German car manufacturing giant BMW – Bayerische Motoren Werke AG (ETR:BMW) opened Tuesday’s European trading with losses, as the market bears dominated.
European stocks were lower overall on Tuesday as stricter coronavirus restrictions in Europe and ongoing concerns over the U.S. stimulus negotiations ahead of the presidential election kept in check any market optimism from the strong earnings reported in the banking and finance sector.
BMW stocks fell 1.69% within a short time of the opening bell. This, despite news that the company delivered higher-than-expected free cash flow during the third quarter of the year.
According to a report in Reuters, free cash flow amounted to 3.07 billion euros ($3.61 billion) in the third quarter of this year. This was an increase from the 714 million euros ($840.16 million) free cash flow reported in the same period a year earlier.BMW said in its earnings summary report:
“This was due in particular to a faster recovery in several markets, which led to higher sales growth,” However, the auto manufacturer also stated:
“Economic disruption caused by the coronavirus pandemic continues to significantly impair forecasting and leads therefore to considerable uncertainty in providing an accurate outlook,”
Brexit Concerns Still Weigh
Less than two weeks ago, BMW Chief Financial Officer Nicolas Peter is reported to have said that Brexit – the UK’s exit from the European Union, could cost carmakers and their suppliers as much as 11 billion euros unless cross-border trade remains tariff-free and without the red-tape of bureaucracy. Peter said:
“The auto industry association ACEA has estimated that it could cost carmakers and suppliers 10 to 11 billion euros,”
“We need tariff-free trade. And even then, it needs to be seamless. We have a just-in-time manufacturing system so the administrative processing at customs needs to be efficient.”
During a roundtable discussion, the CFO said that BMW have already spent double digit millions preparing BMW for Brexit.
