Il third quarter of 2024 difficult for bmw, the German automotive giant that also owns the Mini and Rolls-Royce brands. The company reported a Net profit collapsed by 83,8%, stopping at 476 million euros, compared to the billion of the previous year. revenues are down of 15,7%, going from 38,46 billion euros in 2023 to 32,4 billion, below analysts' forecasts who estimated a turnover of 34,3 billion euros. Weighing especially on the results are the drop in demand in China e defective components which have led to massive recalls.
BMW has reported a sharp decline in profitability in its core automotive division. The operating margin for the automotive sector fell to 2,3%, a performance reminiscent of the levels of the second quarter of 2020, during the Covid-19 pandemic. TheTotal operating profit suffered a contraction of 61%, stopping at 1,7 billion euros, compared to 4,3 billion in the same period of the previous year.
Despite disappointing results, the CEO Oliver zipse it is shown optimistic about the fourth quarter, stating that BMW is “back on the right track” and is expect a profit increaseThe company aims to reduce inventories and increase deliveries in the final months of the year, thus strengthening its 2024 outlook.
BMW in crisis: technical problems and falling Chinese demand weigh on it
BMW has faced several technical issues that have weighed on its financial results. In particular, a recall of defective brakes produced by Continental has affected over 1,5 million vehicles, with significant impacts on logistics and costs. A technical problem that caused delivery delays, affecting approximately 320 thousand units, and mainly impacting sales performance.
The situation was also complicated by the weak demand in China, the most important car market for BMW and other European giants such as Volkswagen and Mercedes-Benz. The slowing Chinese economy and growing competition from local manufacturers have significantly reduced the German company's sales in the Asian country.
Bmw: 2024 guidance confirmed
In September, BMW had lowered its forecasts for the entire year due to the “headwinds” that are hitting the automotive industry. The operating profit margin expected for 2024 has been reduced to 6-7% of revenues, from the previous estimate of 8-10%. Return on invested capital (ROCE) has also been scaled back, from a forecast of 21-26% to a target of 14-16%
The financial director of the House, Walter Mertl, confirmed that the company is determined to achieve the free cash flow target for 2024, thanks to “rigorous management”.
BMW: Results Cause Stock Price to Collapse
The financial performance of the third quarter and the difficulties encountered on the market have had a negative impact on Bmw title, which ends up losing more than 6%.
