BMW expects significant earnings growth despite Ukraine war

on Mar 16, 2022
  • BMW CEO discussed the impact of Ukraine war in a CNBC interview.
  • The luxury cars manufacturer expects 2022 deliveries to remain flat YoY.
  • BMW forecasts at least €7.0 billion in FCF from automotive segment.

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Shares of BMW AG (ETR: BMW) are up 2.5% on Wednesday after the luxury cars manufacturer expressed confidence that its earnings will rise significantly this year, despite the ongoing war in Ukraine.

CEO Oliver Zipse’s remarks on CNBC

BMW cited consolidation of BMW Brilliance Automotive – its Chinese joint venture for the upbeat guidance. The automaker, however, doesn’t expect deliveries to grow YoY due to the geopolitical tensions. In a CNBC interview, CEO Oliver Zipse said:

Our €1.0 million to UNICEF is only the start of our support to the humanitarian crisis in Ukraine. Secondly, we have to secure our operations, specifically for wire harness. We’re trying to mitigate direct effects from supply chain and are optimistic that we can mitigate that in the short to medium term.

BMW now forecasts EBIT margin for its car business to stand between 7.0% and 9.0% this year, down from 10.3% in 2021.

BMW sees €7.0 billion in FCF from automotive

According to BMW, its free cash flow from the automotive segment will likely hit €7.0 billion at least in 2022. Quantifying the short-term impact from the Ukraine war, however, is rather challenging, added CEO Zipse.

To make a forecast for the next couple of weeks is really difficult, but on the other hand, our production systems are very flexible and react dynamically to changing situations. We’ll try to cope with that.

BMW reported its financial results for 2021 earlier in March. The stock that trades at a PE multiple of 4.30 is down 15% for the year.