In the first quarter, which was severely affected by the epidemic, declining revenue and plummeting profits became the key words for most car companies. Compared with those companies, BMW, which saw both revenue and profit increase, was one of the few that delivered a pretty good report card. Around these figures, this reporter found through analysis, and other car companies through cost reduction and efficiency in the form of regulating expenditure is different from the BMW report card is beautiful from its own development of the unique toughness.
As a huge multinational automobile enterprise, BMW has been using pragmatic and effective management mode to coordinate the development, especially in the global automobile enterprises are facing the transition of the special period, BMW has been "steady" as the key word, not aggressive and not timid. In the face of future uncertainty, BMW also in accordance with this pragmatic development thinking, the development of expectations for the adjustment, to show everyone the image of a sophisticated leader.
Earnings before interest and taxes to maintain positive growth 133% year-on-year
According to the BMW Group's 2020 first-quarter earnings data, from January to March, the BMW Group achieved revenues of 23.25 billion euros (about 178.3 billion yuan), a slight year-on-year increase of 3.5%; net profit of 574 million euros, a slight year-on-year decrease of 2.4%; EBITDA of 1.38 billion euros, up 133 percent year-on-year from 589 million euros in the same period last year.
While the BMW Group said in its earnings report that the core reason for the sharp rise in EBIT was that it paid a 1.4 billion euro European Union antitrust fine in the first quarter of last year, which led to a lower base in the same period last year.
But a review of BMW's first-quarter 2019 earnings data reveals that BMW's EBITDA in the first quarter of 2019 was 1.1 billion euros if the 1.4 billion euro fine is taken out. This means that even without the impact of the 1.4 billion euro fine, BMW Group's EBIT in the first quarter of 2020 remained up year-on-year.
Operating income rose a modest 3.5 percent year-on-year, with solid growth in many businesses
In terms of sales, the BMW Group showed a clear "V" trajectory of development. Although it maintained steady growth in January, BMW's sales fell severely in February due to the impact of the new pneumonia outbreak. Along with the domestic epidemic prevention and control of the situation is improving, BMW sales in March again showed signs of gradual recovery.
Data show that in the first quarter, BMW delivered 471,700 new cars*** under the BMW, MINI and Rolls-Royce brands globally, down 20.6% year-on-year. Among them, the BMW brand delivered a total of 411,800 new vehicles, down 20.1% year-on-year; MINI brand delivered 64,449 new vehicles, down 23.4% year-on-year; Rolls-Royce delivered 853 new vehicles, down 27.2% year-on-year. In terms of new energy vehicles, BMW delivered a total of 30,692 electric vehicles in the first quarter, up 13.9 percent year-on-year.
It's worth noting that despite the BMW Group's sales in decline, its revenue of 23.25 billion euros (about 178.3 billion yuan) in the first quarter rose slightly by 3.5 percent year-on-year. That means that outside of the auto business, BMW's non-auto businesses, such as financial services, are also extremely profitable.
An automotive market observer told reporters that BMW Group's first-quarter results reflect Germany's pragmatic industrial development wisdom. A huge multinational enterprise should not have only one profitable business, but should establish a perfect business mix. Only in this way can the smooth running of the business be maintained when irresistible surprises arise.
Strict control of inventory levels Planned adjustment of EBIT margin expectations
For the future, considering the continued spread of the epidemic, the BMW Group has likewise made a series of plans. Zipzer, chairman of the BMW Group, said: "Obviously, the situation is still serious and market forecasts are all dependent on the epidemic. We are gradually restoring production capacity in line with overall market demand. Even so, we are closely monitoring the latest situation and exercising maximum flexibility to provide feedback to the market. Going forward, we will keep a tight rein on inventory levels as liquidity is critical in this scenario."
It is understood that as early as the beginning of the outbreak, the BMW Group reacted quickly and implemented comprehensive anti-epidemic measures. Among them, according to the market demand in the first quarter and the operating conditions of dealers, the BMW Group has flexibly adjusted the business targets for February and March to reduce the pressure for dealers. Along with the gradual improvement of the epidemic, China's automobile consumer market has also begun to pick up and recover. In order to further help dealers create better business conditions, since April, BMW Group has launched a new round of dealer support program - "Renewal Program", which targets the actual needs of different customer groups and introduces sales and after-sales policies for different categories to further help dealers restore normal operations. policies to further help dealers resume normal operations.
At the same time, considering that the world may be in a state of long-term resistance to the "epidemic", BMW is doing a systematic analysis of the economic situation, but due to the uncertainty of the fluctuation of the economy caused by the epidemic, which means that the outlook of the enterprise itself is also facing a lot of uncertainty. Therefore, in order to refract this uncertainty, the BMW Group has adjusted the automotive segment's EBIT margin to be within a range of 0% to 3%. In the Financial Services segment, return on equity is expected to decline year-on-year. In the motorcycle business, BMW expects its deliveries to be significantly lower in fiscal 2020 than in fiscal 2019 levels as well, with an EBIT margin of around 3% to 5% within the range.
Continuing electrification push BMW ix3 production planned for July
At the first-quarter earnings presentation, Nicolas Peter, BMW Group director in charge of finance, said, "We are now pursuing a strategy of making targeted investments on a proportional basis, either putting some projects on hold or revisiting them. So we hope that we can reduce our capital expenditures to less than 4 billion euros from about 5.7 billion euros last year."
The financial data show that the impact of the BMW Group's targeted investments has been gradually visible in terms of capital expenditures on real estate, plants, equipment and other intangible assets, which have been reduced by about 30 percent compared with the same period last year. But in terms of research and development investment, the BMW Group spent basically the same amount in the first quarter as in the same period last year.
In response to the situation, BMW said its electrification process will not be forced to "slow down" because of the spread of the epidemic. Zipzer said BMW will continue to push forward with electrification, driverless technology and hydrogen fuel cell technology, and will invest more than 30 billion euros in research and development by 2025 to drive the company's transition to the New Four.
The latest news shows that BMW Group plans to offer global consumers five pure electric models by the end of 2021; by 2023, BMW Group's new energy lineup plans to expand to 25 models, half of which will be pure electric. Among them, the BMW ix3 will make its debut this year and is scheduled to be put into production in China by BMW Brilliance in July, and then it will also be mass-produced at the German plant in 2021 along with the i4 and the iNEXT for the global market.
This article comes from the authors of Automotive House Car Family, and does not represent the views of Automotive House's position.