FRANKFURT—Shares in BMW AG fell nearly 2% on Wednesday despite
record profits after the German premium car maker announced a
lower-than-expected dividend and investors become concerned over
the company's growth.
Net profit in 2015 rose 10% to €6.4 billion ($7.05 billion),
compared with €5.8 billion a year earlier. Revenue increased 15% to
€92.2 billion from €80.4 billion, helped by favorable currency
rates.
The Munich-based car maker, which produces the namesake BMW
brand sedans and sport-utility vehicles, Rolls-Royce, the MINI
luxury compact car, and BMW's iconic motorcycles, forecast another
record year in sales in 2016 after selling 2.25 million vehicles
last year. But investors noted that BMW is losing ground against
rivals Daimler AG, which makes the Mercedes-Benz brand, and Audi
AG.
"The numbers presented today reflect the past," Frank Schwope,
analyst at Nord/LB, said in a note to clients. "In the present and
future (BMW) is likely to face increased pressure from the
competition."
BMW said it would propose to shareholders to raise the dividend
on common shares to €3.20 from €2.90, and on preferred shares to
€3.22 from €2.92. Nominally, the dividend is higher, but investors
noted that the payout is flat as a percentage of earnings.
"We understand that the lack of any special dividend and flat
payout disappoint," Arndt Ellinghorst, head of automotive research
at Evercore ISI, said in a note. "Management has indicated to do
more for shareholders for quite some time."
That's why investors will listen closely when BMW Chief
Executive Harald Krü ger presents the company's new strategy next
week. In addition to hearing how the freshman CEO plans to steer
the company through the challenges facing the global auto industry,
investors are hoping he will announce a more generous dividend
policy for the future.
"We clearly expect this to be the case," Mr. Ellinghorst
said.
Mr. Krü ger was handpicked by BMW's family owners Stephan Quandt
and his sister Susanne Klatten, to take the wheel last year and
steer the company's development of new technology such as electric
vehicles, in-car digital services and new business models such as
car-sharing.
He has been hailed as a bright, young executive more at home in
the digital economy than his predecessor, Norbert Reithofer, who
BMW insiders say refused to deal with email.
But Mr. Krü ger isn't seen as much of a driving force as his
predecessor, who had a powerful, commanding presence.
Mr. Krü ger is quieter and his public appearances have raised
questions about his ability to lead BMW's masculine culture. In
September, as he took the stage at the Frankfurt Motor Show, Mr.
Krü ger fainted and was taken to a hospital for examination. Since
then, he has made few public appearances.
Under Mr. Reithofer, BMW took the lead in the premium segment
from Mercedes and took a big risk on electric vehicles, developing
the i3 battery-electric compact urban vehicle and the i8 hybrid
sports car. Mr. Krü ger takes charge at a time when BMW's rivals
are gaining ground and he will have to work hard to keep the
company out front.
Over the past few months, Mr. Krü ger has hinted that BMW as a
brand must become more like Apple, developing an iconic hardware
platform around which the company can build a vast array of digital
services. He also wants to adapt BMW's processes and structures to
the digital economy and step up development of electric
vehicles.
BMW is expected to present a new model in its i-Series, possibly
as early as next week, that will be more of a family car than
either the i3 or i8. BMW has confirmed that it would announce a new
i-model this year, but has declined to provide any details.
Shortly after taking charge at BMW, Mr. Krü ger signed on to the
joint acquisition of Nokia Corp.'s digital mapmaker, Here, with
rivals Daimler and Audi, a sign of how the entire industry is
moving into digital technology. Here's maps are a key component
needed for self-driving cars and other digital services.
BMW has also stepped up its hiring of software programmers and
plans to hire an additional 500 software engineers this year, the
company said.
Mr. Krü ger has also hired Jens Monsees, who worked at Alphabet
Inc.'s Google on automotive issues for seven years, to take charge
of BMW's digital strategy, according to a person familiar with the
situation. He is currently chief digital officer on the management
board of Arvato. BMW is expected to announce the appointment next
week.
The move comes after Volkswagen AG, Europe's biggest car maker
by sales, recently hired an Apple executive to take charge of its
digital strategy and development.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
March 09, 2016 13:05 ET (18:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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