BMW, the world's largest maker of luxury vehicles, reported first-quarter profits that beat analysts' expectations, as demand for the revamped 1 Series fueled record deliveries.
Earnings before interest and taxes rose 19 percent to $2.8 billion from $2.34 billion a year earlier, the company said Thursday. The figure beat the $2.26 billion average estimate of nine analysts surveyed by Bloomberg. Sales rose 14 percent to $23.8 billion, outpacing the 11 percent rise in deliveries.
"The higher revenue gain shows that prices increased, which led to higher profit," said Hans-Peter Wodniok, an analyst at Fairesearch in Kronberg, Germany. "The sport-utility vehicles did very well and the 1-Series shot off like a rocket."
BMW stuck to its target of increasing pretax earnings for the full year, with the auto unit generating a margin at the upper end of the 8 percent to 10 percent range. The company is counting on demand for a new generation of the best-selling 3 Series sedan, which was introduced in February, to boost deliveries and offset development costs for the i3 battery- powered city car, which will be rolled out next year.
BMW shares rose as much as 3.6 percent to $95.75 and were up 2.1 percent as of 9:35 a.m. in Frankfurt trading. The stock has risen 41 percent this year, making it the top- performing carmaker in the 14-member Euro Stoxx Autos and Parts Index and valuing the company at $60,58 billion.
The car and motorcycle manufacturer is expanding to fend off efforts by Volkswagen AG's Audi and Daimler AG's Mercedes- Benz to grab the sales lead in luxury autos. The maker of BMW, Mini and Rolls-Royce models will start production at a second plant in China later this month but has temprarily shelved plans in Brazil.
BMW's auto unit recorded 11.6 percent return on sales, down from an 11.9 percent margin a year ago. The figure beat Audi's 11.4 percent return and Mercedes's 8.4 percent. BMW's auto deliveries rose to a record 425,528 vehicles in the first quarter from 382,758 a year earlier, as 1-Series sales climbed 20 percent and the X3 SUV surged 55 percent.
BMW spent $650 million in the second half of 2011 to introduce new models, weakening margins. Investments to introduce the "i" electric-car sub-brand and to expand into new markets will probably burden profit more in 2012 than last year, Chief Financial Officer Friedrich Eichiner said in March.
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. BMW is targeting sales of at least 2 million vehicles by 2016 after delivering 1.67 million in 2011.
BMW expects deliveries in 2012 to rise even as the debt crisis in Europe softens demand in its home region, backed by new versions of the 1 and 3 Series and a new four-door version of the 6-Series luxury coupe. The company has projected sales this year to rise by at least 10 percent in China and by a "high single-digit" rate in North America, offsetting a market decline of as much as 5 percent in Europe.––Paul Duchene
