BMW posts strong Q2 earnings but warns on chip shortage

BMW raised its profit forecast for 2021 after strong quarterly results, but warned that the global semiconductor shortage and rising raw materials prices would impact its performance in the second half.

Net profit for the second quarter was 4.8 billion euros ($5.7 billion), compared with a loss of 212 million euros for the same quarter in 2020. The company’s automotive segment had an EBIT margin of 15.8 percent, roughly double the carmaker’s annual forecast of 7 percent to 9 percent.

Earnings were boosted by higher sales volume and good pricing, the automaker said in a statement on Tuesday.

BMW said it now expected a full-year operating margin for the automotive segment in a range from 7 percent to 9 percent, up from its previous forecast of a range from 6 percent to 8 percent.

The automaker warned of tense months ahead because the global chip shortage will continue to hit vehicle output.

“Our performance has benefited from strong customer demand during the first half of the year, enabling us to achieve significant growth,” CEO Oliver Zipse said in the statement.

“However, in light of a number of prevailing risks, including raw materials prices and a shortage of semiconductors, the second six-month period is likely to be more volatile for the BMW Group,” he said.

CFO Nicolas Peter said BMW was able to offset the challenges of the chip shortage through “sheer hard work,” but added “the longer the supply bottlenecks last, the more tense the situation is likely to become.”

“We expect production restrictions to continue in the second half of the year and hence a corresponding impact on sales volumes,” he said.

BMW has so far been relatively less affected by the global chip shortage that some of its auto industry peers, which has been attributed to its strong relations with its supplier base.

Its German rivals Volkswagen and Daimler have both warned the chip shortage would dent their results in the second half, and Daimler has said the crisis could drag on into 2022.

BMW’s second-quarter results also received a 1 billion boost after the automaker had to set aside less money than initially feared for expected European antitrust fines for alleged collusion with rivals.

In May, BMW said the revised amount would lead to a rise of around one percentage point on its automaking margin forecast.

The company last month agreed to pay a fine of 373 million euros after an EU investigation into collusion that regulators said curbed the rollout of emissions-cleaning technology. BMW had set aside a total of 1.4 billion euros.

Bloomberg contributed to this report

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