On Wednesday, BMW cut its output projection and issued a warning about a very uncertain second half, citing the availability of energy in Europe and semiconductors globally as the two most important factors in whether the automaker would meet its full-year earnings goals.
Oliver Zipse, BMW‘s chief executive, stated that although fresh incoming orders were starting to decline, order books were still full for the upcoming several months.
Finance chief Nicolas Peter stated that there has been a particularly high demand for electric vehicles. According to him, the luxury automaker was on track to achieve its objective of tripling all-electric vehicle sales by year’s end and anticipated total sales growth of 5 to 10 percent in the second half, supported by robust Asian markets.
BMW anticipates that year-end deliveries will fall short of the 2.52 million record highs set in 2017.
Its forecast did not account for the prospect of the war in Ukraine spreading or for the possibility of tougher sanctions against Russia. The development of the supply situation, not just for semiconductors but also for energy supplies in Europe, will be a key aspect, according to Zipse.
At 0931 GMT, shares of BMW were down 4.9 percent.
Due to concerns that Russia may reduce or stop delivering gas to Europe in reaction to Western sanctions over its invasion of Ukraine, Germany and other European Union members have taken emergency measures to reduce gas use.
Around 3,500 gigawatt hours of energy are used by BMW each year in Germany and Austria, with natural gas accounting for 75 percent of that energy.
According to Zipse, the automaker might purchase electricity from other sources to replace the roughly 500 gigawatt hours of electricity produced annually by gas-powered combined heat and power facilities. It would be more difficult to replace the gas utilised in manufacturing processes.
“Even if partial recompense is successful, the cost will undoubtedly be high. We won’t be able to keep up the per-kWh prices in any way “Added he.
According to a study released on Wednesday by Germany’s Ifo institute, the financial health of German automakers started to worsen in July as order backlogs shrank and price expectations fell.
BMW’s remarks were more dismal than those of rival Mercedes-Benz, which last week increased its annual earnings projection following higher profits and revenues in the second quarter despite lower unit sales.
Despite increasing revenues, the Munich-based automaker’s profitability plummeted 31% to 3.4 billion euros ($3.46 billion) in the second quarter, topping the 3.13 billion euro projection in a Refinitiv survey of eight experts.
BMW reported an automotive margin of 8.2 percent, down from last year’s 15.8 percent, but said the consolidation of its China joint venture BMW Brilliance Automotive boosted revenues in the first half but reduced second quarter earnings.
In total, the revaluation of the Chinese joint venture shares increased first-half earnings before tax by 7.7 billion euros.
Copyright: News Central TV
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from News Central TV.