BMW Shocks Investors With Big Loss, But Expects Small Profit For The Year.
“Our swift responsiveness and consistent management strategy enabled us to limit the impact of the corona pandemic on BMW during the first half of the year,” Oliver Zipse
BMW lost a record amount of money in the coronavirus-stricken second quarter, but still expects to make a profit for the whole year, albeit a tiny one.
News of the loss, its first in over 10 years, shocked investors on Wednesday, and BMW shares dived more than 4.5% to 55.49 euros.
BMW joined Volkswagen, Mercedes parent Daimler, France’s Renault and Volvo of Sweden in posting losses because of the pandemic. Groupe PSA remained in the black.
BMW lost a pre-tax 498 million euros ($600 million) in the 2nd quarter and made an operating loss of 666 million euros ($800 million). BMW’s EBIT (earnings before interest and tax) margin for cars dived to minus 10.4% from plus 6.5% in the same quarter last year, but it stuck with a forecast it made in May that the margin would range from zero to 3% for the year as a whole. BMW remained in the black for the whole of the 1st half.
A bright spot for BMW was sales in China which rose 17%, while sales of electric vehicles rose 3.4% to 61,650.
“Our swift responsiveness and consistent management strategy enabled us to limit the impact of the corona pandemic on the BMW Group during the first half of the year,” said Oliver Zipse, Chairman BMW.
“We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0 and 3% for the Automotive segment in 2020. We are monitoring the situation very closely and managing production capacities in line with market developments and regional fluctuations in customer demand,” Zipse said.
Last of the big carmakers
BMW is the last of the big car makers to report first half results, and it wasn’t a pretty sight.
Volkswagen lost approaching $1 billion in the first half, but expects to remain in the black for the whole of the year. Mercedes parent Daimler reported a 2nd quarter operating loss of 1.68 billion euros ($1.95 billion). Volvo, owned by China’s Geely Automobile Holdings Ltd, reported an operating loss of close to $100 million in the first half, after a $5.5 billion profit in the same period of 2019.
Renault recorded a net loss of 7.29 billion euros ($8.6 billion) in the first half compared with operating income of 1.5 billion euros in the same period last year.
Groupe PSA remained solidly in the plus column. PSA, which owns Peugeot, Citroen, Opel and Vauxhall brands, and is negotiating a merger with Fiat Chrysler Automobiles, said its net profit in the first half slid to 595 million euros ($700 million) from 1.83 billion euros ($2.2 billion) in the same period of 2019.