BMW expects higher margins and deliveries in 2023 amid electrification rollout
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German car manufacturer bmw on Wednesday set targets to slightly increase margins for its auto segment and increase deliveries this year as it ramps up the rollout of its electric fleet.
The company expects an EBIT margin (earnings before interest and taxes) of between 8% and 10% for its car range in 2023, with deliveries pending increase slightly from 2022 and “Selling prices remain at a stable level”. He predicts that the used car market will normalize this year “due to the increased availability of new cars”.
Shares of BMW rose 1.07% following the 8:20am London time announcement.
“A high level of flexibility, combined with our operational performance, has proven to be an effective combination to ensure the success of the BMW Group even in the face of headwinds and to seize opportunities for profitable growth,” said Oliver Zipse, Chairman of the BMW Group Board of Management of BMW AG , said in a press statement.
Like competitors, BMW is struggling with global semiconductor shortages and supply chain disruptions, and is challenging it to fulfill its book order.
The company confirmed the results for the full year 2022 reported last week, including EBIT of 10.6 billion euros ($11.4 billion) for the automotive segment, which had one. 8.6% margin last year. The company recorded an automatic cash flow of almost 11.1 billion euros.
As a result, he proposed a dividend of €8.50 per common share, versus €5.80 for the same share last year.
“We’re not looking at a powertrain trend or a segment or a region in the world, and I think for us that aligns very well with what we said a couple of years ago,” Zipse told CNBC. “And now we’re executing on that plan. And it looks like the plan that we’re executing here is pretty successful on the revenue side but also on the market share side.”
He stressed that BMW’s strategy will continue to prioritize profitability and downplay the impact of rising inflation rates on consumer demand.
“Whether inflation really has an impact depends on your ability to have pricing power in the market,” he noted. “With this global approach that we have here I would be cautiously optimistic for the year and we will have a modest uptick in volume overall.”
The company announced the date March saw a new Chief Financial Officer, Walter Mertl taking over the position in May after Nicolas Peter left.
The BMW results follow a series of optimistic announcements from automakers earlier in the week, with Porsche issuing an ambitious growth outlook after record earnings for 2022 and Volkswagen unveiling a five-year $193 billion investment plan.
BMW expects its business’s main growth drivers this year to be its premium models and full battery electric vehicles (BEV).
“Depending on the market conditions in the second half of the decade, the development of raw material prices and availability as well as the pace at which a nationwide charging infrastructure is built up, the BMW Group expects to reach a BEV share of over 50% well before 2030 ‘ the company said after signaling that its BEV share will reach 15% in 2023.
BMW plans to deliver 2 million fully electric vehicles by 2025 and over 10 million such units by 2030. The automaker’s first MINI brand electric vehicles are set to hit the market later this year, after the Rolls-Royce range launched its first all-electric model, the Rolls-Royce Specter, in 2022 and will reach customers in 2023.
The automaker has ramped up efforts to transition to electric vehicles, and announced in October that it is doing so intends to invest $1.7 billion in its US operations to build such cars and batteries. It introduced a pilot fleet of hydrogen vehicles earlier this year.
https://www.cnbc.com/2023/03/15/bmw-expects-higher-margin-and-deliveries-in-2023-amid-electric-rollout.html BMW expects higher margins and deliveries in 2023 amid electrification rollout