EU AUTOMOTIVE: BMW: Profit Warning
Oct-08 06:03
(BMW; A2/Aneg/NR)
Slight negative. China weakness had been somewhat signalled in previous comments. Its guidance had help up relatively well versus peers this year before now.
- 4Q China volume assumptions have been reduced as the anticipated recovery in 3Q did not materialise. It will also incur costs supporting dealers for government mandated commission reductions.
- Tariff reimbursements following the EU-US trade deal will not be realised until 2026. It had assumed 2025. Some of its tariff mitigation assumptions have not been realised.
- Updated outlook:
- Auto EBIT margin 5-6%, from 5-7%. BBG consensus 5.7%. The tariff component is 25bp.
- Auto FCF above €2.5bn, from above €5bn. Less than €1bn of that is tariff reimbursement timing, with the balance China driven. BBG consensus €5bn.
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MNI: GERMANY JUL EXPORTS -0.6% M/M; IMPORTS -0.1% M/M
Sep-08 06:00
- MNI: GERMANY JUL EXPORTS -0.6% M/M; IMPORTS -0.1% M/M
- GERMANY JUL TRADE BALANCE EUR +14.7 BLN
MNI: GERMANY JUL IND PROD +1.3% M/M
Sep-08 06:00
- MNI: GERMANY JUL IND PROD +1.3% M/M
UK DATA: KPMG-REC Report on Jobs: Steepest Increase in Candidates Since Nov'20
Sep-08 05:55
- The KPMG-REC Report on Jobs showed further labour market softening - the most notable of which was the "steepest upturn in candidate availability since November 2020." The report notes that this was driven by vacancies falling "sharply" again alongside redundancies. The availability of staff index has now moved above 70.
- The Report has been flagging that starting salaries have been increasing at below average rates for some time. For permanent employees the increase was the report notes it is the weakest in 4.5 years.
- The only minor positive in the report was that both permanent and temporary placements declined at a slower pace than in either June or July, but even so there was continued decline and at similar levels to in May.
- We know for Deputy Governor Ramsden it has been his primary concern for some time, while Governor Bailey noted that he put more emphasis on the downside risk of pay growth in his August cut decision (after it undershot the Bank's May MPR forecast). So this report is likely to make both of these members more likely to vote for further cuts - and we think that both members would be required to keep continuing quarterly cuts on the table.
- All in all, we conclude that the probability of a November 25bp cut is increased a little by this report and it follows the DMP survey last week to be another downbeat labour result. But that we still need to see continued deterioration in the official labour market statistics and other labour surveys ahead of the November decision (including Agents' survey). And importantly, any earlier indications regarding pay settlements for 2026 will be key to the decision, too.
