Money BMW after loss: savings in investment and personnel planned
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car plants and dealerships were closed for months - BMW has now also slipped into the red. The group saves and is preparing for various scenarios. But slowly things are looking up again. In July there is already “a clear ray of hope”.
For the first time in eleven years, BMW is back in the red. "As expected, the global measures to contain the pandemic had a full impact on our business in the second quarter," said CEO Oliver Zipse on Wednesday in Munich. The bottom line was a quarterly loss of 212 million euros. Despite the weak second quarter, a profit was still made in the first half of the year, emphasized Zipse - and he was "quite confident" for the second half of the year.
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"The month of July signals a clear ray of hope: our sales of automobiles at Group level were well above the previous year," said Zipse. “In China, the market is developing more positively than expected,” added CFO Nicolas Peter. “In other important markets such as Germany or the USA, a slight recovery is now noticeable. As planned, we are therefore on track to achieve our annual targets. ”However, according to Peter, the uncertainty remains high: The Munich-based company is continuing to exclude a possible second wave of infections in their forecasts.Profits expected to be significantly below previous year
For the year as a whole, BMW expects both car sales and pre-tax profit to be significantly below the previous year's level. With 21.7 billion euros in liquidity, the group is very well positioned and has enough reserves, said the CFO.
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In the second quarter, BMW sold a quarter fewer cars than a year ago. The plants and the car dealerships in Europe and the USA were closed for a long time. In China, on the other hand, sales were already well above the previous year's level.
Worldwide sales in the second quarter fell by 22 percent to just under 20 billion euros. BMW also concluded fewer loan and leasing contracts and earned only a fraction of the previous year's result with financial services. A year ago BMW had made a bottom line of 1.5 billion euros in profit - and now it has lost 212 million euros.
BMW is not alone with the setbacks: VW, Audi and Mercedes-Benz were also in the red between April and the end of June because demand and production came to a complete standstill for weeks during the pandemic. In the first half of the year, however, BMW was overall a little better: While the Bavarians still had a profit of 362 million euros, the Volkswagen group recorded a billion and the Daimler group a loss of 1.9 billion euros. In contrast to BMW, both Daimler and VW still have heavy commercial vehicles on offer, which were particularly hard hit during the crisis.
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The Volkswagen Group has felt the Corona crisis in terms of sales and earnings and has slipped into the red as expected. © Provided by Finanz.net GmbH DANIEL ROLAND / AFP / Getty Images Before taxes there was a loss of 1.4 billion euros in the first half of the year, as the DAX group announced on Thursday in Wolfsburg. A year ago, VW had made a profit of 9.6 billion euros here.
As one of the weakest DAX values, the BMW ordinary share fell significantly after the figures were presented. Some analysts and investors had hoped for a slightly better performance.Savings in investments and personnel planned.
All BMW plants have been running regular shifts again since the end of June. "We are still aligning our production to demand and arming ourselves for various scenarios," said Zipse. The American SUV plant in Spartanburg - the Group's largest plant - is running “under full steam”, so to speak. China's share of global sales rose sharply in the first half of the year, but should decrease again over the course of the year.
BMW wants to save on investments and personnel. By the end of next year, the number of employees is expected to drop by 6,000 to 120,000, primarily through age-related and voluntary departures with severance payments. BMW currently employs around 90,000 people in Germany. Many projects would be postponed or put to the test, said CFO Peter. Investments in property, plant and equipment would be cut this year by a third to less than four billion euros.
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Pre-tax loss reached £770 million in the first half of the year.The bank’s second quarter impairment charge was set aside to cover the bad debts that NatWest thinks might be on its books. It pushed the bank into a loss for the first half of the financial year.
On the other hand, research and development efforts in the second quarter even rose slightly to 1.5 billion euros, and BMW is only careful to use the red pencil here with a view to the future. In two years, BMW wants to have 25 electric and hybrid models on the road. Most recently, the group presented the iХ- $, the first fully electric SUV, which is produced in China and will be sold there first.
"We're making excellent progress with electrification," said Zipse. In July, 50 percent more hybrid and e-cars were sold, incoming orders were very high, the “subsidy programs help tremendously.” The reduction in VAT in Germany is also having an effect. dpa
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