Bayerische Motoren Werke AG (BMW), the world’s largest maker of luxury vehicles, earned more money per car than ever before in its 95-year history, lifted by surging deliveries of the revamped 5-Series sedan.
The automotive unit’s first-quarter operating margin climbed to 11.9 percent from 2.7 percent a year earlier, the Munich-based manufacturer said today. BMW made a profit of 4,462 euros per car on average, compared with 4,145 euros at Daimler AG’s Mercedes-Benz and 2,981 euros at Volkswagen AG (VOW)’s Audi.
BMW “seems like they’re playing in a different league at this stage,” said Arndt Ellinghorst, a London-based Credit Suisse analyst with an “outperform” rating on the stock.
Chief Executive Officer Norbert Reithofer is pushing BMW to boost profitability to guard the company’s independence and fend off Audi, which aims to overtake BMW as the luxury-car leader by 2015. The maker of BMW, Mini and Rolls-Royce cars has exited the Formula One race circuit, cut staff and reduced spending on components and supplies by more than 4 billion euros since 2008.
BMW’s earnings before interest and taxes more than quadrupled to 1.9 billion euros ($2.81 billion), beating the 1.54 billion-euro average estimate of 14 analysts surveyed by Bloomberg. Sales of BMW’s 5-Series more than doubled to 85,400 vehicles and the X3’s deliveries surged 94 percent to 22,700 SUVs, fueling a 21 percent advance in demand to 382,800 autos in the first quarter.
“It’s a fantastic result,” Jose Asumendi, a London-based Royal Bank of Scotland analyst who recommends buying the shares, said of BMW’s earnings. “It’s all driven by the autos. The flagship models are delivering.”
BMW rose as much as 1.63 euros, or 2.6 percent, to 65.00 euros and was up 0.1 percent to 63.45 euros as of 3:53 p.m. in Frankfurt trading. The shares have climbed 77 percent in the past 12 months, valuing the company at 40.4 billion euros. The stock pared gains today after the automaker said costs will increase.
Second-half growth will likely slow because of tougher year-earlier comparisons, while introductions of models like an overhauled version of the 1-Series compact and a new Mini coupe will add about 500 million euros to expenses, Chief Financial Officer Friedrich Eichiner said today on a conference call. BMW stuck to its target for an auto Ebit margin of more than 8 percent this year.
“Our environment is volatile,” said Reithofer, adding that the carmaker will likely avoid significant disruptions stemming from the March earthquake in Japan. BMW’s sales rose about 17 percent to 136,000 vehicles in April, he said.
Daimler said today deliveries of Mercedes and Smart cars rose 7.7 percent to 110,000 vehicles last month, boosted by gains for the updated C-Class mid-sized sedan and SLK roadster. The Stuttgart-based carmaker aims to sell more than 1.3 million cars this year.
China’s growing economy and a rebound in spending in the U.S. are fueling record demand for vehicles from the three German luxury-car makers. VW reported last week first-quarter Ebit more than tripled because of demand for Audi in China. Daimler AG’s operating profit rose 71 percent led by sales of the Mercedes S-Class. Audi had a 10.6 percent operating profit as a percentage of sales in the first quarter, while Daimler AG (DAI)’s Mercedes was 9.3 percent.
BMW’s first-quarter net income almost quadrupled to 1.21 billion euros. Revenue increased 29 percent to 16 billion euros. BMW expects to sell “well over” 1.5 million vehicles this year, surpassing the 2010 level of 1.46 million.
“We have generated record earnings and sold more cars in a first quarter than ever before,” Reithofer said. “The BMW group is well on its way towards achieving new sales volume and earnings records for the full year.”
BMW is expanding its lineup to reach a goal of selling more than 2 million cars and SUVs annually by 2020. It has created the “i” electric-car sub-brand, which will start in 2013 with the i3, a battery-powered city car. BMW is also planning the i8, a hybrid supercar based on the Vision Efficient Dynamics prototype. The sub-brand’s models will have frames built largely of carbon fiber and display a blue ring around the BMW logo.
The manufacturer is also pushing into transport-related services and experimenting with short-term rentals as it seeks to appeal to consumers more interested in gadgets like Apple Inc. (AAPL)’s iPhone. The company started a $100 million venture- capital unit and invested in the MyCityWay guide service.
To contact the reporter on this story: Chris Reiter in Munich at firstname.lastname@example.org