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Investing.com — Bayerische Motoren Werke AG (ETR:BMWG) shares slumped to near the bottom of the pan-European STOXX 600 after the German luxury carmaker lowered its guidance for expected full-year deliveries and warned that the outlook for the global automobile market has “deteriorated.”
The company now sees annual deliveries of its car brands to be “slightly lower” than in 2021. BMW previously said the figure would be in line with the previous year’s total of 2,521,514 units, a group record.
Constraints in the supply chain for key semiconductors, which stemmed from strict COVID-19 lockdowns in China that caused factory disruptions, are also now not forecast to improve “appreciably” over the remainder of the year. BMW had initially assumed that the supply challenges would ease in the second half.
“The BMW Group also expects higher expenses for raw materials and energy prices in the second half of the year, particularly due to reduced gas supplies, with a corresponding negative impact on earnings in the form of further rising costs of material and manufacturing,” the company said.
The Munich-based firm backed its prediction for a 7-9% uptick in core income in 2022, saying that the estimated decline in deliveries will likely be offset by higher pricing and strength in the pre-owned vehicle market.
In the second quarter, BMW reported a 34.3% drop in group-wide pre-tax profit compared to the prior year to €3.93B as automotive deliveries tumbled by nearly a fifth. That still came in ahead of analyst estimates of €3.13B.
Besides ongoing supply bottlenecks for chips, BMW cited the impact of the war in Ukraine and subsequent gas flow concerns that have helped drive up energy prices as a major weight on performance.
Meanwhile, half-year revenues jumped by 19.1% to €65.91B due to the first-time consolidation of BMW’s joint venture in China into BMW’s results. However, group cost of sales linked to this move increased in the second quarter.
