BMW has reduced the outlook for the profitability of its automotive and motorcycles divisions, citing the low demand which has been hit because of the movement restrictions imposed to contain the coronavirus.
BMW stated it expects the revenues before interest and taxes (EBIT) margin for the automotive segment to drop within a range between 0% and 3% this year, adjusting its outlook from an earlier expected margin range of between 2% and 4%.
“The decisive factor for the adjustment is that the measures to contain the coronavirus are lasting longer in several markets and are thus leading to a broader negative impact than what was foreseeable in mid-March,” BMW stated.
Delivery volumes in these markets will not revive under a few weeks as the automaker had assumed, with the highest negative impact now expected in the second quarter of 2020, the automaker said, noting that matters could still get worse.
“The updated guidance does not, in particular, include, a longer and deeper recession in major markets, a more severe economic downturn in China as a result of recessions in other parts of the world,” BMW added.
More margin pressure are possible due to stronger competitive environment or a second wave of coronavirus infections.
The automaker also said it now expects deliveries of motorcycles to be significantly below from 2019 levels.
The EBIT margin in the motorcycles segment will now be fall under a range of between 3% and 5%, instead of 6% and 8%, BMW said.
Last month BMW cautioned it was expecting a further reduction in global demand even after a 20.6% decline in first-quarter sales to 477,111 vehicles.
BMW is due to publish first-quarter earnings on May 6.
