BMW: Shares dip on supply chain warning as carmaker lifts earnings guidance
BMW’s higher annual earnings forecast failed to chime with investors, as the carmaker warned of a hit from supply chain issues and inflation.
The Munich-headquartered firm said it expected an annual EBIT margin of 9-10 per cent, up from 8-10 per cent, as it reported strong demand for vehicles and a doubling of deliveries in its electric vehicle (EV) segment.
However, shares were down 2.3 per cent mid morning, as the carmaker warned that ongoing supply chain issues and inflation could weigh the group down in the year ahead.
Costs will rise “along the whole supply chain,” BMW said, as a result of “labour shortages, parts availability issues, continued high prices for raw materials and energy and other unfavourable factors.”
However, BMW – who own premium brands including Rolls-Royce and Mini – still saw strong earnings in the second quarter, which jumped 11.3 per cent on higher sales. Pre-tax profits were also up 7.5 per cent year-on-year to 4.2bn euros.
71,186 Mini vehicles were delivered in the three months to 30 June, a sharp 10 per cent increase on the prior year although both Mini and Rolls-Royce segments saw slight overall downturns over the full six months.
Oliver Zipse, chairman of the board of management of BMW, said : “Strong products generate strong demand – across all drive technologies. The second quarter underlined how the broad range of technologies we offer is winning over customers.”
“Sales of vehicles with highly efficient combustion engines provide us with a solid foundation – the strong growth comes from the significant increase in demand for our fully-electric vehicles.”
“We are combining both: systematic transformation and economic success.”
It comes amid a general upturn in the fortunes of European carmakers, as semiconductor supply chain issues stemming from the Covid pandemic continue to ease – although many have offered similarly tempered expectations on the back of a challenging global macroeconomic backdrop.
Analysts from Jefferies described the results as “solid,” but noted general inflation, “supply chain constraints and rising warranty costs.”