Q3 2024 Bayerische Motoren Werke AG Earnings Call Transcript
Key Points
- Bayerische Motoren Werke AG (BAMXF) reported a growing market presence in the United States, with sales exceeding 290,000 vehicles, marking a growth of nearly 7,000 units.
- The company has a strong manufacturing footprint in the U.S., producing high-demand vehicles like the X3, X5, X6, X7, and XM, which provides a natural hedge against potential tariffs.
- Bayerische Motoren Werke AG (BAMXF) is committed to electrifying its Spartanburg plant, with an investment of EUR1.7 billion, enhancing its production capabilities for electric vehicles.
- The company is strategically targeting an 8% to 10% EBIT margin, indicating a focus on improving profitability.
- Bayerische Motoren Werke AG (BAMXF) is expanding its electric vehicle offerings in China, with a 15% share of BEVs in the market, and plans to introduce the fully electric MINI produced locally.
- The company's Q3 profitability was impacted by high warranty provisions and lost sales, leading to a lower auto margin of around 5%.
- There are ongoing challenges in China, with a shrinking market and financial difficulties faced by some dealers, impacting overall performance.
- Bayerische Motoren Werke AG (BAMXF) faces pressure from elevated inventory levels and a negative pricing impact, affecting its financial results.
- The financial results for Q3 were negatively impacted by the evaluation of fair value derivatives, influenced by decreasing interest rates.
- The company is dealing with significant warranty costs related to past issues, such as airbags and EGR, which continue to affect its financial performance.
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Ladies and gentlemen, welcome back to our Q3 call. Our CEO, Oliver Zipse; and our CFO, Walter Mertl, are also back in the room with me. The line will be open shortly for your questions. The operator will first give you some technical instruction. Please go ahead.
Questions & Answers
(Operator instructions) George Galliers, Goldman Sachs.
The first question I had was around the underlying profitability of the business. If we add back some -- in the region of EUR800 million for the IBS provisioning, it would imply an auto margin of around 5%. And I think if we also look at your full year guidance, it would seem to suggest a margin in the range of 5% to 7% for the fourth quarter.
So is this the right way to think about the underlying level of profitability at BMW today? Or are there still factors related to IBS that are suppressing the margin, both in
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