BMW Group remains at the mercy of currencies – and the US dollar in particular – according to an analyst who spoke to just-auto today.
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Creative Global Investments analyst Sabine Blümel said that BMW Auto can reach its 2012 target of an 8-10% EBIT margin only at a EUR/USD 1.20 transaction rate.
The EUR/USD exchange rate currently stands at 1.43.
“For 2011 we calculate a USD6.4bn net exposure – after natural hedging – from the US market alone. In view of BMW’s growing business in China and other emerging markets, we estimate that the group’s exposure will be closer to USD10bn in 2011,” she said.
But she added that the firm is set for an earnings recovery in 2010 and 2011 after reaching break-even in 2009.
Higher sales, a further ramp-up in production and improving model momentum should drive BMW’s earnings higher for the fourth quarter.
Nine-month vehicle deliveries (excluding motorcycles) fell 15.7% to 939,554 units but BMW said new models like the X1 SUV and 5 Series GT should lead to an increase in the last quarter. Going forward into 2010, it also has the new 5 Series to reinforce sales.
Overall, the company expects that the sales volume decrease for 2009 will be between 10% and 15%.
“Exposure to the US dollar is to remain BMW’s single largest currency risk,” Blümel added.
“The 2012 target looks overly optimistic. We estimate that BMW needs a transaction rate of EUR/USD 1.20 in 2012, in order to achieve even the lower end of management’s ambitious 2012 target of an 8-10% EBIT-margin at the automobile division.”
