The German premium manufacturer is making more profits. The outlook for the year is, however, very cautious.
TDespite a significant increase in profits in the third quarter, BMW is cautious about the year as a whole. In view of the Corona crisis, the automobile manufacturer has now reiterated the expectation that group earnings before taxes will decline significantly in the current year, i.e. by more than ten percent. The return on sales (EBIT margin) in the auto business will shrink from 4.9 percent in the past year to zero to three percent, said BMW and thus remains with its earlier forecast. After nine months, the pre-tax group result was almost 42 percent below the previous year’s figure, and the auto business was barely profitable with an EBIT margin of 0.3 percent.
“After the economic environment stabilized in the third quarter, the pandemic is now picking up again significantly,” warned the manufacturer. The negative consequences of the wave of infections and the uncertainties due to the economic effects of the containment measures are high.
Despite a 1.4 percent decline in sales to EUR 26.28 billion, consolidated earnings before taxes rose by almost ten percent to EUR 2.46 billion in the quarter. The surplus even increased by 17 percent to 1.82 billion euros.
The development was supported by good business in China. The world’s largest car market has recovered much more strongly than the markets in other regions of the world. BMW had already reported an increase in sales and an increase in free cash flow in the auto business for the third quarter.
Other car companies had recently relied on the China business. Daimler got back on the road to success surprisingly quickly and increased its operating profit massively in the third quarter. Thanks to full order books and high savings potential, Volkswagen is cautiously optimistic about the final months of the year.
The electric car manufacturer Tesla had reported the fifth quarterly profit in a row. The profit, however, was mainly fed by the sale of CO2 credits to other car manufacturers, who use them to offset their emissions values for the achievement of the climate targets.