BMW shares slip on weak half-year cash flow

Investing.com -- Shares of BMW (ETR:BMWG) were down on Thursday after its second quarter results were largely in line with expectations for auto EBIT, but fell short on free cash flow.

At 8:13 am (1213 GMT), BMW was trading 2.7% lower at €83.515.

“Small negative on weak FCF and continued concerns about the guided better H2

retail sales (and working capital) performance in H2 in a lackluster demand environment.,” said analysts from UBS Global Research in a note.

BMW's auto EBIT unexpectedly met expectations, primarily driven by higher-than-anticipated production of 52,000 units, masking underlying challenges. 

However, the company reported a disappointing free cash flow of €1 billion, primarily due to a significant working capital build-up of €1.7 billion in the first half, UBS added.

The reported total EBIT for Q2 was €3.877 billion, slightly below the consensus estimate of €3.912 billion, while total sales amounted to €36.944 billion compared to the expected €37.666 billion. These results reflect a performance that met the lower end of market expectations.

The EBIT margin stood at 8.4%, falling short of the anticipated 8.6%. However, sales in this segment reached €32.070 billion, surpassing the consensus estimate of €31.747 billion. 

Free cash flow (FCF) from automotive operations was €1.006 billion, which was notably lower than the consensus forecast of €1.790 billion.

 Automotive unit sales came in at 619,000 units, slightly below the expected 621,000 units, but revenue per unit was €51,809, which was higher than the consensus estimate of €51,098, said analysts at RBC Capital Markets. 

In the motorcycle segment, BMW reported EBIT of €110 million, which was below the consensus of €129 million. The EBIT margin for motorcycles was 11.1%, less than the anticipated 12.6%, and sales were €989 million, compared to the consensus estimate of €1.023 billion.

For its financial services segment, BMW achieved EBIT of €725 million, exceeding the consensus estimate of €697 million. Sales in this segment were €9.742 billion, higher than the forecast of €9.345 billion.

BMW has maintained its 2024 guidance for automotive EBIT margins at 8-10%, which is in line with the consensus of 8.5%. 

The guidance for motorcycle EBIT margins remains at 8-10%, exceeding the consensus estimate of 7.7%. The company has also upheld its automotive FCF guidance of above €6 billion, which is slightly below the consensus estimate of €6.3 billion.