BMW has just released its financial results, and they are unfortunately very disappointing. We explain everything below!
Nothing has been going well in recent months for the automobile industry, which is undergoing a major crisis, after that caused by the Covid-19 epidemic. Thus, all manufacturers are more or less affected, some even having to take drastic measures, such as implementing layoffs. And what about BMW? Well, the German firm has just published its financial results for the third quarter of 2023, and the figures are striking. But not really in a good way.
BMW is also in crisis
And for good reason, the German manufacturer, although emblematic of the premium sector, saw its net profit fall by 83.8% compared to the previous year, while its operating profit plummeted by 61%. Overall sales decline by 13%leading to a decrease in its turnover of 15.7%. This announcement shook the financial markets, the Bavarian firm’s share price having lost 7.2% on the announcement of these results. However, The year 2023 had started in a more encouraging manner for the German group. Although faced with an uncertain economic context, BMW had surprised analysts with results above initial forecasts, suggesting unexpected resilience. months, economic reality eventually caught up with the brand, and performance deteriorated. In particular, sales in China, a key market for BMW which historically represents a third of its global sales, recorded a significant decline of 30%. a context where the Middle Kingdom is often seen as the engine of growth for premium brands, this decline is particularly worrying.
A decreasing margin
BMW’s operating margin is also at half-mast, coming in at just 2.6% for this quarter, compared to 10.6% last year. The latter, although expected between 6 and 7% for the entire 2023 financial year, remains disappointing for a premium manufacturer, coming closer to the margins of general manufacturers like Stellantis, which is also targeting a range of 5 to 7%. . In comparison, Renault expects around 7.5% for 2024. In the premium sector, where margins are usually higher to compensate for lower volumes than those of general manufacturers, this situation sounds like a setback for the Munich firm. . Faced with these results, investors and analysts naturally wondered what had caused this fall. If the drop in sales in China is one of the reasons given, it is not the only one. Oliver Zipse, CEO of BMW, mentioned another unexpected factor: the IBS braking system (Integral Braking System). Unlike ABS, a commonly used electronic system, IBS relies on mechanical and hydraulic technology. However, this system, developed by the equipment manufacturer Continental, experienced technical failures, forcing BMW to recall nearly 1.5 million vehicles, including Mini, BMW and even Rolls-Royce models.
This massive recall had serious financial repercussions for the group, especially since deliveries also had to be temporarily suspended.
Source: www.autoplus.fr
