Bmw: Net profit plummets in Q3 (-83.8%), guidance confirmed

"The Bmw brand recorded solid sales growth in Europe in the first nine months of the year. With a sales increase of more than 7 per cent, we are significantly outperforming the overall European market and expanding our market share. Word of BMW Group CEO, Oliver Zipse. Were it only for the Propeller brand, the accounts could shine. Then there is China. And other factors that in the end produced a third quarter with profits in sharp decline. There is the overall drop in sales (540 thousand cars, -13% in total, Mini -25.2%). Particularly in China (-29.8%). And there's the painful recall of 1.5 million vehicles due to faulty brakes manufactured by Continental. Thus, between July and September the Munich-based manufacturer posted a group net profit (which includes cars, motorbikes and financial services) of EUR 476 million, down 83.8% from EUR 2.9 billion in 2023, 'in a context of crisis in the European automotive sector', the manufacturer said. As for operating profit, it reached 1.7 billion (-61%), down from 4.35 billion in 2023. In the nine months, car sales fell by 4.5% to 1.7 million. Operating profit stopped at 9.6 billion, down 31.6% from 14 billion in the same quarter last year. As for sales, they fell 15.7% to 32.4 billion from 38.46 billion in 2023 and well below analysts' expectations.

The two other German biggies, Volkswagen and Mercedes-Benz, are also grappling with falling sales in China amidst a weak economy and fierce competition.

Bmw reported a sharp drop in profitability of its core car unit, despite the good sales performance of electric vehicles in the nine months (300 thousand cars, share of sales rose from 15% to 19%, thanks to the 266 thousand units of the core brand, +22%). The Bavarian group said it was still on track for a 2024 operating margin of between 6% and 7%. In the third quarter, the margin for the automotive segment plummeted to 2.3% (from 9.8% in 2023 or -76.5%; in the nine months 6.6% and -35.9%), at the levels of the second quarter of 2020, at the height of the pandemic.

In the last quarter of the year, the Munich-based manufacturer expects an increase in deliveries and a significant reduction in inventories. The outlook for the whole of 2024, lowered in September precisely because of the maxi recall, is confirmed. According to Zipse, after 'extraordinary challenges in the third quarter, we are back on track in the fourth quarter to deliver higher earnings to meet annual targets'. The CEO recalled plans to launch the next-generation electric range, the Neue Klasse, in 2025. The target of 50 per cent battery-powered cars by 2030. But also the problems on the front of EU rules on emissions and duties. The latter 'threaten the business models of global companies'.