(Update: share prices, management and analyst statements.)
MUNICH (dpa-AFX) - Car manufacturer BMW felt the impact of the weak market in China again last year and is setting cautious targets for 2026. However, management expects the situation regarding transatlantic trade tariffs to ease somewhat starting in the second half of the year. In any case, demand for cars is expected to remain stable. Despite a slight decline in profit, the dividend, which was significantly cut last year, is to be increased slightly again. Shares fell on Thursday.
The stock recently lost 1.2 percent to 79.84 euros in a stable Dax. This marks a 14 percent price decline for the current year. The automotive division disappointed, but the payout to shareholders was strong, wrote Goldman Sachs analyst Christian Frenes. Jefferies expert Philippe Houchois viewed the recent performance similarly and also considered the outlook for free cash flow in the new year to be somewhat weak.
Earnings before interest and taxes (Ebit) fell by 11.5 percent to 10.19 billion euros in 2025, the Dax-listed group announced in Munich on Thursday. In the important automotive division, the operating profit margin (Ebit) stood at 5.3 percent, a decrease of one percentage point. In the fourth quarter, the Bavarian company performed slightly weaker in this area than experts had expected.
Cautious forecast
In the new year, the closely watched figure is expected to land in the range of 4 to 6 percent. According to the company, increased tariffs will cost around 1.25 percentage points in margin - last year it was around 1.5 percentage points. Experts' estimates for 2026 had previously been almost at the upper end of the forecast range. Pre-tax profit is expected to decrease moderately this year. Currency effects and more expensive raw materials are also contributing factors.
CFO Walter Mertl expects relief regarding transatlantic trade tariffs in the second half of the year, as he stated in a press conference. For instance, EU import duties on US-produced cars are expected to drop to zero as planned, and there should also be relief in North American trade between the USA, Mexico, and Canada.
Free cash flow in the automotive division, which is important for investors, is expected to exceed 4.5 billion euros again in 2026. This provides information about current financial strength. In 2025, it had fallen from 4.9 billion to 3.2 billion.
Bottom-line profit decreased by 3 percent to 7.45 billion euros in 2025, while revenue fell by 6.3 percent to around 133.5 billion euros. Surprisingly, the dividend is set to rise by 10 cents to 4.40 euros per Dax-listed ordinary share. The main beneficiaries are the heirs of the Quandt owner family, Stefan Quandt and his sister Susanne Klatten.
More stable than the competition
BMW has fared relatively well so far through the general crisis in the German automotive industry. Although this is already the third annual decline in profit, its two German competitors, Mercedes and Volkswagen, both saw their profits nearly halved last year. In comparison, the decline for the Munich-based company is almost harmless - although problems in China and with supplied brakes had already hit the books hard the previous year.
No job cuts so far
And while other German carmakers are cutting jobs, BMW has managed to get through the crisis so far without job reduction programs.
A clear advantage for the Munich company is likely that, thanks to its own large plant in the USA, it is at least partially spared from tariffs there. Nearly 413,000 cars were built there last year, more than half of which remained in the USA. This means that BMW had to import less than half of the cars sold in the USA.
Furthermore, they benefit from having designed their plants so that electric cars, hybrids, and internal combustion engines can be produced on a single assembly line. This helps to cushion the uncertainties surrounding the ramp-up of electromobility. BMW CEO Oliver Zipse emphasized: "We have positioned ourselves strategically correctly in recent years. We are benefiting from that today: we do not have to change course in a challenging environment, but can maintain our direction and continue to implement our strategy consistently."
Zipse's final figures
The annual balance sheet is the last with Zipse as CEO. On May 14, his designated successor Milan Nedeljkovic will take over. He is currently the Board Member for Production, a position Zipse also held before his promotion to the top of the company.
Nedeljkovic has therefore been involved for some time in Zipse's most important project, which will help determine BMW's fate in the coming years. The "Neue Klasse" (New Class), whose first representative, the iX3, was presented last year, has been available at dealerships for a few days.
So far, it has had a strong start. In view of high orders, BMW already introduced an additional production shift in January. The Munich-based company also plans to present the next car of the New Class shortly: the i3 - the electric counterpart to the 3 Series - in a high-volume segment for the company./men/ruc/err/nas
