Chip Shortage ‘Likely’ To Hit Second Half, BMW Predicts

BMW reported a record profit of 4.8 billion euros for the second quarter on Tuesday, but warned that chip shortages will “certainly” affect the second half of the year.

The Bavarian company has so far been able to compensate for a global shortage of this critical component, but will now begin to feel the impacts.

“The longer supply bottlenecks persist, the more tense the situation is expected to become,” stated Nicolas Peter, financial director, in a news release.

“We anticipate that production constraints will persist in the second half of the year, with a corresponding impact on sales volumes.”

A rise in raw material prices is also “expected to have an impact” on the second half of the year.

BMW’s record earnings from April to June were boosted in part by a fine from European competition regulators in July that was one billion euros ($1.2 billion) lower than expected and was reflected as a positive effect in the results.

The fine was imposed by Brussels for BMW and Volkswagen’s collusion in the development of anti-pollution technology for diesel vehicles.

Daimler, which was complicit in the violation but alerted authorities to it, was exempt from punishment.

A huge boost in sales as the economy recovered from the coronavirus outbreak also aided the figures.

In comparison, the corporation lost 212 million euros in the second quarter of 2020, when the pandemic disrupted global trade and travel.

The division’s operating margin for the year is thus expected to be at the “upper end” of the seven to nine percent range, up from the six to eight percent previously predicted.

This widely watched metric hit 13 percent in the first half, significantly above the minus four percent recorded for 2020.

Revenue increased by 43 percent year on year from April to June, and by 28 percent in the first half to 55.4 billion euros.

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