BMW (BMW.DE) on Monday evening reported that it had a much higher free cash flow than expected in the third quarter of this year.
In a preliminary release, ahead of its third-quarter earnings report on 4 November, the German luxury carmaker said that its free cash flow came to €3.07bn (£2.8bn, $3.6bn) compared with €714m in the same quarter of 2019.
The carmaker said in a statement that “this was due in particular to faster recovery in several markets, which led to higher sales growth.”
It also attributed the higher cash flow to reduction in fixed costs and capital expenditure, and optimisation of working capital, but noted that its earnings forecasts for the group are unchanged.
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COVID-19 is making future predictions tough, BMW noted. “Economic disruption caused by the coronavirus pandemic continues to significantly impair forecasting and leads therefore to considerable uncertainty in providing an accurate outlook,” it said in its statement.
While the automotive industry was brought to a standstill in the first and second quarters due to COVID-19 lockdowns and a collapse in consumer demand, there are signs that things are starting to slowly pick up again.
BMW rival Daimler (DAI.DE) last week reported a rebound in the third quarter, with strong cash flow boosted by a growth in September sales. Its operating profit (EBIT) surged by 14% to over €3bn in the three months ending September.
Like BMW, Daimler is on a drive to reduce costs and restructure. The Mercedes-Benz maker said in July that it will need to cut more than 15,000 jobs.
The European car market saw its first monthly increase in new car registrations in September. According to data from the European Automobile Manufacturers Association, new car registrations were up by 3.1% last month, led by a rebound in Italy and Germany. However, over the nine months of the year to date, demand shrunk by almost 29% compared with the same period in 2019.
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