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.-
These Stocks Are (Still) Powering the Bull Market
-
5 Undervalued Energy Stocks to Play the AI Data Center Demand Boom
-
After Earnings, Is Lowe’s Stock a Buy, Sell, or Fairly Valued?
-
5 Stocks With the Largest Fair Value Estimate Cuts After Q1 Earnings
-
10 Stocks With the Largest Fair Value Estimate Increases After Q1 Earnings
-
Markets Brief: Inflation Back in the Spotlight
-
AI Is Booming, but Consumer Spending Is Slowing. Which Will Prevail in the Stock Market?
-
What’s Happening In the Markets This Week
-
3 Dividend Stocks for June 2024
-
After Earnings, Is Alibaba Stock a Buy, Sell, or Fairly Valued?
-
MongoDB Earnings: Slashing Valuation as Execution and Macro to Blame for Lower Guidance
-
Marvell Earnings: We Raise Our Medium-Term AI Forecast and Bring Our Valuation Up to $75
-
Zscaler Earnings: Impressive Traction in Emerging Products Drives Sales Growth for the Quarter
-
Dell Earnings: Raising Valuation on Strong AI, but the Stock Remains Severely Overvalued
-
After Earnings, Is Nvidia Stock a Buy, Sell, or Fairly Valued?
-
The 10 Best Companies to Invest in Now