BMW raises its profit forecast for 2021 but warns that chip shortages will affect results in the second half of the year.

BMW (BMW), one of Germany's luxury troika, raised its profit forecast for 2021 after reporting strong quarterly results on Tuesday, but warned that a global shortage of semiconductor chips and rising raw material prices would affect its performance in the second half of the year.

BMW's second-quarter revenue was 28.58 billion euros, up 43.1% from a year earlier and 45.2% after exchange rate adjustment, mainly driven by higher sales and higher prices in the new and used car markets. BMW delivered a record 702441 vehicles to customers worldwide in the quarter, up 44.7 per cent from a year earlier.

It is worth noting that although BMW sold nearly 30500 vehicles less than its rival Mercedes-Benz in the first quarter of this year, the gap has narrowed to just over 4400 so far this year.

BMW made a net profit of 4.8 billion euros ($5.7 billion) in the second quarter, compared with a loss of 212 million euros in the same period in 2020 as a result of the epidemic. On average, analysts expect BMW's second-quarter net profit to be 2.2 billion euros, according to Refinitiv estimates.

BMW's pre-tax profit was 5.98 billion euros in the second quarter, compared with a loss of 300 million euros a year earlier; earnings per share were 7.23 euros, compared with a loss of 0.35 euros in the same period a year earlier; and second-quarter profit margins before interest and tax in the automotive business were 15.8 percent.

BMW now expects its auto business to have a full-year operating margin of between 7% and 9%, up from its previous forecast of 6% to 8%.

"in the first half of this year, our results benefited from strong customer demand, which enabled us to achieve significant growth," said Oliver Zipse, chief executive of BMW. "however, given a range of widespread risks, including raw material prices and semiconductor shortages, BMW is likely to be more volatile in the second half of the year."

The major car companies have issued warnings one after another.

"the longer the supply bottleneck persists, the more tense the situation is likely to become," said Nicolas Peter, BMW's chief financial officer. "We expect production restrictions to continue in the second half of the year, which will have a corresponding impact on sales."

Not only BMW but also a number of automakers have warned of a global shortage of chips.

Although Volkswagen (Volkswagen AG) raised its profit forecast for this year at the end of last month because of strong sales of high-end brands such as Porsche and Audi, Europe's largest carmaker also warned that the core crisis affecting global car production would worsen over the next six months.

Daimler (Daimler AG) also downgraded its sales outlook for its main Mercedes-Benz luxury car division last month as persistent semiconductor shortages hampered car production. The carmaker now expects full-year car shipments to be the same as last year, which had been expected to be much higher than last year's level.