BMW Group upbeat after robust third quarter

Automaker BMW Group reported a robust third-quarter performance on Friday, with a higher margin in its core cars business as it remained optimistic about its annual forecasts.

The German conglomerate reiterated its outlook for an annual margin on EBIT in its cars division between 9.0% and 10.5%, with its year-to-date margin standing at 10.3%.

It said its strong performance was driven by higher-priced and fully electric vehicle sales, surpassing analyst expectations with quarterly revenues reaching €38.5bn.

However, the group’s net profit declined 7.7% year-on-year, primarily due to a one-off boost in 2022 when BMW acquired majority control of its Chinese joint venture.

Despite some relief in raw material prices and improved supply chain conditions, the company reported a €200m impact from the net balance of currency and raw material positions in the third quarter.

High labour costs from partners and ongoing materials and logistics expenses were continuing to pose challenges for BMW throughout the year, the board said.

Its EBIT margin for the third quarter reached 9.8%, rising to 10.8% when excluding the impact of last year’s Chinese joint venture acquisition.

The company had cautiously raised its automotive margin outlook in August.

Looking ahead, BMW noted that supply chain issues had eased after it warned in August that the challenges could persist throughout the year.

Year-to-date, BMW’s sales have increased 5.1%.

Fully electric vehicle sales accounted for 15.1% of total sales in the third quarter, exceeding BMW’s end-year target of 15%.

Sales growth was driven by models from the upper price segment, including the 7 Series, the updated BMW X7, and the BMW X5 and BMW X6 models.

The company reported that free cash flow for its automotive business for the year-to-date stood at €5.7bn, closely aligning with the full-year forecast of €6bneuros.

“In 2023, we are once again demonstrating the success of the BMW Group’s strategic approach,” said BMW Group’s management board chairman Oliver Zipse.

“With our products, range of drive technologies and production sites worldwide, our position is highly diversified.

“The mood is also very positive inside the company, as this year’s employee survey confirmed.”

Zipse said the company surveyed its near-150,000 employees, with the response reportedly that the BMW Group is a “highly attractive” employer.

“The workforce backs the company’s goals, and our employees worldwide are proud to work for the BMW Group.

“That is the best foundation for continuing on our successful course in the future.”

At 1145 CET (1045 GMT), shares in Bayerische Motoren Werke were up 3.1% at €93.91.

Reporting by Josh White for Sharecast.com.