MUNICH • BMW AG’s loss-making automotive division dragged the company into the red for the first time in more than a decade, rounding out a dismal quarter for European carmakers hit by the coronavirus pandemic.
The German manufacturer lost €666 million (RM3.31 billion) before interest and taxes between April and June, its first quarterly deficit since the financial crisis in 2009.
BMW’s auto business, which recorded a bigger than expected earnings before interest and tax (Ebit) loss, was mainly to blame after deliveries tanked due to pandemic-related shutdowns of dealerships and factories, the company said in a statement yesterday.
BMW is the final German manufacturer to report after what has been a difficult quarter for carmakers. Volkswagen AG lost €2.4 billion and cut its dividend, while Daimler AG argued it had weathered the worst but still needs to slash tens of thousands of jobs.
Renault SA’s alliance with Nissan Motor Co Ltd came under strain as the Japanese partner was mostly to blame for the French carmaker’s record US$8.6 billion (RM36.12 billion) loss.
BMW fell as much as 4.4% in early Frankfurt trading and was down 3.1% as of 11:26am yesterday. The shares have lost more than a fifth this year.
The company’s automotive sales increased “significantly” in July from a year earlier, CEO Oliver Zipse said yesterday during a call with reporters. Both the UK and France reported rising new-car registrations last month.
BMW reported a worse than expected second-quarter (2Q) loss and its outlook for zero 2020 free cashflow might also disappoint. BMW’s industrial net cash buffer has now fallen by one third in first half (1H) to €11.6 billion, despite only modest 2Q cash burn, following an €8.5 billion intragroup transfer to support financial services.
Another bright spot for BMW was China, which started to recover from April and registered volume growth during the three months through June compared to the year earlier.
BMW will start producing the iX3 electric car in China this year, where it will also be first sold to customers.
Deliveries of electric and hybrid cars rose in the quarter as countries including Germany and France raised subsidies for the vehicles. The company said it expects further growth from that sector in the 2H of the year.
Despite the loss, BMW stuck to a prediction for an automotive Ebit margin of between 0% and 3% for the full year, after lowering it from 2% to 4% in May. — Bloomberg