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German car manufacturer BMW on Wednesday set targets to slightly increase margins in its auto segment and increase deliveries this year as it continues to roll out its electric fleet.
The company said it expects an EBIT (earnings before interest and tax) margin of between 8% and 10% for its automotive lineup in 2023, with deliveries expected in slightly up on 2022 and “selling prices remaining at a stable level”. He predicts the used car market will normalize this year “due to the increased availability of new cars.”
Shares of BMW rose 1.07% at 8:20 a.m. London time following the announcement.
“A high level of flexibility, combined with our operational performance, has proven to be an effective combination to ensure the success of the BMW Group even in the face of headwinds and to take advantage of opportunities for profitable growth,” said Oliver Zipse, Chairman of the board of directors of BMW AG, said in a press release.
Like its rivals, BMW has faced global semiconductor shortages and supply chain disruptions, which has challenged it to fulfill its order.
The company confirmed the results for the year 2022 reported last week, including an EBIT of 10.6 billion euros ($11.4 billion) for its automotive segment, which had a. 8.6% margin last year. The company posted its automotive cash flow at nearly 11.1 billion euros.
As a result, he proposed a dividend of 8.50 euros per ordinary share, compared to a payment of 5.80 euros for the same share the previous year.
“We’re not looking at a driving trend or a segment, or a region of the world, and I think, for us, that plays very well into what we said a couple of years ago,” Zipse told CNBC. “And now we’re executing this plan. And it looks like the plan we’re executing here is quite successful on the revenue side, but also on the market share side.”
He stressed that BMW’s strategy will continue to prioritize profitability, minimizing the effect of soaring inflation rates on consumer demand,
“The question of whether inflation really has an impact is a question of pricing power in the market,” he noted. “With this overall approach that we have here, I would be cautiously optimistic for the year, and we will have a slight increase in overall volume.”
The company announced the appointment of a new CFO on March 9, with Walter Mertl due to take on the role in May after Nicolas Peter retired at the time.
BMW’s results follow a series of upbeat announcements from automakers earlier in the week, with Porsche issuing ambitious growth prospects after record profits in 2022 and Volkswagen outlining a $193 billion five-point investment plan. years.
green thrust
BMW expects the main growth drivers for its business this year to be its premium models and fully battery-electric vehicles (BEVs).
“Depending on the market conditions prevailing in the second half of the decade, the evolution of prices and the availability of raw materials, and the rate at which a comprehensive charging infrastructure is being built, the BMW Group will expects to reach over 50% BEV share well before 2030,” the company said, after announcing that its BEV share would reach 15% in 2023.
BMW plans to deliver 2 million fully electric vehicles by 2025 and more than 10 million such units by 2030. The automaker’s first MINI-branded electric vehicles are expected to hit the market this year, after that the Rolls-Royce range has launched its first fully electric model. Rolls-Royce Specter in 2022 and will reach customers in 2023.
The automaker has stepped up its efforts to transition to electric vehicles, announcing in October that it was seeks to invest $1.7 billion in its US operations to build such motor vehicles and batteries. It introduced a pilot fleet of hydrogen vehicles earlier this year.