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BMW plunges to second-quarter EBIT loss as COVID-19 pandemic hits car sales

BMW plunges to second-quarter EBIT loss as COVID-19 pandemic hits car sales

File photo of the BMW M8 in Bangkok, Thailand, Jul 14, 2020. (Photo: REUTERS/Jorge Silva)

FRANKFURT: BMW on Wednesday (Aug 5) said it expected to post an operating profit for the full year despite coronavirus lockdowns pushing the carmaker to a second-quarter operating loss as deliveries of luxury cars fell by 25 per cent during the period.

The Munich-based carmaker said it swung to a €666 million (US$786 million) loss before interest and taxes in the quarter ending in June, down from a €2.2 billion operating profit in the quarter a year earlier.

The earnings before interest and taxes (EBIT) margin in the company's automotive segment was pushed to a negative 10.4 per cent in the quarter, slumping from 6.5 per cent in the second quarter last year, as BMW ramped up expensive electric car technology investments.

Car sales have begun to recover in some markets, including in China, leading BMW to expect its core business to return a profit, but the rebound will not be enough to make up the shortfall of sales lost to the coronavirus pandemic.

"We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0 per cent and 3 per cent for the automotive segment in 2020," Chief Executive Oliver Zipse said in a statement.

BMW reiterated that it expected pre-tax profit to be significantly below 2019 levels and for car deliveries to customers to fall significantly this year, even as car sales have begun to rebound in some markets, like China.

In May, the automaker warned it would post a second quarter loss and slashed its outlook, forecasting an automotive margin on EBIT of 0 per cent to 3 per cent this year, versus the 2 per cent to 4 per cent seen before the pandemic.

Source: Reuters/dv

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