BERLIN -- BMW lowered its output forecast and warned of a highly volatile second half, pinpointing supplies of energy in Europe and microchips worldwide as the two crucial factors to the automaker hitting full-year earnings targets.
The company expects a solid sales increase in the second half, but said full-year deliveries will fall short of last year's record high of 2.52 million.
Tightening sanctions on Russia, interruption of gas supply or the possibility of the war in Ukraine spreading were not factored into its forecast, BMW said on Wednesday.
"Semiconductor supply difficulties remain the dominant and decisive issue for our sales," CEO Oliver Zipse said during an earnings call on Wednesday.
New incoming orders were beginning to fall but order books remained filled for the next few months, Zipse said.
BMW sees vehicle orders normalizing toward the end of the year, particularly in Europe, as pent-up demand from the semiconductor shortage levels off. BMW kept unchanged a forecast on automaking returns at between 7 to 9 percent.
"The crucial factor will be how the supply situation develops -- not just for semiconductors, but also energy supplies in Europe," Zipse said.
Fears that Russia could further cut or stop altogether supplying gas to Europe in response to Western sanctions over its invasion of Ukraine prompted European Union members, including Germany, to adopt emergency plans to curb gas use.
BMW consumes about 3,500 gigawatt hours of energy annually in Germany and Austria, three-quarters of which comes from natural gas.
The automaker could replace the about 500 gigawatt hours of electricity produced per year from gas-powered combined heat and power plants by buying electricity from elsewhere, Zipse said. Replacing gas used in manufacturing processes would be more complex.
Lower Q2 earnings
Second-quarter earnings before interest and taxes fell 31 percent to 3.4 billion euros ($3.46 billion) despite growing revenue.
Quarterly earnings were down because of last year's one-time gain of 1 billion euros ($1.02 billion) from a partial reversal of EU antitrust fines, and 1.1 billion in headwinds from the Chinese unit's consolidation, the company said.
BMW increased its stake in its joint venture with Brilliance Auto Group to 75 percent from 50 percent in February after securing the necessary license from Beijing to take majority control.
"BMW is the first manufacturer to signal caution on the demand front," analyst Daniel Roeska of Bernstein Research said in a note. "A warning for year-end 2022 likely implies that BMW is already seeing weakening consumer demand today."
A survey by Germany's Ifo institute on Wednesday showed German carmakers' business situation beginning to deteriorate in July, with order backlogs shrinking and price expectations plummeting.
BMW struck a more negative note than competitor Mercedes-Benz, which last week raised its earnings outlook for the year after profits and revenues grew in the second quarter despite falling unit sales.
Bloomberg contributed to this report