At the halfway stage, the BMW Group remains on course towards achieving its targets for the full year. After implementing controlled cutbacks at many of its plants in March as a response to the foreseeable drop in global demand, the Group initiated a coordinated restart of its production facilities in the second quarter. Since mid-June, all its manufacturing plants have again been working in regular shifts. Nonetheless, cost efficiency and cash management remain decisive factors for best controlling the consequences of the corona pandemic.
“Our swift responsiveness and consistent management strategy enabled us to limit the impact of the corona pandemic on the BMW Group during the first half of the year,” said Oliver Zipse, Chairman of the Board of Management of BMW AG, in Munich on Wednesday. Despite a significant market decline following the corona pandemic the BMW Group was able to achieve a positive profit before tax of € 498 million in the first half year. “We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0 and 3% for the Automotive segment in 2020. We are monitoring the situation very closely and managing production capacities in line with market developments and regional fluctuations in customer demand.”
The BMW Group remains committed to its plans; despite the highly challenging market environment, it will continue to invest in future-oriented technology fields and develop its expertise accordingly. As previously announced, the Group intends to invest more than € 30 billion in research and development up to 2025 with the aim of extending its leading edge in terms of innovation.
Liquidity position remains strong – future-oriented investments at high level
In order to accomplish the targets referred to above, the BMW Group continues to make the necessary upfront investment in future-oriented technologies. Group research and development expenses totalling € 2,734 million remained at a high level in the first half of the current financial year (2019: € 2,796 million; ‑2.2%). The figure includes expenses for the ongoing electrification process and, in particular, for developing the BMW iNEXT. As previously reported, capital expenditure on property, plant and equipment as well as on other intangible assets is being undertaken on a prioritised, highly focused basis. The total expense for the first half of the year amounted to € 1,477 million (2019: € 2,175 million; -32.1%).
“We are investing carefully and with a sense of proportion. In light of the current situation, we are either postponing or closely scrutinising our projects. As announced, we have also systematically reduced inventory levels during the second quarter with the aim of safeguarding free cash flow,” stated Nicolas Peter, Member of the Board of Management of BMW AG, Finance. “Our Performance Programme is making a significant earnings contribution. Over the past three years or so, this programme has laid the groundwork for key improvements, which we are now benefiting from and which enable us to drive forward the necessary changes.”
CO2 reduction to be achieved through millions of electrified vehicles
The Group’s second strategic focus is on sustainability. During the corona pandemic, the Board of Management has set some ambitious long-term targets. “Sustainability and digitisation are the key issues of the coming decade. Particularly in these challenging times we need to set the right course in this respect,” said Zipse. “We not only combine product excellence with state-of-the-art digital technologies – we also design them to promote our sustainability goals. Our customers as well as society in general will benefit from this strategy.”
For the first time across the entire life cycle of its products – from the supply chain to production and through to a vehicle’s end-of-life phase, the BMW Group has set itself clear targets for reducing its CO2 emissions up to the year 2030. Over this entire period, CO2 emissions per vehicle are to be reduced significantly by at least one third by…