BMW slumps almost 9% to lowest level since October 2022 on 2024 guidance cut📉

Shares of German automaker, BMW (BMW.DE) slumps today almost 9% on unexpected FY2024 guidance cut, affected especially by slowing demand on Chinese market. What's more, the company grapples with technical problems of Integrated Braking System (IBS), supplied by its external partner for 1.5 million cars fleet.

• Now, BMW has to halt deliveries of cars that haven't reached customers yet, which will probably end with lower sales in 2024 and even hundred million euros additional costs impacting earnings report since Q3 2024. However, BMW expects that Q3 will be impacted much more than Q4.
• The German automaker expects now slight decrease in 2024 deliveries; previously awaited modest growth.  EBIT margin in the automotive segment is now expected to fall to narrow to a range of 6% to 7%, vs previously anticipated 8% to 10%. Also, ROCE for the automotive business will be probably between 11% and 13%, below the earlier 2024 target of 15% to 20%.
• The company still expects 4 billion EUR free cash flows for the year, but profitability pressure persists. Also, motorcycle segment is now weaker than expected, due to slowing US and Chinese markets. BMW expects flat year-on-year deliveries and the EBIT margin forecast of motorcycle business has been also revised down to 6% to 7%, from the previously expected 8% to 10% range, with ROCE between 14 to 16% (21% to 26% previously).

BMW.DE chart (D1 interval)

The discount between BMW shares and major resistance zone of EMA200 (the red line) is now more than 30% (bearish trend) but RSI dropped today to 17 points, signalling oversold conditions.

Source: xStation5