BMW anticipates surpassing last year’s record profit, thanks to demand for the new generation of the 3-Series sedan in 2012.
“We are targeting new highs in sales volume and pretax earnings for 2012,” Chief Executive Officer Norbert Reithofer said at the company’s annual press conference. “We are off to a promising start with car sales in the first two months of the year at an all-time high."
Pretax profit this year will probably beat 2011’s $9.72 billion, the company reports and the outlook exceeds the estimate of 20 analysts surveyed by Bloomberg.
BMW will add a second plant in China this year and is in talks with the Brazilian government to build a factory in the country as the luxury-car maker fends off efforts by Audi and Mercedes-Benz to nab the segment’s lead spot. VW and Daimler forecast flat 2012 earnings, burdened by costs for cleaner technology and new models.
The world’s top three upscale carmakers are all projecting sales records this year on growth in China and recovering spending in the U.S. After delivering 1.67 million cars last year, BMW expects to sell at least 2 million vehicles by 2016, four years earlier than planned, Reithofer said.
“The outlook doesn’t look too ambitious,” said Juergen Pieper, a Frankfurt-based Bankhaus Metzler analyst with a “buy” rating on the shares. “BMW didn’t trust itself to raise its margin target range, but in this environment it’s understandable and fits BMW’s conservative approach.”
BMW traded down 7 cents, or 0.1 percent, at 70.98 euros as of 1:33 p.m. in Frankfurt after advancing as much as or 0.8 percent. BMW stcok has risen 27 percent over the past 12 months, making it the third-best performer in the 14-member Euro Stoxx autos and parts index, valued at $59 billion..
“Markets and consumers alike remain uneasy about the significant public debt and the euro crisis,” Reithofer said, projecting auto earnings before interest and taxes to be “at the upper end” of its 8 percent to 10 percent target range. That’s down from 11.8 percent in 2011.
The maker of BMW, Mini and Rolls-Royce vehicles spent $660 million in the second half of 2011 to introduce new models. The expenses caused BMW’s auto margins to drop below Audi’s, which reported a 12.1 percent return on sales. Mercedes, which is spending on a new line of small cars, posted a 9 percent margin in 2011.
Investments to introduce the “i” electric-car sub-brand and to expand into new markets will likely burden profit more in 2012 than last year, Chief Financial Officer Friedrich Eichiner said today.
BMW proposed a dividend of $2.76 per common share for 2011, an increase from the previous year’s $1.71, after net income surged 51 percent to $6.48 billion.
Reithofer’s total compensation for last year rose to $8.13 million from $5.67 million a year earlier, the company said in its annual report.––Paul Duchene
