BMW plunges to Q2 loss as lockdowns hit sales
FRANKFURT: BMW AG expects to make a profit this year if demand continues to recover, despite posting a record loss for its car division in the second quarter.
The German manufacturer of BMWs, Minis and Rolls-Royces said yesterday that sales had started to recover during the latest three months, including a 17% jump in deliveries in China, but the rebound would not fully make up for sales lost to Covid-19.
As a result of the sales slide, and higher costs for developing low-emission cars, BMW posted a pre-tax loss of €498 million ($590 million), its first in over 11 years, and an operating loss of €666 million ($790 million) for the quarter.
“What matters now is how robust this upward trend is and when individual markets will follow suit,” said chief executive Oliver Zipse, adding that its overall cars sales in July were higher than last year.
BMW said, however, that its outlook did not factor in the potential impact of a second wave of Covid-19 infections, nor the prospect of a more sustained or deeper recession than expected in its key markets.
Zipse said on a call that developments in the United States, which has the highest number of Covid-19 cases and deaths worldwide, were “extremely worrying”.
Sales in the United States made up 12.6% of deliveries in the first half of 2020, down from 15.2% in 2020. Overall, BMW said it expected global demand for luxury cars to fall by a fifth this year.
BMW’s EBIT margin for cars slumped to -10.4%, an historic low, down from 6.5% in the second quarter last year, though it maintained the forecast it made in May for a margin of 0% to 3% for the year as a whole.
Jefferies analyst Philippe Houchois said BMW’s margin forecast for the year suggested a healthy recovery in the second half of 2020, even though the second-quarter results were below the consensus.
“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,” Zipse said in a statement.