BMW Net Profit Improves Despite Margin Pressure
May 03 2016 - 4:10AM
Dow Jones News
MUNICH—BMW AG, the German luxury car maker, reported a 8.2% rise
in net profit in the first three months of the year despite a
slight drop in revenue and a decline in operating profit at its
core automotive division.
The Munich-based auto maker said net profit rose to €1.64
billion ($1.90 billion) in the three months to March 31 from €1.52
billion in the same period last year on revenue of €20.85 billion,
down 0.3% after currency swings offset a 6% rise in vehicle
sales.
Earnings before interest and taxes, a key measure of BMW's
operational performance, fell 2.5% to €2.5 billion, reflecting a
1.7% decline at the group's automotive division which includes the
BMW, MINI and Rolls-Royce brands, and a drop of 18% at its
motorcycle unit.
In contrast, BMW benefited from an improved performance from its
financial-services unit and a lower tax charge.
"Our first-quarter performance is further proof of our ability
to generate positive earnings with our core business, despite a
volatile environment," said Chief Executive Harald Krü ger said
Tuesday. "The decisive factor for us isn't short-term profit but
sustainable, profitable growth."
Mr. Krü ger's comment comes as he is overseeing a shift in
strategy at the German auto maker which is increasing its emphasis
on electric vehicles in addition to investing in new technology to
head off upstart competitors, such as the ride-sharing service Uber
Inc. and Alphabet Inc.'s Google, which threaten to upend the global
auto industry.
Sales of the BMW brand vehicles achieved a record in the fist
quarter, rising 6% to 478,743 vehicles, driven by sales of the BMW
flagship 7-series, the X1 compact sport-utility vehicle, as well as
the X3 and X6 sport-utility models.
Looking ahead to the full year, BMW reaffirmed its outlook for
slightly higher earnings and revenue. The EBIT margin at the
group's automotive division is expected to be within a range of 8%
and 10%, Mr. Krü ger said. It was 9.4% in the first quarter.
The results were largely in line with analysts'
expectations.
"BMW's outlook remains unchanged for a slight increase in group
EBIT. Overall, a solid start to the year," Arndt Ellinghorst, head
of automotive research at Evercore ISI, said.
--Friedrich Geiger contributed to this article.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
May 03, 2016 03:55 ET (07:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.