BMW Records First Quarterly Loss Since 2009 on Virus Impact

(Bloomberg) -- BMW AG's loss-making automotive division dragged the company into the red for the first time in more than a decade, rounding out a dismal quarter for European carmakers hit by the coronavirus pandemic.

The German manufacturer lost 666 million euros ($787 million) before interest and taxes between April and June, its first quarterly deficit since the financial crisis in 2009.

BMW's auto business, which recorded a bigger-than-expected Ebit loss, was mainly to blame after deliveries tanked due to pandemic-related shutdowns of dealerships and factories, the company said Wednesday in a statement.

BMW is the final German manufacturer to report after what has been a difficult quarter for carmakers. Volkswagen AG lost 2.4 billion euros and cut its dividend, while Daimler AG argued it had weathered the worst but still needs to slash about 20,000 jobs.

Renault SA's alliance with Nissan Motor Co. came under strain as the Japanese partner was mostly to blame for the French carmaker's record $8.6 billion loss.

BMW fell as much as 4.4% in early Frankfurt trading and was down 3.1% as of 11:26 a.m. local time. The shares have lost more than a fifth this year.

The company's automotive sales increased “significantly” in July from a year earlier, Chief Executive Officer Oliver Zipse said Wednesday during a call with reporters. Both the U.K. and France reported rising new-car registrations last month.

What Bloomberg Intelligence Says

BMW reported a worse-than-expected 2Q loss and its outlook for zero 2020 free cash flow may also disappoint. BMW's industrial net cash buffer has now fallen by one third in 1H to 11.6 billion euros, despite only modest 2Q cash burn, following an 8.5 billion-euro intragroup transfer to support financial services.

-- Michael Dean, auto analyst

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Another bright spot for BMW was China, which started to recover from April and registered volume growth during the three months through June compared to the year earlier-period. BMW will start producing the iX3 electric car in China this year, where it will also be first sold to customers.

Deliveries of electric and hybrid cars rose in the quarter as countries including Germany and France raised subsidies for the vehicles. The company said it expects further growth from that sector in the second half of the year.

Despite the loss, BMW stuck to a prediction for an automotive Ebit margin of between 0% and 3% for the full year, after lowering it from 2% to 4% in May.

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