMW is expecting "significantly" higher costs in order to comply with stricter carbon emission legislation. Rising Manufacturing cost would thus be likely to have a "dampening effect" on the German carmaker's earnings. In addition, "unfavorable" currency effects and higher material costs are expected to have a "medium to high three-digit million negative impact" on BMW's business in 2019.
In its automobile segment, BMW is now expecting its margin to decline even further than the German car maker announced in April. For the whole fiscal year 2019, BMW is seeking to achieve a margin between 4.5 and 6.5 percent.
