BMW warns on virus lockdowns but maintains outlook
German luxury carmaker BMW on Wednesday warned that new pandemic restrictions would “severely” hit business in the months ahead, even as it reported better than expected third quarter profits.
The coronavirus “will remain the biggest of many risks”, chief executive Oliver Zipse told a virtual press conference, as “new lockdowns could severely impact our business development in the fourth quarter and early 2021”.
The Munich- based company posted a net profit of 1.8 billion euros ($ 2.1 billion) in the three months to September, up from 1.5 billion euros in the same period last year as it recovered from the impact of lockdowns early in 2020, BMW said in a statement.
Group sales were down 1.4 percent year- on- year to 26.3 billion euros.
The results beat analysts’ predictions of third quarter net profit of 1.5 billion euros on sales of 26.1 billion euros, according to the FactSet financial information service.
BMW suffered its first loss in 10 years in the second quarter after the pandemic shuttered showrooms, closed factories and ravaged demand in the spring but the auto market bounced back strongly as restrictions were eased.
Following a better third quarter, “the pandemic is now clearly regaining momentum”, BMW said.
The company confirmed its full- year outlook, forecasting a significant fall in earnings and car sales for 2020.
Brexit will also “contribute to uncertainty”, with BMW maintaining a large presence in Britain at its Mini factory in Oxford.
Operating profit at BMW’s automobiles segment, which includes its Mini and Rolls- Royce marques, fell 2.5 percent to 1.5 billion euros with more than 675,000 cars delivered worldwide in the third quarter. China’s economic recovery in the quarter saw BMW increase sales in its largest national market to a record level, it said.
Germany this week closed restaurants, bars, cultural and leisure centres to curb a second coronavirus wave, raising doubts about the rebound in Europe’s top economy.
But significantly for carmakers, and unlike during the first round of shutdowns, factories remain open.
“We don’t think there will be an interruption in production,” Zipse said. Asian countries are also still open for business, leaving global supply chains unaffected, he added. To confront the pandemic and weaker demand in key markets, BMW is ramping up a cost- cutting drive. In June it announced that 6,000 jobs will be lost this year -- out of 126,000 at the end of 2019 -- through attrition and voluntary early retirement.
The automaker is also racing to catch up with EU emissions requirements.
BMW said it will invest more than 30 billion euros in research and development by 2025, including 4.2 billion euros in the nine months to September this year. The number of electrified BMW and Mini models sold between January and September is up by 20 percent. The group aims to sell six million such cars within 10 years.
“We are shaping the transformation of our industry from a position of strength and are very well positioned for the years to come,” Zipse said.
Electric cars will be made at all German car plants by 2022, including the BMW i3, the Mini Cooper SE and the next generation of the 7 Series, BMW added.