BMW sees itself well equipped for the year

The Munich-based car manufacturer BMW sees itself well equipped for the year as a whole, despite rising raw material costs and the global shortage of semiconductors in the automotive industry. The demand for cars is high, especially in China, and customers are willing to pay higher prices. Chief Financial Officer Nicolas Peter predicted a significantly higher pre-tax result. However, the rising prices for steel, rhodium and palladium, which are currently at a record level, are likely to have an impact, especially in the second half of the year. In addition, the supply situation for memory chips is very tense. "We can not assume for the second quarter that we will get away completely unscathed," admitted BMW boss Oliver Zipse. CFO Peter put the additional costs at up to one billion euros, which should be halved to 500 million euros due to exchange rate effects. Unlike most other car manufacturers worldwide, BMW has so far hardly been affected by production interruptions. Only at Mini in Great Britain and in Regensburg did the production line stand still for a few days - Volkswagen, on the other hand, had to cut production repeatedly and register short-time work. Zipse referred to the traditionally close relationships with its suppliers. In addition, BMW did not significantly reduce its production planning for 2021 after the outbreak of the corona pandemic last year. In the first quarter, the Munich-based company benefited from strong demand in China and higher sales prices. There was also good business with leasing returns in the USA. Group sales for the year rose by 15.2 percent to 26.8 billion euros. The operating result doubled to a good three billion euros. The operating margin in the auto business even rose to 9.8 percent. The bottom line was that BMW earned 2.8 billion euros, almost five times as much as in the first quarter of 2020, which was particularly hard hit by the outbreak of the corona pandemic. Electric cars and plug-in hybrids in particular saw an upward trend, where sales doubled. For the current year, Zipse expects deliveries of BMW, Mini and Rolls-Royce vehicles to be solidly above the previous year's level. The profit margin in the auto business should recover significantly and come out at the upper end of the corridor of six to eight percent. "We consider the executive board's outlook to be very conservative," wrote Frank Schwope, an analyst at NordLB. "Exceeding the stated margin target would not come as a surprise." In view of the good first quarter, competitors Daimler and Volkswagen had raised their return forecasts, while Audi reaffirmed the margin outlook. Moody's analyst Matthias Heck said BMW had the strongest first quarter of the German carmakers.