On Thursday afternoon, shares of German automaker BMW AG (BAMXF -6.08%) (BMWYY 0.79%) plunged as the company’s German-listed shares were severely damaged by mounting worries about the new coronavirus in Europe.
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Richters, Kim
Following BMW AG’s affirmation of its full-year margin target for the auto industry but warning of reduced deliveries and softer demand in a challenging second half, the company’s shares declined on Wednesday.
Despite lowering its forecast for deliveries to slightly below last year’s level, the German business stated that it still anticipates the profits before interest and taxes margin for its automotive segment to be between 7% and 9% this year. Due to supply constraints in the first half of the year, sales volumes in the second half of the year won’t entirely make up for lost volumes, but the drop in deliveries is anticipated to be somewhat offset by favorable effects from price, mix, and the used-car markets, it added.
Consensus estimates for the auto EBIT margin are already at the upper end of the range, and investors may have anticipated an increase in guidance, particularly after BMW rival Mercedes-Benz raised the target for its cars business last week, according to research by RBC Capital Markets analyst Tom Narayan.
Despite strong second-quarter earnings, BMW sounded cautious about the year’s demand and hinted that orders will normalize near the end of the year, according to Bernstein analysts. The automaker had previously stated that it anticipates the current challenging business environment to last and that “ongoing inflation and interest-rate hikes will continue to influence the macroeconomic environment in the coming months and impact demand.”
BMW’s group EBIT for the most recent quarter decreased from EUR5.01 billion to EUR3.43 billion. While the partial discharge of a provision relating to European Union antitrust proceedings improved the company’s earnings in the second quarter of last year, the consolidation of BMW Brilliance Automotive Ltd. hurt the company’s profitability this year. Revenue increased 22% to EUR34.77 billion in the second quarter thanks to favorable pricing, product mix, and currency translation effects.
Summary
- In a piece I published over the summer about BMW, I made the point that EVs shouldn’t drive up a company’s multiple to absurd heights. The timing of that piece worked out perfectly.
- Since then, the company has significantly underperformed the S&P500.
- I give this superb German carmaker an update today.
Looking at recent-term performance, my previous piece on BMW (OTCPK:BMWYY) and my “neutral” posture both proved to be well-timed.
As I indicated in that article, I sold my BMW shares at a respectable profit, and in that particular piece, I advised readers not to invest in the German automaker, which yields 2%. At the appropriate price, this company is a “BUY,” but the price has to drop.
Despite its strong Q2 results, BMW issues a warning for H2.
– (RTTNews) Following the luxury automaker’s warning that its second half-year is likely to be more volatile due to supply constraints, high raw material prices, and a lack of semiconductors, shares of BMW Group were down almost 5% in German trading on Tuesday. Despite announcing outstanding second-quarter earnings supported by high demand, this was the case.
The company anticipates that production limitations will persist in the second half of the year, which will have an equivalent effect on sales volumes.
BMW improved its full-year projection for the Financial Services and Motorcycles businesses in 2021 and anticipates healthy business growth across the board. The business also stated that a slightly reduced workforce will be needed to meet its annual goals.
Despite immediate difficulties, the company claimed it was still committed to its long-term plan of maximizing its innovative strength and long-term profitability.
BMW’s second quarter profits were much better thanks to robust demand for its high-end automobiles and persistently competitive pricing. Comparing the financial year 2019 to the year prior to the pandemic, sales and earnings have both increased significantly.
A deficit of 212 million euros the year before was replaced by a net profit of 4.79 billion euros for the second quarter. A loss of 0.35 euros was offset by earnings per share of 7.23 euros. Compared to a loss of 300 million euros, the profit before tax was 5.98 billion euros.
Revenues for the second quarter were 28.58 billion euros, up 43.1% from 19.97 billion euros in the same period previous year. On a currency-adjusted basis, revenues increased by 45.2%, driven by stronger sales volumes and higher selling prices realized in the new and used auto markets.
The company shipped a total of 702,441 units to clients globally, a rise of 44.7 percent over the 485,464 units sent the year before.
BMW brand vehicles increased by 43.5 percent to 617,667 units. MINI brand vehicles increased by 52.8 percent to 83,165 units, while Rolls-Royce brand vehicles increased by 127.6 percent to 1,609 units.
The total growth in sales volume was influenced by all significant sales regions. Deliveries increased 75.2 percent across Europe, with Germany seeing the largest growth at 45.7 percent.
Deliveries increased 82.7 percent in the Americas, largely due to an increase of 88.5 percent in the USA. Deliveries grew 15.2 percent in Asia, with China seeing the largest rise of 11.7%.
Is BMW losing ground?
Even while deliveries of electric vehicles increased during the same period, BMW AG reported an almost 20% fall in sales in the second quarter. The Munich-based automaker reported Friday a 28% reduction in China and a drop in sales to around 563,536 BMW, Mini, and Rolls Royce automobiles. Sales decreased by roughly a percent in both Europe and the US.
Is BMW a worthwhile investment?
German multinational corporation Bayerische Motoren Werke AG, usually referred to as BMW, makes cars and motorcycles. Because it outperforms its rivals, the company is drawing investors’ attention during this period of uncertainty on the financial markets.
Investors should keep in mind that BMW is a solid firm with a strong presence in the market while trading BMW stock. The majority of financial analysts anticipate that the price of BMW stock will increase significantly over the next several years, making it a potentially profitable investment decision.
The market capitalization of $49.58B and the total stockholders’ equity of $65.67B show that this stock is not expensive, and perhaps this is a good moment to buy BMW stock. The fact that this company has given its shareholders more than $8 billion in dividends over the last three years, and that this sum may become much higher in the future, is another important piece of information for prospective investors.
According to certain predictions, the car industry will only modestly expand over the next few years, but BMW will still be a big role. If you choose to purchase BMW shares, keep in mind that there are a number of drawbacks associated with this business.
According to a press statement from the European Automobile Manufacturers’ Association, car registrations in Europe fell by 5.7% in July and 18.9% in August. BMW’s second-quarter loss before interest and taxes was $780 million as opposed to the $2.57 billion in EBIT from the prior year (earnings before interest and taxes).
BMW CEO Oliver Zipse, though, expressed optimism that the company’s performance will likely improve in the second half of the fiscal year.
BMW sold 372,754 automobiles in Europe during the second quarter, a decline of 32%, while the first half of the year saw 121,318 units (a decrease of 29.5%) sold in the USA. China’s six-month sales only fell by 6.0% to 329,447 units over the past six months, thanks to second-quarter volume growth over the prior year.
The Covid-19 pandemic is mostly to blame, but after things have settled, the price of BMW stock will be much higher.
BMW values depreciate quickly?
A brand-new BMW is typically not a wise investment, unless you take enjoyment and nice aesthetics into account. New BMWs typically degrade quickly after being driven off the lot and are ranked near the bottom of the luxury rankings. It depends on the BMW model you’re looking at, much like with the other German premium brands (Audi, Mercedes-Benz). It will ultimately depend on the model and body type you are thinking about, so do your research. The 7 Series should be avoided because the resale figures aren’t great.
Our top choice for the BMW model year with the best value is the 2017. The 2017 would cost you, on average, 59% less than it did when it was brand-new, and it would still have 58% of its usable life left.
For the BMW models, the 2018 and 2020 model years are especially appealing and offer a respectable value. Our rankings take into account a number of variables, such as the original new price, the current price, maintenance expenditures, and the remaining years of anticipated overall spending. Our top-ranked model year is the BMW model that offers the best value for the money.
Who holds the most shares in BMW?
With more than 25% of the company’s shares in his ownership, Stefan Quandt is BMW’s greatest stakeholder. Second-largest stockholder is Susanne Klatten.
While the ownership of BMW has changed throughout time, Stefan Quandt has consistently held the majority of the shares.
Just around 20% of the shares are still under Susanne Klatten’s ownership, which is a sizeable holding.
Since BMW is a publicly traded company, hundreds of diverse stockholders collectively own more than half of its shares.
Is BMW having money problems?
The sanctions for conspiracy are seriously hampering BMW’s plans to dominate the luxury market.
In the past ten years, BMW hasn’t experienced a loss. Given the overall decline in auto sales, the automaker’s poor 2019 Q1 may not have come as a great surprise, but the decline in BMW’s trend line is far too severe to be explained by a slowing auto industry alone.
According to Bloomberg, BMW’s loss was mostly caused by having to set aside $1.6 billion as a legal provision to face fines from China and Europe as a result of the automaker’s alleged cooperation with rival German companies to postpone the introduction of new emissions equipment. But even if you disregard the substantial sum of money BMW had to set away, first-quarter earnings still decreased by 42%, or EUR1.1 billion ($1.23 billion).
The pricing competition BMW encountered in some regions and the expenditures it made in new technology during the first three months of 2019 are the causes of that decline. Although it’s unclear what those investments were used for, it’s understandable how cash resources may have been limited given the automaker’s commitment to collaborate with Daimler on autonomous technology and the influx of new models it recently released, including the X7, 8 Series, Z4, and upcoming 3 Series.
BMW unveiled a EUR12 billion ($13.4 billion) savings strategy that comprises reducing the number of models and speeding up the manufacture of new cars in order to return to profitability. But not all is hopeless, since the momentum BMW created through its investments may result in a surge of sales for the second half of 2019.
Nicolas Peter, chief financial officer at BMW, predicted that overall, the first half of the year will be “somewhat weaker.” Model changes that affect sales and drive up costs should be the cause of the anticipated loss in Q2 2019, but Peter stated that “We expect the second half-year to profit from the strong product momentum.”
Sales of the new 3 Series and the X7, the latter of which, according to BMW CEO Harald Krueger, is flying off dealer lots and above forecasts, will provide that impetus. If BMW can survive this difficult time, which could be made worse by escalating trade disputes between the US and China, it may be able to surpass Mercedes as the leading luxury automaker.
What exactly is the primary issue with BMWs?
Overheating engines, gearbox troubles, oil leaks, and fuel pump issues are a few of the most prevalent BMW issues.
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Even while we nowadays tend to hope for (or at least anticipate) few to no issues when purchasing our cars, there are no flawless automakers. Even the most reputable manufacturers create cars that unlucky buyers have problems with. A