Integrated braking system slows BMW down

BMW today revised its annual forecast for 2024 significantly downwards. On the one hand, this is said to be triggered by negative effects in the Automobiles segment resulting from delivery suspensions and recalls due to the Integrated Brake System (IBS) supplied by a supplier, with delivery suspensions for vehicles not yet in customer hands leading to negative sales figures worldwide in the second half of the year. In addition, demand in China is weakening.

In total, the technical measures for IBS affect over 1.5 million vehicles. They will result in additional warranty costs in the high three-digit million range in the third quarter. On the other hand, the continuing subdued demand in China is also having an impact on sales volumes there. Despite the government's support measures, the reluctance to buy continues there.

Based on the developments in the Automotive segment described above, the BMW Group is adjusting its forecast for the financial year 2024 as follows

Deliveries to customers are now expected to be slightly lower than in the previous year (previously: slightly higher).
The EBIT margin for 2024 is forecast to be in a corridor of 6 percent to 7 percent (previously: 8 percent to 10 percent). The return on capital employed (RoCE) is expected to be between 11% and 13% (previously: 15% to 20%). The free cash flow in the Automotive segment for the full year 2024 is estimated at
estimated at more than EUR 4 billion.

As things stand at present, the third quarter will be significantly more affected by the earnings and additional inventory effects described above than the final quarter.

In the Motorcycles segment, there is a tense market and competitive situation in the core markets, including China and the USA, which is having a significant impact on volume and price realization. Deliveries to customers are therefore now expected to remain at the previous year's level (previously: slight increase). The EBIT margin for 2024 is expected to be in the range of 6% to 7% (previously: 8% to 10%) and the return on capital employed (RoCE) between 14% and 16% (previously: 21% to 26%).

Consolidated earnings before taxes will now decrease significantly (previously: slight decrease). (aum)