Start of production of the all-electric BMW i5
Milan Nedeljkovic, Production Director at BMW, shows the all-electric BMW i5.
(Photo: dpa)
Full order books and higher prices mean that BMW is raising its annual forecast for 2023. A return of nine to 10.5 percent can now be expected in the car business, as the company announced in an ad hoc announcement on Tuesday. So far, Munich had aimed at eight to ten percent.
In terms of deliveries, the carmaker is also assuming “solid” growth. Previously, only slight growth compared to the previous year had been expected in Munich.
What clouds the good prospects, however, is the forecast for the so-called free cash flow. To put it simply, you have to subtract all expenses, including investments, from all incoming cash flows for this key figure.
Due to higher investments in electromobility and increased inventories to secure its supply chain, BMW is only assuming a cash inflow of six billion euros. In May there was talk of almost seven billion euros. Analysts had also expected around 7.5 billion euros in cash flow for the current year.
In addition, according to the announcement, BMW expects continued challenges in the supply chain and inflation in the second half of the year, which could cloud the margin. The BMW share gave in the morning sometimes more than six percent. The paper was one of the biggest losers in the Dax on Tuesday.
Margin in the auto segment has recently fallen
BMW will present its full quarterly report on Thursday. In preliminary results, the Munich-based company reported a pre-tax group margin of 12.6 percent in the first half of the year, in the core business – the car segment – the EBIT margin was 10.6 percent. The second quarter was significantly worse here than the first.
Vehicle sales in the first half of the year were 1.2 million, an increase of 4.7 percent compared to the same period last year. However, at the time, the war in Ukraine and lockdowns in China had triggered significant problems in the supply chain and severely curtailed production throughout the auto industry.
According to figures from the industry service provider Marklines, BMW produced 443,000 cars in Europe from January to May. That is ten percent fewer vehicles than in the comparable months of the pre-Corona year 2019.
Premium manufacturers such as BMW are currently continuing to benefit from their high prices and constant demand. 2022 was already a record year for Bayern in terms of sales and profits. Last week, therefore, BMW competitor Mercedes-Benz also raised its outlook for the current fiscal year. Volume manufacturers like Volkswagen, on the other hand, are increasingly feeling the price war in the industry – especially in China.
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