BMW, a premium manufacturer with fundamental potential


BMW like the rest of the automotive sector suffered the harsh impact of COVID-19. The Group implemented controlled cuts at many of its plants in March in response to the foreseeable drop in global demand and restarted its production facilities in a coordinated manner in the second quarter. Since mid-June, all of its manufacturing plants have returned to regular shifts.

Thanks to this quick response, and despite a significant market downturn, the BMW Group was able to achieve a positive profit before tax of € 498 million in the first half of 2020. From January to June, it delivered 962,575 (-23.0% vs 1H19) vehicles of the premium brands BMW, MINI and Rolls-Royce to customers around the world. The group’s income consequently fell to 43,225 million euros (-10.3%); profit before tax fell to 498 million euros (-82.3%), which translates into an EBT margin of 1.2% (2019: 5.8%); the group’s net profit amounted to 362 million euros (-82.5%).

  • Europe: 372,754 BMW, MINI and Rolls-Royce brand vehicles sold during the six-month period (-32.3%).
  • Germany: registered sales volume fell to 116,362 units (-27.9%).
  • China: A more positive trend became evident from April. Thanks to volume growth in the second quarter compared to the prior year, sales in the semester only decreased 6.0% to 329,447 units.
  • USA: a total of 121,318 units sold (-29.5%) in 1H20.

BMW, a premium manufacturer with fundamental potential


For the last tranche of 2020, the Group anticipates an EBIT margin between 0 and 3% for the Automotive segment. The Financial Services segment is expected to generate a lower volume of new business in a potentially more volatile risk environment. As a result, a moderate year-on-year decline is expected in the segment’s return on equity. Deliveries in the motorcycle segment are expected to decline significantly compared to the previous year. Currently, the EBIT margin is expected to be in the 3-5% range in this segment.

The forecasts point to a significantly lower profit before tax for the Group at the end of the current year vs 2019.


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Despite the highly challenging market environment, BMW has confirmed that it will continue to invest in future-oriented technological fields. The Group intends to invest more than € 30 billion in research and development until 2025. But certain projects will have to be postponed and re-examined. It has also systematically reduced inventory levels during the second quarter in order to safeguard free cash flow.

BMW also maintains its strategic objectives in terms of sustainability and digitization. For the first time in the entire life cycle of its products, from supply chain to production to the end-of-life phase of a vehicle, the BMW Group has set clear targets to reduce its CO2 emissions by 2030 Throughout this period, CO2 emissions per vehicle will be significantly reduced by at least a third by 2030 compared to 2019 levels.

Furthermore, the BMW Group is already a leading manufacturer of electric vehicles. By the end of 2021, it will offer five mass-produced fully electric cars. The next generation of the BMW 7 Series will mark another important milestone. By 2023, the BMW Group intends to have 25 electrified models on the road, half of them fully electric versions.


Profitability and cash management remain critical factors in better controlling the effects of the pandemic. BMW maintains a tight inventory control that makes it easy to control cash flow. Liquidity and solvency ratios remain at adequate levels, which will help you navigate 2020 and 2021 that are expected to be very complex from a sales point of view. Once effective vaccination is achieved and the recovery of demand begins to return to normal, BMW will undoubtedly be one of the most favored manufacturers.

In a valuation by multiples under the forecast of 2021 results (EPS 7.96 € / share, revised upwards after the publication of figures corresponding to 3Q20), the market undervalues ​​the company. The PER ratio remains at moderate levels (9.15v); with a CBA> 47%, the PEG ratio picks up strong upside potential (0.19v). EV / EBITDA with room for improvement and undervaluation by Book Value.

BMW, a premium manufacturer with fundamental potential

Based on a fundamental assessment the recommendation is positive for the medium / long term value.

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