Bayerische Motoren Werke Aktiengesellschaft Q3 Earnings Call Highlights

Bayerische Motoren Werke Aktiengesellschaft ETR: BMW reported third-quarter group earnings before tax of €2.1 billion and said it is accelerating portfolio and organizational changes as it ramps up its Neue Klasse vehicle platform.

BMW Group Chairman of the Board of Management Milan Nedeljković said the company achieved a 3.5% Automotive segment EBIT margin through the first nine months despite what he described as a difficult business environment. He said the company has expanded its portfolio and structural measures to accelerate its transformation and adjusted its 2026 guidance accordingly.

Third-Quarter Results and Automotive Performance

Group revenue exceeded €30 billion in the third quarter and totaled almost €93 billion in the first nine months, according to CFO Walter Mertl. Group earnings before tax reached €2.1 billion for the quarter and €6.1 billion for the nine-month period. The group EBT margin was 6.8% in the third quarter and 6.6% year to date.

In the Automotive segment, EBIT was €901 million in the third quarter, representing a reported EBIT margin of 3.4%. The nine-month Automotive EBIT margin was 3.5%, with EBIT of about €2.9 billion.

Mertl said the third-quarter margin benefited from a settlement with a supplier related to the IBS brake-system warranty case. However, the result was also affected by elevated tariffs, which reduced the margin by about 1.25 percentage points, and depreciation stemming from the BBA purchase-price allocation, which reduced the margin by 1.2 percentage points.

BMW delivered about 551,000 BMW, MINI and Rolls-Royce vehicles during the quarter, down 6.3% from a year earlier. Automotive revenue fell 6.5% to €26.7 billion, reflecting lower deliveries and continued competitive intensity in several markets.

Battery-electric vehicle deliveries rose 7.2% year over year to more than 110,000 units, accounting for one in five vehicles sold globally. Including plug-in hybrids, electrified vehicle sales exceeded 150,000 units and represented 27.4% of deliveries.

• European retail sales increased 2.6%, with all-electric vehicles accounting for more than one in three units sold in the region.
• U.S. retail sales rose 2.5% in the quarter and 3.5% in the first nine months.
• China retail sales declined 24.8%, as weak consumer demand weighed particularly on non-electrified vehicles.
• Sales in Asia Pacific, Eastern Europe, the Middle East and Africa declined 10.9% amid weaker consumer sentiment and competitive pressure.

Mertl said the combined effect of volume, model mix and pricing reduced Automotive EBIT by roughly €600 million from the prior-year quarter, primarily due to lower volumes in China and pricing pressure in several markets.

Cash Flow, Financial Services and Share Buybacks

Automotive free cash flow was negative €566 million in the third quarter but remained positive at €724 million after nine months. BMW said lower inventories contributed about €600 million to third-quarter free cash flow, while provisions and timing effects weighed on the result.

The company maintained its target of more than €2.5 billion in Automotive free cash flow for the full year, citing expected fourth-quarter contributions from further working-capital reductions and tariff refunds.

BMW Financial Services reported €639 million in third-quarter earnings before tax, stable from a year earlier. First-nine-month earnings in the division fell 10.3% to €1.65 billion, mainly due to an addition to an existing provision related to a U.K. consumer compensation program during the first quarter.

The company concluded approximately 1.3 million new retail customer contracts in the first nine months. Adjusted for currency effects, new-business volume rose 3.3% to about €49.4 billion, while the penetration rate for leasing and loan products increased to 53.7%.

BMW said it expects to complete the third and final tranche of its current €2 billion share-buyback program in November, five months ahead of its original schedule. The company said the program will have returned around €1.25 billion to shareholders through buybacks in 2026.

Expanded Restructuring Measures Affect Outlook

BMW said expenses related to its workforce restructuring program will be recognized in the fourth-quarter profit and loss statement. The company now expects the combined impact of expanded portfolio and structural measures to reduce the full-year Automotive EBIT margin by about 2.5 percentage points, compared with an earlier expected impact of 1.25 percentage points.

As a result, BMW revised its 2026 Automotive EBIT margin outlook to a range of negative 0.5% to positive 0.5%, including the measures. Mertl said the margin would still be expected to exceed 2% without them. The company also expects Automotive return on capital employed between negative 1% and positive 1%.

BMW said it will consider the total impact of the measures when determining shareholder returns for the 2026 financial year. It continues to target Automotive free cash flow above €2.5 billion and said both research and development spending and capital expenditures are expected to be below prior-year levels in 2026.

Neue Klasse Rollout and Long-Term Targets

Nedeljković said BMW aims to complete most of its organizational transformation by the middle of next year. The company has begun a voluntary severance program for indirect employees of BMW AG in Germany and said strong interest would allow it to complete the program quickly. BMW is also proceeding with a previously announced 20% reduction in senior vice president roles.

The company is expanding Neue Klasse production across facilities in Debrecen, Munich, Dingolfing, Spartanburg and Shenyang. Nedeljković said the ramp-up of sixth-generation battery-electric models will allow BMW to phase out certain fifth-generation BEVs earlier than originally planned, creating an additional impact on 2026 earnings.

In China, BMW plans to launch the long-wheelbase iX3 in November, followed by additional Neue Klasse models through 2027. The company said it is strengthening local research, development and sourcing, while considering exports from its Shenyang production network to other Asia-Pacific markets.

BMW reiterated its target of a 3% to 5% Automotive EBIT margin in 2028 and its longer-term goal of returning to an 8% to 10% margin range at the beginning of the next decade.

About Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW)

Bayerische Motoren Werke Aktiengesellschaft, together with its subsidiaries, engages in the development, manufacture, and sale of automobiles and motorcycles, and spare parts and accessories worldwide. It operates through Automotive, Motorcycles, and Financial Services segments. The Automotive segment engages in the development, manufacture, assembling, and sale of automobiles, spare parts, accessories, and mobility services under the BMW, MINI, and Rolls-Royce brands. The Motorcycles segment develops, manufactures, assembles, and sells motorcycles and scooters under the BMW Motorrad brand, as well as spare parts and accessories.

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