Coronavirus: BMW gives profit warning as carmaker shuts factories
German auto giant BMW has warned that vehicle deliveries and profit will both fall this year due to the impact of coronavirus as it prepares to suspend production at its plants in Rosslyn, Europe and South Africa.
The carmaker said it was taking the steps both as a precaution against its employees getting infected and due to a slowdown in demand.
Chairman Oliver Zitse said that the interruption to production at the plants was currently due to last until 19 April.
Due to uncertainty as to how long the crisis is likely to last, BMW did not offer specific financial guidance for the year but said that vehicle deliveries would decline in all of its markets.
In a statement, the firm added: “Group profit before tax is expected to be significantly lower than in 2019”.
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On latest forecasts, the EBITDA margin for its automotive division is expected to come out somewhere between two and four per cent.
The factory closures come as a plethora of Europe’s giant manufacturers shut facilities due to employee concerns over health conditions on production lines.
Fiat Chrysler, Peugeot, Volkswagen – including its subsidiaries Seta and Audi – and Renault are all closing plants in the coming days in response to fears over the virus.
Yesterday Japanese firm Nissan also shuttered its plant in Sunderland, the UK’s biggest car factory.
BMW also said that profit would be lower due to increased research and development spending on next generation technology.
The Munich-based firm will spend €30bn by 2025 in order to bring the next generation of hybrid and electric vehicles to market, with the next 7-Series model due to be made available as a fully electric car.