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BMW raises pretax profit guidance despite third-quarter earnings drop

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BMW raises pretax profit guidance despite third-quarter earnings drop

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BERLIN (Reuters) – BMW <BMWG.DE> slightly raised its profit outlook counting on demand for new models and cuts in development spending even as third-quarter earnings fell on technology costs. The world’s second-biggest luxury automaker by sales on Tuesday forecast a 5-10 percent gain in pretax profit, raising a previous forecast of 1-5 percent. New vehicles are stoking demand, including its redesigned 5 Series, BMW’s second best-selling model, and an upgraded 4 Series which came to market this year. The overhauled X3 sport-utility vehicle hits dealerships this month. The Munich-based carmaker, which has been pushing cuts in development costs by restricting parts complexity, said it still expects a rise in deliveries to a new record this year. BMW is “keeping (its) promises and raising the bar for our own ambitious targets,” Chief Executive Harald Krueger said. Still, growing spending on electric and self-driving technologies keeps weighing on results. Quarterly pretax profit fell 5.9 percent to 2.42 billion euros (2.13 billion pounds), near the 2.41-billion-euro low-end forecast in a Reuters poll of bank and brokerage analysts. BMW plans to offer a convertible version of the electric i8 Roadster next year as part of efforts to expand battery-powered offerings to 25 models by 2025, about half of them fully-electric. The carmaker’s operating profit margin slipped to 8.3 percent in the July-to-September quarter from 8.5 percent a year earlier, within its 8-10 percent target range but below Audi’s <NSUG.DE> 8.9 percent and the 9.2 percent at Mercedes-Benz <DAIGn.DE>. BMW pared expectations for revenue gains this year, forecasting sales in core automotive operations to grow by between 1 and 5 percent amid currency headwinds and political volatility, lowering previous guidance of 5-10 percent.

(Reporting by Andreas Cremer; editing by Maria Sheahan and Jason Neely)
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