BERLIN — BMW reported Thursday that first-quarter earnings in its critical automotive division fell more than expected, as heavy discounts in core European markets and technology costs curbed profits from rising car sales, according to Reuters News service.
Earnings before interest and tax declined 15.9 percent to $2,100,000,000, slightly missing a consensus forecast in a Reuters survey. The operating margin dropped to 9.9 percent from 11.6 percent a year earlier.
‘'We don’t expect to receive a great deal of impetus from most European markets over the next few months,' said Norbert Reithofer, BMW's chief executive. ‘'Economic conditions in these areas are likely to remain challenging.'’
Still, BMW reaffirmed its target for 2013 to push vehicle sales to a new record. The company also aims to match last year’s record group pretax profit and achieve an operating margin of between 8 and 10 percent in automotive operations.
German luxury brands like BMW, Audi and Mercedes-Benz have fared better in the economic downturn than their European mass-market peers like Peugeot.
At the same time, BMW is spending more on research and development of fuel-efficient technologies to maintain a technological edge.
Operating profit at the BMW group level, including its motorcycle and financial services divisions, fell less than expected, to $2,652,000,000, compared with a forecast of $2,379,000,000.
BMW’s main rival, Audi, posted a smaller drop in its first-quarter operating margin, to 11.1 percent from 11.4 percent. Audi, a unit of Volkswagen, is the market leader in China and Europe. It is also aiming to achieve an operating margin of 8 to 10 percent for 2013.
Mercedes has fallen further behind its German rivals, struggling to match BMW’s and Audi’s scale and efficiency in smaller cars as well as their success in China. The brand’s first-quarter margin plunged to 3.3 percent from 8.2 percent.
Daimler, the parent company of Mercedes, scrapped its earnings forecast for a second time in six months on April 24 after three-month profit plunged more than half because of Europe’s economic woes and distribution problems in China.––Paul Duchene
