Financial roundup: Challenges affecting manufacturer results

2 August 2019

Vehicle manufacturers are continuing to announce their latest financial results. As the industry faces a number of challenges, many are finding areas such as poor sales and investment in new technologies affecting their figures, while others are optimistic about their full-year outlook.

Germany goes green

BMW saw its earnings before interest and taxes (EBIT) fall 19.6%, due to expenditure on electric vehicle (EV) and hybrid development, as the carmaker looks to claw back some of its high CO2 output and lessen potential EU fines.

EBIT fell to €2.2 billion in the quarter while investments in property, plant and equipment climbed by 39% to €1.2 billion – mainly due to the ongoing new model initiative and the modernisation of plant structures, making them more flexible. The growing proportion of electrified vehicles is also contributing to higher production costs, the company said.

′We are consistently expanding e-mobility with all-electric vehicles and plug-in hybrids and continuing to optimise our already economical combustion engines. Moreover, we are also investing in new technologies such as the [hydrogen] fuel cell,’ commented outgoing CEO Harald KrÜger.

By 2021, deliveries of electrified vehicles are predicted to double compared to 2019. BMW then expects to see a steep growth curve up to 2025, with the volume of electrified vehicles delivered forecast to grow on average by more than 30% per year.

Italian growth

Fiat Chrysler Automobiles (FCA) stuck to its full-year profit guidance, after posting record results in the US and a small profit in Europe, helping the company defy the current automotive slowdown.

In its first earnings release since its failed ′friendly merger’ with Renault, the carmaker said it was confident its adjusted earnings would beat last year’s figure of €6.7 billion globally.

In Europe, FCA posted adjusted earnings of €22 million, down 88% from the same quarter last year. The EBIT margin for the region was 0.4%. Revenue in Europe fell 12% to €5.56 billion. 

′In the second half of the year, we will continue to focus on the underperforming areas of our business, including Maserati, where we’ve reinforced our leadership team; and EMEA, where we continue to target increased margins through the impact of restructuring actions, better management of channel mix, and targeted product strategies,’ the company said in its financial statement.

Renault itself has lowered its outlook for full-year revenue after its first-half profits were hit by weakening demand in Europe and an earnings collapse at Nissan, its alliance partner.

French struggles

Renault-Nissan’s net income slumped by more than half to €970 million in January-June as revenue fell 6.4% to €28 billion, the carmaker said in a statement. Operating profit dropped 14% to €1.65 billion.

′Given the degradation in demand, the group now expects 2019 revenues to be close to last year’s,’ Renault said.

An €826 million drop in earnings from Nissan, in which Renault holds a 43% stake, hit the French company’s bottom line.

Japan rising

Japanese carmaker Toyota has cut its full-year profit forecast by almost 6% on expectations that a stronger yen will affect its forecasts, overshadowing its best quarterly performance in four years.

The company posted an 8.7% rise in operating profit to ¥742 billion (€6.3 billion) between April and June – its best quarter since September 2015. This was helped by a slight increase in global vehicle sales. In Europe, sales totalled 273,964 units, an increase of 21,325 units. Operating income, excluding the impact of valuation gains/losses from interest rate swaps, increased by ¥11.6 billion (€97.8 million) to ¥34.7 billion (€292.6 million).

However, the company lowered full-year profit to ¥2.4 trillion (€20.2 billion) from ¥2.55 trillion (€21.5 billion) previously.

Toyota expects the yen to trade at about 106 to the US dollar and 121 to the euro in the financial year, from a previous assumption of ¥110 and ¥123, respectively.