Despite higher annual targets of bmw are the Shares
of the carmaker came under pressure on Tuesday. The shares fell more than 6 percent to their lowest level in two months. Although BMW scored in the first half of the year with a respectable operating margin of 10.6 percent. The group therefore also raised its forecast for the full year. However, the margin declined in the second quarter. Analysts blamed the weak profitability in the second quarter for the price losses. In the wake of the BMW share, the papers also fell on the stock exchange Mercedes Benz
return.
Zipse raises forecast
BMW now expects an operating profit margin in its core business of 9 to 10.5 percent, as the Dax group announced on Tuesday. So far, the group had promised 8 to 10 percent for the key figure, which is highly regarded on the stock market, and was already considering the upper part of the range. The basis for the optimism of BMW boss Oliver Zipse (59) are preliminary results from the first half of the year. The operating margin in the car business was 10.6 percent in the first half of the year and was thus noticeably above the previously targeted range.
When it comes to deliveries, the Munich-based company is assuming solid growth compared to the previous year – i.e. by 5 to 10 percent. So far, only a slight plus had been announced. The Group is becoming more cautious on the cash flow outlook.
Second quarter margin below expectations
In their initial reactions, analysts from the investment houses JP Morgan, Jefferies and RBC primarily criticized the Munich company’s weak profitability in the second quarter. The margin in the auto business is 9.2 percent, below the market expectation of 10.1 percent, wrote Tom Narayan from bank RBC. In addition, the increased operating margin forecast (EBIT) for 2023 is probably already reflected in the current market estimates. A slowdown in business in the second quarter has investors concerned about 2024.
BMW’s statements on cash flows were also not well received by the experts. The carmaker has reduced its forecast for free cash flow this year by one billion euros. The new BMW CFO Walter Mertl is now aiming for a free inflow of funds of at least 6 billion euros in the car business, after his predecessor Nicolas Peter (61) had promised around 7 billion. BMW explained that the reason for this was higher investments in the conversion to e-mobility, but also higher stockpiling to secure the supply chains. Increased inventories had a dampening effect as early as the second quarter, and free cash flow in the auto division was weaker than in the first quarter at EUR 1.2 billion. Investors are sensitive to cash inflow, or free cash flow, because less cash in the treasury can mean less dividends.