Monday 18 January 2021

BMW Group Q3 profit tops $2.9bn

MUNICH, November 5, 2020

The BMW Group said it generated profit before tax of around €2.5 billion ($2.92 billion) in the third quarter (Q3) of the year, with free cash flow in the automotive segment was in excess of €3 billion.

“The third-quarter performance underlines the BMW Group’s operational strength and ability to perform well within a challenging environment. We improved Group earnings compared to one year earlier and are therefore firmly on track towards achieving our targets for the full year. We manage our day-to-day operations closely, taking regional fluctuations in demand into account, and can respond to changing market situations at any time,” said Oliver Zipse, Chairman of the Board of Management of BMW AG, in Munich on Wednesday.
“We are shaping the transformation of our industry from a position of strength and are very well positioned for the years to come. At the same time, we are already strategically and technologically aligning the Group for the period after 2025 – including key aspects such as vehicle architectures and planning for vehicle production by plant.”

Investments in the future remain key to innovation leadership

The Group intends to invest more than €30 billion in research and development by 2025 with the aim of extending its leading edge in terms of innovation.

In the period from January to September, the BMW Group's research and development expenses totalled €4,140 million and thus remained at a high level (2019: €4,247 million; -2.5%).This includes expenses for future electrified models and modular kits for e-vehicles. Capital expenditure on property, plant and equipment as well as on other intangible assets continues to be undertaken on a clearly prioritised, highly focused basis. A total of €2,375 million (2019: €3,308 million; -28.2%) was invested during the nine-month period to September.

“Our financial management strategy focuses on high profitability and strict cost management. On this solid basis, we continue to invest in the future of our Group and are financing the transformation with our own resources,” said Nicolas Peter, Member of the Board of Management of BMW AG, Finance.

“Today, for example, we are benefiting from our strategic focus on the upper luxury segment, a decision we took back in 2016. With the attractive 8 Series models and the BMW X7, we have managed to grow the sales volume of highly profitable models by over 70% since 2018. On the cost side, numerous initiatives are boosting our efficiency with the aim of keeping the Group on course in this challenging environment, both short-term and long-term.”

E-autos to be made at all German plants by 2022

The BMW Group continues to accelerate its e-mobility ramp-up. All four German automotive plants will be manufacturing all-electric vehicles in the foreseeable future. Following the BMW i3*, which has been made in Leipzig since 2013, the BMW iNEXT will be produced in Dingolfing and the BMW i4 in Munich from 2021. In a subsequent step, the production of an all-electric model will also begin at the Group's Regensburg plant in 2022.

CO2 reduction to be achieved by millions of electrified vehicles

The BMW Group's second strategic focus is on sustainability. During the corona pandemic, the Board of Management has been setting itself some ambitious long-term targets. First and foremost, the BMW Group has clear objectives for reducing its CO2 emissions up to the year 2030 – for the first time across the entire life cycle of its products – encompassing the supply chain, the production process and right up to each vehicle’s end-of-life phase. Across the entire period up to 2030, CO2 emissions per vehicle are to be significantly reduced by at least one third compared with 2019 levels.

Additional all-electric models in the pipeline

In addition to the BMW 7 Series, comprehensive electrification will continue to be rolled out across the Group’s model range. Further examples of the "Power of Choice" will be the highly popular BMW X1 and BMW 5 Series, which will also be available with all four drivetrain variants going forward – all-electric, plug-in hybrid, diesel and petrol.

Perceptible recovery in third quarter – earnings improved

During the period from July to September, the BMW Group's business performance recovered perceptibly from the previously massive impact of the corona pandemic. In the third quarter, the Group delivered a total of 675,592 (2019: 621,981; +8.6%) BMW, MINI and Rolls-Royce brand vehicles to customers around the world – a new quarterly all-time high.

A total of 1,638,167 automobiles were delivered to customers during the first nine months of the year (2019: 1,872,451 units; -12.5%). Group revenues decreased to €69,508 million (2019: €74,844 million; -7.1%). Profit before tax amounted to €2,962 million (2019: €5,063 million; -41.5%). Accordingly, the Group’s return on sales (EBT margin) fell to 4.3% (2019: 6.8%). Group net profit amounted to €2,177 million for the nine-month period (2019: €3,614 million; -39.8%).

The BMW brand sold a total of 1,427,392 units (-11.3%) during the first nine months of the year. During this period, the MINI brand delivered 208,124 units (-20.0%) and Rolls-Royce Motor Cars 2,651 units (-28.5%) to customers. Despite the overall decline in volumes, the number of electrified vehicles delivered to customers increased to a new record level of 116,381 units (+20.0%) for the nine-month period.

BMW Motorrad increased deliveries of its motorcycles and maxi-scooters in the third quarter to 52,892 units (+20.9%), generating revenues of €637 million (2019: €558 million; +14.2%) and an EBIT of €45 million (2019: €35 million; +28.6%). The segment EBIT margin came in at 7.1% (2019: 6.3%).
Outlook for 2020 reaffirmed

The BMW Group sets itself ambitious targets, even in politically and economically turbulent times. For the twelve-month period as a whole, the BMW Group continues to assume that demand in all key markets will be significantly reduced in light of the coronavirus pandemic and the necessary containment measures.

As a consequence, in 2020, automotive segment deliveries worldwide are likely to be significantly lower than in the previous year. Under the prevailing circumstances, the BMW Group expects the segment EBIT margin to lie within a range between 0 and 3% in 2020.

Mainly due to the negative economic outlook, the Financial Services segment is expected to generate a lower volume of new business amidst a potentially more volatile risk environment. Accordingly, a moderate year-on-year drop in return on equity is forecast for the segment.

Motorcycles segment deliveries are expected to decrease moderately year-on-year. The EBIT margin is therefore currently forecast to lie within a range between 3 and 5%.

Taking account of the various factors described above, Group profit before tax is likely to be significantly lower than in 2019.

The workforce size will be slightly below the level recorded one year earlier. The personnel-related measures previously communicated will be used to manage the workforce size. Under the current circumstances, all new recruitment is subject to stringent critical review. – TradeArabia News Service



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