BMW anticipates US$1.2 billion boost from milder antitrust fine

Frankfurt

BMW will raise its earnings forecast for the year because it expects an antitrust fine from the European Union (EU) will be much smaller than anticipated two years ago.

The automaker said late Thursday it will get a boost of roughly one billion euros

(S$1.6 billion) to earnings this quarter from revaluing a provision for an EU fine over allegations that it colluded with its German peers to delay rolling out cleaner cars.

BMW shares rose as much as 1.9 per cent on Friday in Frankfurt.

The automaker expects the EU "will significantly reduce its allegations" against the company, said a statement.

The lesser-than-anticipated penalty will allow the company to raise its margin projection for auto earnings before interest and taxes by about one percentage point.

At issue is the EU's investigation of BMW, Volkswagen and Daimler over their alleged conspiring on emission-reduction systems for diesel cars between 2006 and 2014.

The EU said in 2019 that the companies' coordination made technology aimed at reducing nitrogen-oxide emissions less effective.

Daimler was first to inform the EU about the possible breach of cartel rules and therefore may avoid a fine. VW has also cooperated with authorities and is less exposed to legal risk than BMW.

The provision reduction adds to a run of positive momentum for BMW.

The company said this month it expects returns for its main auto business to be at the upper end of the 6-8 per cent range it was forecasting for the year.

While the carmaker was recently forced to idle some production due to the global shortage of semiconductors, it has not lost as much output as rivals.

BMW shares have risen about 19 per cent this year, roughly in line with the Stoxx 600 Automobiles & Parts Index. BLOOMBERG