BMW’s third-quarter profit increased by nearly 10% due to Chinese demand for luxury cars, but the automaker warned a new wave of coronavirus infections occurring in Europe and the United States and it posed a “considerable” risk to its business.
Sales of luxury models such as the 8 series and X7 helped the automaker reach a new sales record in the quarter, but the cautious outlook led to a drop in BMW shares on Wednesday.
“After a more stable phase in the economic environment in the third quarter, the pandemic is now clearly regaining momentum,” the automaker said.
“If the pandemic takes an even more serious course and the worldwide economy experiences a perceptible downturn, the risk exposure could be considerable, particularly on the demand side.”
Like Mercedes, BMW’s pretax profit recovered in the third quarter, increasing 9.6% to 2.46 billion euros ($2.87 billion), lifted by an 8.6% boost in deliveries.
The automotive EBIT (earnings before interest and tax) margin recovered to 6.7%, from minus 10.4% in the second quarter and 6.6% a year ago.
“BMW beat mostly on earnings quality with auto margin recovering to year ago level,” Jefferies analyst Philippe Houchois said, pointing to prudent cost management, lower R&D spending, and a recovery in demand from China.
But after the coronavirus crisis in the spring, BMW still expects total deliveries of high-end vehicles and group pretax profit of 2020 to be significantly lower than in 2019.
