BMW's free cash flow reached 3.4 billion euros last year, exceeding market expectations

On January 27, BMW announced that its preliminary free cash flow for the fourth quarter and full year of 2020's automotive business was higher than market expectations.

(Image source: BMW)

BMW said in a statement that in the last three months of 2020, the free cash flow of the company's automotive business increased to 2.8 billion euros (US$3.4 billion), almost twice the amount in the same period in 2019; 2020 For the whole year, its auto business free cash flow reached approximately 3.4 billion euros (4.1 billion US dollars).

BMW reiterated that due to the rapid recovery of demand in its major markets in the second half of 2020 and the company’s cost management measures, its automotive business unit’s 2020 EBIT margin in 2020 is at the upper limit of the range of 0 to 3% . The group's pre-tax profit is still within the forecast range and in line with market expectations.

Previously, BMW's German competitor Volkswagen also announced relatively optimistic preliminary earnings data. Both BMW and Volkswagen sales rebounded after the first half of last year, and the demand recovery in the Chinese market has been particularly strong. Despite this, the lockdown measures of the new crown epidemic have put pressure on the sales of the two companies throughout the year. Daimler's Mercedes-Benz has therefore maintained its leading position in the global luxury car market for the fifth consecutive year.

Although BMW has performed well in its largest market, China, BMW is facing increasing pressure as rising stars such as Tesla, NIO and Ideal grab market share. In response to this threat, BMW is expanding its electric models, and it is expected that its iX SUV and i4 sedan will be launched this year and 2022 respectively.

BMW also benefited from better-than-expected second-hand car performance. Affected by the epidemic, consumers sought alternatives to public transportation. The second-hand car market was boosted, plus what the company called 'concentration' Inventory management helped its free cash flow reached 3.4 billion euros last year.

This week, a total of 42 companies were approved to receive approximately 2.9 billion euros in European battery project assistance. BMW is one of them. This assistance will strengthen Europe's position in the electric car race.

BMW plans to announce detailed full-year earnings on March 17.