BMW Expects Relatively Stable Car Unit Profitability, Lower Group Margin — Update
By David Sachs
BMW Group expects a stable margin for its key automotive division this year but forecasts a lower group margin as used-car demand falls and investments peak.
The German luxury-car maker, which released 2023 earnings last week, said Thursday that its automotive segment--BMW, Mini, and Rolls-Royce--will experience a slight increase in demand this year as new models reach the market. However, depreciation related to Chinese joint-venture Brilliance Automotive will damp gains, BMW said.
As a result, BMW expects the key division's margin on earnings before interest and taxes to finish 2024 between 8% and 10%, in line with last year's result of 9.8%.
The company also expects its group EBIT margin to finish between 8% and 10%--down from 11% last year. Group EBIT will fall slightly this year from 18.48 billion euros ($20.18 billion), as its financial services division grapples with lower demand in the used-car market that will sap leasing revenue, BMW said. Electrification and digitization investments will also weigh on the result but are expected to peak this year.
The company expects free cash flow for its automotive unit at over EUR6 billion, down from 6.94 billion last year.
BMW presented a caveat to expectations as the EU investigates Chinese subsidies for carmakers that could result in tariffs and trade wars.
"Growing uncertainty around macroeconomic and geopolitical conditions could cause economic performance in some regions to deviate from the expected trends and developments," BMW said. "This concerns trade and customs policy, security policy and possible intensification of international trade disputes."
As a group, fully-electric vehicles will comprise more of BMW's sales this year, the company said.
Write to David Sachs at david.sachs@wsj.com
(END) Dow Jones Newswires
March 21, 2024 03:40 ET (07:40 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.-
After Earnings, Is Home Depot Stock a Buy, a Sell, or Fairly Valued?
-
After Earnings, Is Baidu Stock a Buy, a Sell, or Fairly Valued?
-
Why Stocks Are Hitting Record Highs—and What Could Send Them Back to Earth
-
5 Stocks to Buy While They’re Trading at Big Discounts
-
Markets Brief: Tech Stocks Lead Ahead of Nvidia Earnings
-
How Anti-Obesity Drugs Are Innovating the Healthcare Market
-
What’s Happening In the Markets This Week
-
Why Immigration Has Boosted Job Gains and the Economy
-
After Earnings, Is Walmart Stock a Buy, a Sell, or Fairly Valued?
-
Target Earnings: Margins Hold Up, but Top Line Constrained by Weak Discretionary Spending
-
Is Berkshire Hathaway’s Mystery Stock a Buy?
-
After Earnings, Is Uber Stock a Buy, a Sell, or Fairly Valued?
-
Lowe’s Earnings: Tumultuous Macro Weighs on Near-Term Results but Fails to Sway Our Long-Term View
-
Macy’s Earnings: Plan Taking Shape Despite Tough Environment
-
JPMorgan Investor Day: CEO Dimon Pushes Against More Stock Buybacks at Current Prices
-
Should You Buy and Hold an Artificial Intelligence Portfolio?