BMW's surplus cash flow from 2020's fourth quarter
30 Jan 2021|1,181 views
The BMW Group's preliminary automotive segment free cash flow for the fourth quarter of 2020 is over $4.5 billion, leading to around $5.476 billion for the full year of 2020, thus exceeding current market expectations. This better than expected free cash flow development of the automotive segment in the fourth quarter of 2020 is driven mainly by the following effects.
A positive operating result in the automotive segment, continued focused management of inventories, and lower than expected consumption of warranty provisions as a result of lockdown measures. Higher down payments were also received from BMW Group dealerships, most notably in China, which was in line with their positive market development and in the U.K. relating to Brexit.
The positive operating result of the automotive segment in the fourth quarter of 2020 is partially due to better than expected remarketing results in the pre-owned car market. This also has a positive effect in the financial services segment, leading to a return on equity for the segment which was only slightly down on prior years as opposed to a moderate decline as indicated in the current outlook.
Due to the faster recovery in many markets in the second half of 2020 and consequent cost management, BMW's Earnings Before Interest and Taxes margin in the Automotive Segment for the full year of 2020 is at the upper end of the 0% to 3% corridor. The BMW Group's Earnings Before Taxes remains within the outlook and in line with market expectations.
The BMW Group's preliminary automotive segment free cash flow for the fourth quarter of 2020 is over $4.5 billion, leading to around $5.476 billion for the full year of 2020, thus exceeding current market expectations. This better than expected free cash flow development of the automotive segment in the fourth quarter of 2020 is driven mainly by the following effects.
A positive operating result in the automotive segment, continued focused management of inventories, and lower than expected consumption of warranty provisions as a result of lockdown measures. Higher down payments were also received from BMW Group dealerships, most notably in China, which was in line with their positive market development and in the U.K. relating to Brexit.
The positive operating result of the automotive segment in the fourth quarter of 2020 is partially due to better than expected remarketing results in the pre-owned car market. This also has a positive effect in the financial services segment, leading to a return on equity for the segment which was only slightly down on prior years as opposed to a moderate decline as indicated in the current outlook.
Due to the faster recovery in many markets in the second half of 2020 and consequent cost management, BMW's Earnings Before Interest and Taxes margin in the Automotive Segment for the full year of 2020 is at the upper end of the 0% to 3% corridor. The BMW Group's Earnings Before Taxes remains within the outlook and in line with market expectations.
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