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The Financial Express

BMW's 2020 cash flow exceeded market expectations

| Updated: January 31, 2021 14:26:52


A logo of BMW is seen outside a BMW car dealer, amid the coronavirus disease (Covid-19) outbreak in Brussels, Belgium on May 28, 2020 — Reuters/Files A logo of BMW is seen outside a BMW car dealer, amid the coronavirus disease (Covid-19) outbreak in Brussels, Belgium on May 28, 2020 — Reuters/Files

BMW’s free cash flow last year was better than market expectations at about 3.4 billion euros ($4.12 billion) in its core automotive division, the German carmaker said on Wednesday, citing recoveries in many markets and good cost management.

The margin on earnings before interest and tax in the automotive segment will come in at the upper end of the 0-3 per cent corridor, BMW said, adding that 2020 group pretax earnings remained within guidance and in line with market expectations.

BMW aims to return to its pre-pandemic operating margin target as the global economy recovers, finance chief Nicolas Peter told Reuters last week.

Improving market conditions, a Brexit deal and the German company’s plans to increase its share in its Chinese joint venture to 75 per cent from 50 per cent in 2022 should all help to push BMW back to its pre-pandemic operating margin target of 8 per cent to 10 per cent, he said.

“We’re not talking about far away in the future, but it is a goal that we’re looking at systematically in the short term,” Peter added.

The company will publish 2020 figures and its 2021 margin target on March 17.

For the fourth quarter BMW had free cash flow of 2.8 billion euros in the automotive segment, against 1.5 billion euros a year earlier, according to preliminary figures.

Inventory management, lower than expected consumption of warranty provisions as a result of coronavirus lockdown measures and higher downpayments from dealerships in China and Great Britain also helped to drive cash flow.

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