Salem Radio Network News Thursday, September 16, 2021

Business

BMW says chip shortage, raw material prices to hit second half

By Nick Carey

LONDON (Reuters) -BMW raised its profit forecast for 2021 on Tuesday after strong quarterly results, but said the global semiconductor chip shortage and rising raw materials prices would hurt its performance in the second half of the year.

BMW has so far been relatively less affected by the global chip shortage that some of its peers across the auto industry, which has been attributed to its strong relations with its supplier base.

Its German rivals Volkswagen AG and Daimler AG have both warned the chip shortage would dent their results in the second half, and Daimler has said the crisis could drag on into 2022.

BMW Chief Executive Oliver Zipse flagged similar pressures later this year.

“Our performance has benefited from strong customer demand during the first half of the year, enabling us to achieve significant growth,” Zipse said in a statement.

“However, in light of a number of prevailing risks, including raw materials prices and a shortage of semiconductors, the second six-month period is likely to be more volatile for the BMW Group.”

Chief Financial Officer Nicolas Peter said in a statement that BMW was able to offset the challenges of the chip shortage through “sheer hard work,” but added “the longer the supply bottlenecks last, the more tense the situation is likely to become.” [L8N2PA179]

BMW reported a better-than-expected second-quarter profit after a loss a year earlier when the German luxury carmaker was pummelled by the coronavirus pandemic.

BMW’s sales jumped nearly 45% in the second quarter, with sales rising almost 75% in Europe and 88% in the United States. Sales in China, which drove the carmaker back to profitability in the second half of 2020 after pandemic-related production shutdowns, were up nearly 12%.

The carmaker reported quarterly net profit of 4.8 billion euros ($5.7 billion) after a 212 million euro loss in 2020, more than double an average 2.2 billion euro forecast provided by Refinitiv.

The second-quarter results also received a 1 billion boost after BMW had to set aside less money than initially feared for expected European antitrust fines for alleged collusion with rivals.

The carmaker said it now expected its a full-year operating margin for the automotive segment to come in at the upper end of its forecasted range of between 7% to 9%.

($1 = 0.8420 euros)

(Reporting By Nick Carey; Editing by Kim Coghill and Tomasz Janowski)

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