bmw closes 2024 with a sharp drop in profits, hit by weak demand in the Chinese market, rising energy costs and growing competition from Chinese brands, which are increasingly competitive in the electricity sector.net profit fell by 36,9% on an annual basis, reaching 7,678 billion euros, while earnings before taxes (EBT) decreased by 35,8% to 10,971 billion euros. The EBT margin fell to 7,7% compared to 11% in 2023. Free cash flow also decreased, reaching 4,85 billion euros against 6,9 billion in the previous year.
I total revenues of the group stood at 142,38 billion euros, down 8,4% compared to the previous year, with a significant impact due to to the decline in sales in China, the most important market for the German company. The global deliveries decreased by 4%, stopping at 2,45 million vehicles, while in China the decline was more marked, with a 13,4% drop. Also weighing on the balance sheet were technical problems, including a brake defect that forced the company to recall 1,5 million vehicles, causing interruptions in deliveries. All difficulties that forced BMW to publish a profit warning at the end of September.
Despite the results the BMW title does not sink on the stock exchange losing less than 1% (-0,92% at 11,40).
Electric car sales on the rise
Despite the general context, a good result came from electric cars: sales of battery electric vehicles (BEV) are increased by 13,5% reaching 426.536 units, or 17% of total sales. Overall, electrified vehicles (BEV and plug-in hybrid) accounted for 25% of deliveries. BMW plans to launch over 40 new models or updates by 2027, including the New Class, new electric platform of the Bavarian house that will debut during the 2025 with the BMW iX3 model. “What has always distinguished the BMW Group is our ability to stay on course, even in difficult conditions,” said the CEO Oliver zipse. “We remain clearly focused on two things: our short-term performance and our long-term outlook.”
BMW also has strengthened investments in research and development, which in 2024 reached 9 billion euros (+17,1%), representing half of the total 18 billion invested by the group. The number of employees which reached 159.104 units.
Dividend down
The board of directors proposed a dividend of €4,3 per ordinary share, down from 6 euros in 2023, and 4,32 euros for preferred shares, with a payout ratio growing to 36,7% compared to 33,7% last year.
In addition, the car manufacturer has authorization requested for a buyback of up to 10% of the capital over the next five years, after having bought back 6,35% of its shares at the end of 2024 with an investment of approximately 4 billion euros.
Forecast for 2025 and impact of tariffs
Looking ahead to 2025, BMW expects pre-tax earnings to be will remain stable at 2024 levels, with an operating margin for the auto sector of between 5% and 7% and a return on invested capital of between 9% and 13%. The group warns, however, that the situation remains complex due to the increase in customs duties and global trade tensions.
The United States has imposed a 25% tax on some imports from Mexico, and threatened new duties on European imports starting April 2. BMW is particularly exposed to this situation, since 56% of the vehicles produced in Germany are exported outside the European Union. In addition, its plant in South Carolina exports cars worth more than $10 billion, making the German company the largest U.S. auto exporter by value. “We benefit from an integrated global economy,” Zipse said, “that’s why we continue to advocate for open markets and free trade.”
