The BMW Group updated its full-year outlook for 2023 today. Given the solid operational performance in the first half of 2023, the company expects positive momentum in the business during the second half of the year. This is built on the ongoing strength of the order bank and an expected improvement in the availability of its premium vehicles.
The BMW Group made the following changes to their guidance on financial indicators:
- Automotive segment deliveries to customers is expected to see solid growth over the prior-year level (previously: slight growth).
- In the Automotive segment, the EBIT margin for full year 2023 is anticipated to be within the corridor of 9% to 10.5% (previously: 8% to 10%)
- In the Automotive segment, Return on Capital Employed (RoCE) is expected to be between 18% and 22% (previously: 15% to 20%)
- The Financial Services segment Return on Equity (RoE) is expected to be between 16% and 19% (previously: 14% to 17%).
Additionally, free cash flow in the Automotive segment is now anticipated to be above €6 billion for the full year 2023, taking into account higher investments in the transformation to electromobility as well as increased inventories to ensure the necessary supply of vehicles to the markets.
Furthermore, the BMW Group expects higher expenses for suppliers due to inflation and the supply chain to continue to be a headwind in the second half of the year.
The new outlook is based on the following preliminary financial results for the first half year of 2023 and second quarter 2023 respectively:
- BMW Group performance yielded a Group EBT margin of 12.6% for first half of the year; 11.3% in Q2 2023.
- The Automotive segment delivered sales of 1.2m units in the first half of the year that represent growth of 4.7% over the same period in 2022.
- The Automotive segment delivered an EBIT margin of 10.6% in the first half of the year; 9.2% in Q2 2023. This results from improved sales volume, a beneficial product mix and a positive price situation, despite negative effects from foreign currency, higher material and warranty costs.
- The Financial Services segment generated earnings before tax of € 1,704 million in the first six months of 2023; Q2 2023: € 759 million.
- The solid profitability provided the basis for a free cash flow in the Automotive segment of € 3.1 billion in the first half of the year. The second quarter contributed €1.2 billion of free cash flow. Headwinds resulted from increase in inventory to build product supply pipeline, and higher material and raw material costs.
The full quarterly results and the outlook statement will be published in the 2023 half year report on 3 August 2023.
