German carmaker BMW on Wednesday reported a 27-percent drop in third-quarter operating profit to 2 billion US dollars, missing analyst expectations amid currency headwinds and higher research and development expenses.

According to Reuters, analysts had on average expected earnings before interest and taxes (EBIT) to come to 2.06 billion US dollars.

BMW said that despite a slight rise in deliveries of luxury cars, its operating return on sales for the automotive division narrowed to 4.4 percent from 8.6-percent a year earlier, well below its targeted range of 8 to 10 percent.

Earnings were hit by higher raw material prices, currency effects, higher provisions for goodwill and warranty measures, tariffs between China and the United States and a price war in Europe, the carmaker said.

Last month, BMW warned its pretax profit would fall this year, against earlier expectations for a flat outcome, and cut its profit margin guidance for cars, blaming intense price competition.