BMW Slashes Profit Outlook, Idles European Factories As Coronavirus Spreads
18 März 2020 - 10:31AM
Dow Jones News
By William Boston
BERLIN--German luxury car maker BMW AG on Wednesday idled
automotive production at factories in Europe and South Africa and
slashed its outlook for sales and profit in the coming year, as the
impact of the coronavirus pandemic and efforts to contain it hit
demand.
The Munich-based maker of BMW, Mini, and Rolls-Royce vehicles
said its plants in Europe and Rosslyn, South Africa would close
Wednesday and remain shut initially until April 19.
BMW CEO Oliver Zipse, in comments during a news conference, drew
parallels between the economic situation in the wake of the virus
outbreak and the 2008 financial crisis. He said BMW managed to
remain profitable throughout the financial crisis and that the
company would do everything to master the current crisis.
"We find ourselves in an extraordinary situation," he said. "But
we are also cautiously optimistic. There is a time during the
coronavirus. And there will be a time after corona."
All major auto makers this week announced plans to shut down
auto production in Europe to help stem the spread of the novel
coronavirus, which is hitting the region's most important
manufacturing industry at a time when European economies are
already weak and demand for new cars has been in decline.
In a statement outlining its 2019 earnings, BMW said it was
slashing its profit outlook for 2020, saying it was cutting its
pretax profit margin outlook in its automotive businesses to 2% to
4%, down from the 4.9% margin it achieved in 2019.
BMW said earnings before interest and taxes fell 26% to 7.1
billion euros ($7.86 billion) in 2019, and despite a 8% increase in
sales to EUR104 billion. The company sold 2.5 million BMW, Mini,
and Rolls-Royce vehicles last year, up 2.2% from a year ago.
In the face of a European investigation into allegations that
BMW colluded with other auto makers to depress prices of some
technology components, the Munich-based auto maker took an EUR1.4
billion charge against earnings in the first quarter of 2019,
denting earnings for the full year.
Despite the worsening economic situation, BMW indicated it would
not begin slashing jobs, saying it expected the number of employees
this year to remain unchanged from 2019 levels.
The company gave no details about its factories pending an
announcement at 0900 GMT, but as the coronavirus sweeps through
Europe the company said it would adjust production to meet falling
demand in global auto markets and that in the wake of the
coronavirus pandemic it expected sales and earnings this year to be
well below the previous year.
BMW said "demand in all important markets will significantly
impaired by spreading of the virus and the efforts to contain it,"
and that automotive sales in 2020 would be "significantly below the
level of the previous year."
Separately, the Association of European Automobile Manufacturers
said new car sales in the European Union fell 7.4% in February to
957,052 vehicles. The data now excludes the United Kingdom, which
has left the EU. Analysts said the decline did not yet reflect
major coronavirus outbreaks in Europe and expect March sales to
deteriorate significantly.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
March 18, 2020 05:16 ET (09:16 GMT)
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