By Rachel More
BERLIN, Nov 4 (Reuters) - Premium automaker BMW got a boost to shares on Wednesday despite slashing its financial targets for a second time this year and reporting a quarterly profit slump, as it accelerates job cuts and restructuring.
The Munich-based company launched a redundancy programme to cut 8,000 jobs in Germany in July, joining the ranks of Volkswagen and Mercedes-Benz in a battle to cut German production costs.
European automakers are under pressure from plunging sales in China,
once a key profit driver, and steep US tariffs. In recent months, strong momentum for electric vehicles in Europe has further weighed on profitability.
"Current developments in our industry call for decisiveness and swift implementation. We will therefore specifically intensify and accelerate structural measures," CEO Milan Nedeljkovic said.
His comments followed another cut to BMW's 2026 guidance on Tuesday. It now forecasts a margin of between minus 0.5% and 0.5% this year, far below its long-term target of 8% to 10%, as it braces for restructuring charges in the fourth quarter.
Investors appeared confident in the CEO's plan, with shares up 2.3% after the release of third-quarter results largely in line with forecasts.
European auto shares were broadly lifted by Democratic gains in the US midterm elections, which boosted hopes for less confrontational trade policy out of Washington.
A BMW spokesperson declined to comment on the impact of midterm results on future BMW strategy and any tariff or regulatory changes but said the company had worked well with both parties in government over its five decades operating in the US.
BMW BETS ON NEW MODELS FOR CHINA BOOST
Unlike Volkswagen, which is in the midst of a months-long battle with unions and other stakeholders to double job cuts across the group to 100,000, BMW was able to complete its much smaller redundancy programme within three weeks.
"We do not want to lose this momentum," Nedeljkovic said. The company now plans to cut management functions more quickly under the restructuring drive.
Scope Ratings analyst Matthias Hellstern said the restructuring charge reflects BMW's acknowledgement that the auto industry must adapt to lower growth, particularly in China, with cost reductions.
"While the scale of the charge suggests management is aiming to address these issues decisively, I would not assume this is the end of the turbulence," Hellstern said.
BMW's sales in China fell 22% in the first nine months of the year. The company said this was in line with a broader downturn in the market, where Western carmakers have struggled to keep pace with low-cost local brands.
BMW is hoping for momentum from the 'Neue Klasse' revival of its model offering, beginning in China this month with the launch of the iX3 electric SUV after a strong start in Europe.
The group's third-quarter pretax earnings came in at €2.1 billion ($2.4 billion). The operating margin in BMW's core automotive business narrowed to 3.4%, beating analysts' forecast of 3.1%, but declining from 5.2% a year earlier.
($1 = €0.8905)
(Reporting by by Rachel More. Editing by Thomas Seythal, Mark Potter, Tomasz Janowski and Joe Bavier)
