BMW expects growth in Europe but highlights ongoing supply chain challenges.

BMW expects growth in Europe but highlights ongoing supply chain challenges.

BMW Forecasts Growth in Automotive Market, Raises Outlook for the Year

BMW

Berlin, Aug 3 (ANBLE) – BMW (BMWG.DE) is optimistic about the future of the European automotive market, with robust sales in the United States and slight growth expected in China. The carmaker has raised its outlook for the year, driven by strong orders and an improvement in the supply chain. While supply chain issues and inflation remain concerns, BMW is confident about its performance in the coming months.

A Cautious Outlook with Optimistic Adjustments

The global economy continues to face uncertainties, and BMW, like its European rivals, strikes a cautious tone. However, the company remains positive, adjusting its expectations slightly higher due to the easing of supply chain and inflationary pressures. This upward adjustment reflects BMW’s confidence in its ability to navigate challenges effectively.

Second-Quarter Results and Positive Performance

BMW reported a 2.9% drop in net profit for the second quarter, in line with analysts’ expectations. This decline can be attributed to the boost the company received last year when it took majority control of its Chinese joint venture, BMW Brilliance Automotive. Despite the decline in net profit, BMW saw a significant increase in earnings from higher pricing and sales, which rose by 11.3%.

Raised Outlook for Operating Profit Margin

The carmaker raised its outlook for the operating profit (EBIT) margin in its cars division for the year. The previous forecast of 8% to 10% has been adjusted to 9% to 10.5%. BMW also expects solid growth in its deliveries, compared to the previous forecast of only slight growth. These upward revisions demonstrate BMW’s confidence in its ability to generate higher profits and better market performance.

Integration of BMW Brilliance Automotive Boosts Revenues

BMW’s revenues for the first half of the year reached 74 billion euros, largely due to the integration of its Chinese joint venture, BMW Brilliance Automotive (BBA). The company paid 3.7 billion euros to take majority control of the joint venture in February last year, resulting in a significant increase in earnings before tax. This move has positively impacted BMW’s financial performance, contributing to a 7.7 billion euro increase in earnings before tax for the first half of 2022.

Research and Development Focus on Electrification and Automated Driving

BMW’s commitment to innovation is evident in its research and development (R&D) spending. In the first half of the year, R&D expenditure saw a 15.4% increase, predominantly focused on electrification and automated driving. This investment reflects BMW’s dedication to staying at the forefront of technological advancements in the automotive industry.

Material and Manufacturing Costs and Capital Expenditure

While BMW has experienced positive financial performance, higher material and manufacturing costs have weighed on its results in the first half. The company acknowledges this challenge and is actively addressing it to optimize profitability. Additionally, BMW’s capital expenditure rose by 10.3%, demonstrating its commitment to maintaining and improving its production capabilities.

Conclusion

BMW’s positive outlook for the automotive market, as well as its raised outlook for the year, reflects the company’s ability to adapt and thrive in a challenging business environment. Despite supply chain issues and inflationary pressures, BMW remains confident in its ability to generate profitable growth. Through continuous investment in R&D, the integration of its joint venture, and strategic adjustments, BMW is positioning itself for success in an increasingly competitive industry.

($1 = 0.9146 euros)