BMW Posts Biggest Profit in 2 1/2 Years on 5 Series
BMW Second-Quarter Profit Jumps on Higher China, U.S. Demand
Guenter Schiffmann/Bloomberg
Net income gained more than six-fold to 834 million euros ($1.1 billion) from 121 million euros a year earlier, the Munich-based carmaker said in a statement today.
Net income gained more than six-fold to 834 million euros ($1.1 billion) from 121 million euros a year earlier, the Munich-based carmaker said in a statement today. Photographer: Guenter Schiffmann/Bloomberg
Aug. 3 (Bloomberg) -- Michael Tyndall, an automotive specialist at Nomura International Plc, talks about Bayerische Motoren Werke AG's second-quarter profit and outlook. The world’s largest manufacturer of luxury cars reported the biggest profit in 2 1/2 years after demand for the new 5 Series surged and sales advanced in China and the U.S. Tyndall speaks from London with Maryam Nemazee on Bloomberg Television's "Countdown." (Source: Bloomberg)
Aug. 3 (Bloomberg) -- Bloomberg's Jason Harper discusses Bayerische Motoren Werke AG's new 5 Series sedan. The world's biggest manufacturer of luxury cars reported its biggest profit in 2 1/2 years today after demand surged for the new 5 Series and sales advanced in China and the U.S. Net income gained almost sevenfold to 831 million euros ($1.1 billion) from 119 million euros a year earlier. Harper talks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Aug. 3 (Bloomberg) -- Fahd Rachidy, head of global investment strategies at Vantage Capital Markets LLP, talks about the firm's "hold" rating on Bayerische Motoren Werke AG and the auto industry outlook. Rachidy talks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Aug. 4 (Bloomberg) -- Ed Tonkin, chairman of the National Automobile Dealers Association, talks with Bloomberg's Susan Li from Portland, Oregon, about U.S. auto sales in July and the outlook for the market. Nissan Motor Co. and Hyundai Motor Co. led U.S. gains in July among major automakers as sales for most large competitors in the market cooled. Nissan, Japan’s third-largest automaker, said sales rose 15 percent and Seoul-based Hyundai reported a 19 percent increase. Other increases included 21 percent for Kia Motors Corp., and 3.3 percent for Ford Motor Co. Deliveries fell 3.2 percent at Toyota Motor Corp., the world’s biggest carmaker. (Source: Bloomberg)
Bayerische Motoren Werke AG, the world’s top manufacturer of luxury cars, reported its biggest profit in 2 1/2 years after demand for the new 5 Series surged and sales advanced in China and the U.S.
BMW rose to the highest price since 2007 in Frankfurt after second-quarter net income jumped almost sevenfold to 831 million euros ($1.1 billion) from a year earlier. Profit beat the 546 million-euro average estimate of nine analysts compiled by Bloomberg. Revenue climbed 18 percent to 15.3 billion euros, the Munich-based company said today.
BMW has sold 25,000 of the new 5 Series since the sedan went on sale in Europe in March. Record deliveries in China, the largest auto market, and a rebound in the U.S. have prompted BMW and Daimler AG to lift profit forecasts. Daimler said last week its third quarter would be determined by how fast it could produce Mercedes-Benz brand cars to meet orders.
“There’s still a lot to play for, because you’ve still got a lot of new models, cost savings, operational effects still to come through,” said John Buckland, an analyst at MF Global UK Ltd. who recommends buying BMW shares. “They’re producing good results and wanting to save something up for the future to save some growth for 2011 and 2012.”
Forecasts
BMW gained 1.29 euros, or 3.1 percent, to 43.16 euros at the close of trading at 5:30 p.m. in Frankfurt. That’s the highest level since Oct. 31, 2007. The shares have advanced 36 percent this year, valuing the company at 27.5 billion euros.
The manufacturer, which also builds Mini and Rolls-Royce cars, sold 13 percent more vehicles in the first half after customers bought the new X1 and 5 Series, which shares parts with the 7 Series to reduce costs. Second-ranked Mercedes-Benz posted a 12 percent gain. Deliveries at Volkswagen AG’s Audi unit, which aims to topple BMW as the world’s largest luxury-car manufacturer by 2015, gained 19 percent.
BMW raised its 2010 forecast on July 13, saying it expects sales to rise about 10 percent to more than 1.4 million cars and sport-utility vehicles. The operating margin at the automotive division will jump to more than 5 percent.
Daimler raised its 2010 operating profit target on July 27 to 6 billion euros after beating quarterly earnings estimates.
Dealer Expansion
“Sharp sales volume growth on major markets and a high- value model mix are the main reasons for the strong second- quarter performance,” Chief Executive Officer Norbert Reithofer said today. “We have made good progress toward achieving our profitability targets.”
First-half deliveries in China more than doubled and now account for around 11 percent of all sales, Chief Financial Officer Friedrich Eichiner told a conference call. U.S. sales increased 6.4 percent. The carmaker plans to expand its dealer network in China and the U.S to support expansion in the two markets, it said.
The Rolls-Royce super luxury brand posted record first-half sales, with deliveries more than quadrupling to 970 cars.
Higher demand across all brands and regions is pushing BMW to its production limits, Reithofer said, predicting capacity utilization for 2010 would be “well above” 90 percent.
Countryman, X3
The company plans to add about 1,000 employees this year in research and development as well as sales and marketing, it said.
BMW aims to achieve a margin on earnings before interest and taxes of between 8 percent and 10 percent in 2012 in the main automotive business and a return on equity of at least 18 percent in the financial services unit.
In addition to the 5 Series, the manufacturer will also expand its lineup this year with the new X3 and the Mini brand’s first four-door model, the Countryman, which will go on sale in September.
“The 5 Series is very much in demand, adding to an otherwise very strong product line-up,” Georg Stuerzer, a Munich-based analyst with UniCredit who has a “buy” rating on the shares. “The company is known to be fairly conservative when it comes to its outlook. But when you look at other manufacturers like Daimler, I think BMW can do at least as well as that in the second half.”
BMW will significantly exceed its goal of reducing spending on components and supplies by 4 billion euros by 2012, helped by a partnership with Daimler, Herbert Diess, BMW’s purchasing chief, said in May.
To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net; Alex Webb in Frankfurt at awebb21@bloomberg.net.
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