DAX-40 company BMW AG (DE:BMW) yesterday reported its half-yearly earnings, including Q2 numbers for 2023. The company posted stronger revenues and announced more investment in the EV space. BMW is increasing its ambitions with a positive forecast of its own, anticipating further growth in its electric vehicle business.
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During the first half of the year, the company witnessed a 15.4% rise in its research and development (R&D) expenditure, primarily directed towards strengthening its electric vehicle and automated driving initiatives.
The company delivered a 12.4% increase in its revenues of €74 billion for the first half. Earnings (EBIT) jumped by 42.6% to €9.7 billion. For Q2, profit before tax increased by 7.5% to €4.2 billion and revenues by 7% to €37.2 billion. The higher numbers were due to higher sales volume, improved pricing, and more control over its Chinese joint venture, BMW Brilliance Automotive.
Last week, the company’s rival Mercedes-Benz Group (DE:MBG) also published its Q2 earnings, with a 5% increase in revenue driven by top-end models and EV sales. While Volkswagen (DE:VOW) reported a higher increase of 15% in its quarterly revenue of €80 billion in Q2 earnings for 2023.
BMW shares went in the opposite direction and traded down by over 2% yesterday. YTD, the stock has surged by 20%.
A Better Outlook Focused on EV
Looking at the automotive segment, the company delivered 626,726 units in the second quarter, which was 11.3% higher than Q2 2022. Electric vehicles accounted for 14.1% of the total deliveries, which was almost 96% above the prior-period levels. For the full year 2023, BMW anticipates EVs to account for 15% of total deliveries, an increase from the 12.6% recorded in the first half of the year.
Unlike its competitor, Volkswagen, which has announced it will end the sale of combustion engines in Europe by 2035, BMW refused to set any target. The company’s CEO, Oliver Zipse, said it’s “still too soon,” as their sales remain solid in the U.S. and China.
Looking forward, BMW raised its yearly forecast for EBIT margin in its automotive segment. However, the company also acknowledged persistent challenges from supply chain disruptions and inflation for the latter half of the year. The EBIT margin is now expected to be between 9% and 10.5%, up from previously stated levels of 8% and 10%. The company anticipates robust growth in deliveries, a shift from the earlier forecast of modest growth. This change is attributed to a robust order backlog and enhanced availability of its premium vehicles.
BMW Share Price Target
According to TipRanks, BMW stock has a Hold rating with a total of 13 recommendations, of which four are Buy. It also includes eight Hold and one Sell recommendations.
The average price forecast is €110.9, which represents a 7.6% change from the current price level.
