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BMW says wind is at its back after pandemic dents 2020 profit

Stock Markets1 hour ago (Mar 11, 2021 07:11AM ET)

(C) Reuters. FILE PHOTO: Beijing International Automotive Exhibition

By Nick Carey

LONDON (Reuters) – BMW said on Thursday that it was back on a profitable track in 2021 after recovering from shutdowns and a serious dent to sales due to the COVID-19 pandemic in the first half of last year.

The premium German carmaker said it would have five fully-electric models available this year, as it races alongside the rest of the industry to roll out new zero-emission models in the face of tightening CO2 emissions targets in Europe and China.

Plant shutdowns in the first half of 2020 to slow the spread of the novel coronavirus led many in the industry to expect a disastrous year, but a market rebound spurred by China helped the industry recover faster than expected.

“Our performance in the second half of the year demonstrated just how strong the BMW Group is … we soon overcame the impact of weeks of plant closures and nationwide lockdowns,” Chief Executive Oliver Zipse said. “We are starting 2021 revitalised and with a favourable tailwind.”

BMW sales in China rose 7.4% in 2020 versus 2019, mostly offsetting declines in other regions.

Chinese consumers also helped propel BMW’s rival Daimler AG (DE:DAIGn) to a full-year pre-tax profit.

Volkswagen AG (OTC:VWAGY)’s 2020 profit fell less than expected, again with a push from Chinese drivers eager to snap up premium Audi vehicles.

BMW said that, with the exception of the second quarter, it remained profitable throughout 2020.

Investments in electrification, self-driving technology and connectivity meant that research and development costs remained high at 5.7 billion euros ($6.8 billion), though more than 4% below the nearly 6 billion euros the company spent in 2019.

The company cut its other capital expenditures by more than 30% during the year.

The premium carmaker posted a full-year 2020 pre-tax profit of 5.2 billion euros ($6.22 billion), down nearly 27% from 7.2 billion euros in the prior year.

BMW ended the year with free cash flow of 3.4 billion euros, up from 2.6 billion euros in 2019 despite widespread lockdowns.

The carmaker’s pre-tax margin for the automotive segment fell to 5.3% from 6.8%.

BMW says wind is at its back after pandemic dents 2020 profit

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