Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bayerische Motoren Werke AG (BAMXF, Financial) reported a growing market presence in the United States, with sales exceeding 290,000 vehicles, marking a growth of nearly 7,000 units.
- The company has a strong manufacturing footprint in the U.S., producing high-demand vehicles like the X3, X5, X6, X7, and XM, which provides a natural hedge against potential tariffs.
- Bayerische Motoren Werke AG (BAMXF) is committed to electrifying its Spartanburg plant, with an investment of EUR1.7 billion, enhancing its production capabilities for electric vehicles.
- The company is strategically targeting an 8% to 10% EBIT margin, indicating a focus on improving profitability.
- Bayerische Motoren Werke AG (BAMXF) is expanding its electric vehicle offerings in China, with a 15% share of BEVs in the market, and plans to introduce the fully electric MINI produced locally.
Negative Points
- The company's Q3 profitability was impacted by high warranty provisions and lost sales, leading to a lower auto margin of around 5%.
- There are ongoing challenges in China, with a shrinking market and financial difficulties faced by some dealers, impacting overall performance.
- Bayerische Motoren Werke AG (BAMXF) faces pressure from elevated inventory levels and a negative pricing impact, affecting its financial results.
- The financial results for Q3 were negatively impacted by the evaluation of fair value derivatives, influenced by decreasing interest rates.
- The company is dealing with significant warranty costs related to past issues, such as airbags and EGR, which continue to affect its financial performance.
Q & A Highlights
Q: Is the underlying profitability of BMW's auto segment around 5% to 7% for Q4, considering the IBS provisioning impact?
A: Walter Mertl, Member of the Management Board, Finance, confirmed that the Q4 margin is expected to be between 5% and 7%, aligning with the full-year guidance of 6% to 7%. The impact of IBS provisioning is still present, affecting profitability.
Q: Can you provide insight into BMW's manufacturing flexibility in the U.S., particularly at the Spartanburg plant?
A: Oliver Zipse, Chairman of the Management Board, highlighted BMW's strong U.S. manufacturing presence, producing high-demand models like the X3, X5, X6, X7, and XM. The plant's flexibility and local production help mitigate potential tariff impacts.
Q: What is BMW's strategy for addressing the current weakness in the Chinese market?
A: Walter Mertl noted that BMW is focusing on growing its BEV market share in China, with a 15% share of BEVs. The company is also launching new models like the MINI and X3 to regain momentum, viewing the situation as part of the usual market cycles.
Q: How is BMW managing warranty provisions, and what measures are in place to reduce these costs?
A: Walter Mertl explained that warranty provisions remain stable compared to the previous year, with ongoing efforts to address major issues like airbags, EGR, and IBS. The company is working to bring down warranty costs through these measures.
Q: How does BMW plan to adapt its powertrain portfolio to the global shift towards BEVs and hybrids by 2030?
A: Oliver Zipse emphasized BMW's flexibility in powertrain offerings, with plans to introduce the Neue Klasse in China, focusing on BEVs and maintaining a strong presence in plug-in hybrids. The company aims to leverage its diverse portfolio to meet future demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
