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BMW Cuts Profit Forecast Again, And Warns About Uncertainty

BMW Cuts Profit Forecast Again, And Warns About Uncertainty.

“delivery volumes will not return to normal within a few weeks”

BMW cut its automotive profit margin forecast for 2020 to between zero and 3% because of the coronavirus epidemic, and warned that this second profit warning this year might not be its last.

In a separate statement Wednesday, BMW reported its results for the 2020 first quarter in which earnings before interest and tax (EBIT) rose to 1.38 billion euros ($1.5 billion) from 589 million euros ($640 million) in the same period last year. BMW explained that the previous year profits were pulled down by a 1.4 million euro provision.

   In March, BMW said it expected profits to maybe halve in 2020, as the impact of the coronavirus hits sales, economies and consumer confidence, with the automotive EBIT profit dropping to between 2% and 4%.

In 2019, the automotive operating margin fell to 4.9% from 7.2% the previous year and EBIT fell 17% to 7.4 billion euros ($8 billion) compared with the previous year.

In the profit warning statement issued late Tuesday BMW said the coronavirus has generated much uncertainty and things will get worse.

“The decisive factor for the adjustment is that the measures to contain the coronavirus pandemic are lasting longer in several markets and are thus leading to a broader negative impact than was foreseeable in mid-March. It is therefore apparent that delivery volumes in these markets will not – as was previously assumed – return to normal within a few weeks. The highest negative impact is expected in the second quarter of 2020,” BMW said.

“The economic shifts caused by the pandemic make it difficult to provide a reliable forecast. The outlook is therefore subject to a high degree of uncertainty,” BMW said.

On Wednesday in Munich, BMW chairman Oliver Zipse said the company is trying to preserve felixibility because of the uncertain coronavirus environment.

“Quite clearly, the situation remains serious and market forecasts are subject to constraints under these circumstances. We are gradually ramping up our production again according to demand in each market. However, we are monitoring developments extremely closely to be able to respond with maximum flexibility,” Zipse said in a statement.

“We are keeping a tight rein on inventory levels because liquidity has absolute priority in this situation,” Zipse said.


 

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