BMW exceeded analyst expectations with its second-quarter earnings, reporting an earnings per share (EPS) of $3.14, surpassing the consensus estimate of $2.77 by $0.37. The company's revenue for the quarter reached $37.31 billion, slightly above the estimated $37.25 billion. This performance comes after a recent profit warning where the company lowered its operating auto margin guidance to 1% to 3% from the previous 4% to 6%, largely due to weakness in the Chinese market and the impact of the Iran war on consumer sentiment and energy costs.
Despite the positive earnings report, BMW's shares have seen a significant decline, falling approximately 7% on Wednesday to their lowest point since late 2020. The stock has shed roughly 35% since the beginning of the year, trading near its 52-week low of $60.34. The profit warning and subsequent market reaction led to analyst downgrades, with JPMorgan calling it a "wake-up call" for the European auto industry and Deutsche Bank lowering its price target from €100 to €90, though maintaining a "buy" rating.
In response to the challenging market, BMW is implementing major cost-saving measures. The company is considering capacity cuts of 10% to 15% and has announced a voluntary redundancy program targeting around 8,000 employees, primarily in administrative and development roles in Germany. This program, expected to cost hundreds of millions of euros, aims to generate annual savings of approximately €1 billion starting in 2028. Additionally, BMW is intensively examining its cost base and production capacity, with further details expected in its half-year report due on July 30, 2026.
