By Kim Richters
BMW AG said Wednesday that the profit margin for its car segment would be lower this year due to the war in Ukraine, while group earnings should rise significantly thanks to the consolidation of its Chinese joint venture.
The German premium car maker said it expects an earnings before interest and taxes margin for its automotive business of between 7% and 9% in 2022, which compares with 10.3% in 2021. Without the impact of the war, BMW would have aimed for 8% to 10%, it said.
The company said the situation in Eastern Europe is restricting its production network and will continue to do so in the next weeks. It is working on minimising the disruptions and continues to source parts from Western Ukraine, it said.
Due to the production disruptions, BMW said it expects car deliveries this year to be on the same level as 2021. Without the negative effects, deliveries would have been expected slightly higher.
"Regardless of this, the situation remains extremely dynamic, making it difficult to provide accurate guidance for the financial year 2022. Since it is not possible to assess further potential longer-term implications of the war in Ukraine at this time, this cannot be factored into our forecast," BMW said.
Meanwhile, the auto maker guides for free cash flow in its automotive segment to reach at least 7 billion euros ($7.67 billion) this year, plus a positive one-time effect of about EUR5 billion from the previously announced consolidation of its Chinese joint venture BMW Brilliance Automotive. Group earnings before taxes should also grow significantly this year because of the consolidation, it said.
Earlier this month, BMW released figures for 2021, with after-tax profit jumping to EUR12.46 billion from EUR3.86 billion in 2020, and revenue rising to EUR111.24 billion from EUR98.99 billion.
The auto maker was able to increase earnings and revnenue last year despite the semiconductor shortage that affected vehicle production. The company said Wednesday that it doesn't expect the bottlenecks to improve until the second half of this year.
At 0906 GMT, BMW shares were trading 2.2% higher at EUR77.01.
Write to Kim Richters at email@example.com
(END) Dow Jones Newswires
March 16, 2022 06:01 ET (10:01 GMT)Copyright (c) 2022 Dow Jones & Company, Inc.