BMW’s Net Profit Slumps Due to Weak Sales and Delivery Hold-Ups
BMW’s 2024 Net Profit Plummets by Over a Third
BMW’s net profit slumped by over a third in 2024 to 7.68 billion euros (S$11.13 billion), in line with market expectations, due to weak sales in China and Germany as well as delivery hold-ups caused by problems with a brake supplied by Continental, affecting 1.5 million cars.
Earnings Margin Forecast
The premium carmaker expects its earnings margin for cars to be 5-7 per cent in 2025, at best a slight increase from last year’s 6.3 per cent, as it anticipates intensifying trade wars and continued tough competition in China.
Tariffs Impact
The company’s forecast takes into account all tariffs imposed by March 12, including increased tariffs on US steel and aluminum imports and a 25 per cent duty on some vehicles from Mexico, including BMW’s.
Dividend Proposal
The group proposed a higher payout ratio of 36.7 per cent, among the highest in its history, consisting of a dividend of 4.32 euros per preferred share for 2024, down from 6.02 euros paid out for the previous year.
Outlook Adjusted
BMW cut its 2024 outlook to 6-7 per cent from 8-10 per cent in September due to slumping China sales and problems with the brake supplied by Continental.
Fourth Quarter Net Profit
The company’s fourth-quarter net profit dropped 41 per cent, in line with warnings from the carmaker in January that higher fixed costs from unwinding inventory in the final three months and inflation would hit earnings.
Conclusion
BMW’s net profit slump is a result of weak sales in China and Germany, as well as delivery hold-ups caused by problems with a brake supplied by Continental. The company’s earnings margin is expected to be 5-7 per cent in 2025, with a slight increase from last year’s 6.3 per cent.
Frequently Asked Questions
Q: What is the reason for BMW’s net profit slump?
A: Weak sales in China and Germany, as well as delivery hold-ups caused by problems with a brake supplied by Continental.
Q: What is BMW’s earnings margin forecast for 2025?
A: 5-7 per cent, at best a slight increase from last year’s 6.3 per cent.
Q: What tariffs are included in BMW’s forecast?
A: All tariffs imposed by March 12, including increased tariffs on US steel and aluminum imports and a 25 per cent duty on some vehicles from Mexico, including BMW’s.
Q: What is the proposed payout ratio for 2024?
A: 36.7 per cent, among the highest in its history.
