BMW cuts margin outlook for cars division, citing coronavirus woes

FRANKFURT (Reuters) – BMW (BMWG.DE) lowered the outlook for the profitability of its automotive division, citing worse-than-expected demand which has been impacted by global measures to contain the coronavirus.

BMW on Tuesday widened the expected range for the earnings before interest and taxes (EBIT) margin for the automotive segment, and now expects a range between 0{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and 3{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} this year.

BMW had previously said it expected an EBIT margin of between 2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and 4{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}.

“The decisive factor for the adjustment is that the measures to contain the coronavirus pandemic are lasting longer in several markets and are thus leading to a broader negative impact than was foreseeable in mid-March,” BMW said.

Delivery volumes in these markets will not return to normal within a few weeks as BMW had assumed, with the highest negative impact now expected in the second quarter of 2020, the carmaker said.

Last month BMW warned it was expecting a further decline in global demand even after a 20.6{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} drop in first-quarter sales to 477,111 vehicles.

BMW said in March that its pre-tax profit and vehicle deliveries would drop significantly this year as the coronavirus spreads, and that this – combined with higher research and development spending – would lower the profit margin in its automotive segment.