BMW plunges to second-quarter EBIT loss as coronavirus pandemic hits car sales

FRANKFURT (Reuters) – BMW on Wednesday said it expected to post an operating profit for the full year despite coronavirus lockdowns pushing the carmaker to a second-quarter operating loss as deliveries of luxury cars fell by 25% during the period.

The Munich-based carmaker said it swung to a 666 million euro ($786 million) loss before interest and taxes in the quarter ending in June, down from a 2.2 billion euro operating profit in the year-earlier quarter.

The earnings before interest and taxes (EBIT) margin in the company’s automotive segment was pushed to a negative 10.4% in the quarter, slumping from 6.5% in the second quarter last year, as BMW ramped up expensive electric car technology investments.

Car sales have begun to recover in some markets, including in China, leading BMW to expect its core business to return a profit, but the rebound will not be enough to make up the shortfall of sales lost to the coronavirus pandemic.

“We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0% and 3% for the automotive segment in 2020,” Chief Executive Oliver Zipse said in a statement.

BMW reiterated that it expected pretax profit to be significantly below 2019 levels and for car deliveries to customers to fall significantly this year, even as car sales have begun to rebound in some markets, like China.

In May, the auto maker warned it would post a second quarter loss and slashed its outlook, forecasting an automotive margin on earnings before interest and taxes (EBIT) of 0% to 3% this year, versus the 2-4% seen before the pandemic.

(Reporting by Edward Taylor; Editing by Michelle Martin)

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