7 May 2020
Coronavirus (COVID-19) lockdowns froze the production, sales and registrations of vehicles in the first three months of 2020. Now manufacturers are publishing their Q1 figures, the severity of the freeze becomes apparent. Daily Brief editor Phil Curry and journalist Tom Geggus review some of the latest quarterly results.
BMW reported a surprising 133% increase in profit before financial result, €1.4 billion this year compared to €0.6 billion in Q1 last year. However, 2019’s figure was the result of a €1.4 billion provision connected to ongoing antitrust proceedings. After expenses, the group’s EBIT closed at €798 million this quarter, up 4.7% on 2019’s results (€762 million). Automotive deliveries fell by 20.6% year-on-year to 477,111 units in Q1 of 2020.
Looking ahead to the rest of the year, the manufacturer expects the fallout from COVID-19 to linger. ‘The BMW Group still expects the spread of coronavirus and the necessary containment measures to seriously dampen demand across all major markets over the entire year 2020,’ the carmaker said in a release.
In a conference call, Oliver Zipse, chairman of the board of management, did try to inject some positivity by drawing attention to the €30 billion that BMW looks to invest into research and development by 2025. However, he went on to say that projects are being reviewed. ‘We are asking ourselves: Will these projects contribute to the long-term success of the company?’ In response to these questions, he confirmed the opening of BMW’s Hungary plant would be postponed by a year.
Daimler was hit hard by the COVID-19 pandemic in Q1. The manufacturing group’s total unit sales decreased by 17% to 644,300 passenger cars and commercial vehicles, compared to 773,800 in the first quarter of 2019. Meanwhile, revenue slipped by 6% to €37.2 billion, compared with €39.7 billion in Q1 2019. EBIT fell by roughly 77% to €0.6 billion in Q1 2020, from €2.8 billion in Q1 of 2019.
‘We took the proactive decision to stop production in March, and moved very quickly into cash preservation and cost management mode. As a consequence, Daimler ended the first quarter with a positive result and a robust liquidity,’ said Ola Källenius, chairman of the board of management.
The group is holding out for an increase in operating profit for its Mercedes-Benz Cars and Vans division this year, against the tide of the pandemic. As the division was affected by substantial special items in 2019, Daimler does have a lower bar to aim for. However, the group is warning that operating loss is likely in Q2.
Fiat Chrysler Automobiles
Fiat Chrysler Automobiles (FCA) has scrapped its full-year earnings forecast, following a net loss of €1.69 billion in Q1. With COVID-19 hitting Italy hard and the country going into lockdown in the early part of March, the group was always going to struggle in the first three months of the year.
While the figures reveal that combined shipments in Asia dropped by a larger figure (49%) than in Europe (31%), production stopped seven weeks earlier in the region. European operations were suspended on 11 March, just 20 days before the financial results were taken.
‘The pandemic has had, and continues to have, a significant impact on our operations,’ the company said. FCA still made an operating profit, albeit 95% lower than a year earlier. Adjusted earnings before interest and tax (EBIT) were €52 million.
This year was shaping up to be a very important one for Ford, with two big model launches and a global roadshow event to promote them. However, in its recent Q1 results call, chief financial officer Tim Stone suggested that the new Puma and the company’s first mass-produced electric vehicle, the Mustang Mach-E, may be delayed. ‘We will be able to update you on launch timing once we have a better understanding of our operational readiness as we bring our manufacturing back up,’ Stone told reporters.
The carmaker posted an adjusted EBIT loss of $632 million (€586 million) in the first three months of the year, with a net loss of around $2 billion. In Europe, EBIT was down by $143 million, with passenger-car sales dropping 37.9%.
Ford expects an adjusted $5 billion loss in Q2, as the COVID-19 pandemic disruption really starts to bite, with vehicle sales plummeting and production slowly resuming.
Automotive revenue at the French car-making group fell €2.2 billion in Q1. Sales dropped by 30%, and PSA now believes that full-year revenues may be as much as 25% lower than in 2019.
‘Having secured its liquidity and drastically cut its costs, the group now fully focuses on preparing the rebound in a chaotic economic environment,’ said Philippe de Rovira, chief financial officer of Groupe PSA.
Despite the difficult trading conditions, PSA Group has maintained its mid-term operating-margin target of an average 4.5% for its automotive division over the three-year period from 2019 to 2021. The carmaker also maintains that its merger with FCA remains on track for completion towards the end of this year.
Volkswagen Group (VW)
‘The global Covid-19 pandemic substantially impacted our business in the first quarter,’ said CFO Frank Witter. Deliveries for the group were down 23% on 2019’s figures at 2 million units, compared with 2.6 million in Q1 2019. Operating profit dropped by €3.9 billion to €0.9 billion. Earnings before tax fell from €4.1 billion last year to €0.7 billion this year. Sales revenue also took a dive of 8.3% to €55.1 billion.
As restarts are cautiously undertaken, VW is ensuring its financial footing as it expects operating profits to be down severely in 2020 (while remaining positive). ‘We’ve taken numerous countermeasures to cut costs and ensure liquidity and we continue to be robustly positioned financially,’ Witter said. At the end of March, net liquidity in the automotive division stood at €17.8 billion.