Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury autos, reported a surprise 4.2 percent gain in fourth-quarter profit, boosted by stronger demand for the 3-Series sedan and wagon.
Earnings before interest and taxes rose to 1.95 billion euros ($2.72 billion) from 1.87 billion euros a year ago, the Munich-based company said today in a statement. The figure beat the 1.83 billion-euro average of 10 analyst estimates compiled by Bloomberg. The shares gained the most in almost five months.
“We forecast further sales volume growth in the current year which will again bring us a new all-time high,” Chief Executive Officer Norbert Reithofer said in the statement.
BMW is stepping up investment in technology and expanding production to hold off Audi and Mercedes-Benz, which have both vowed to take the luxury-sales crown by the end of the decade. The race is tightening. Volkswagen AG’s Audi outsold BMW’s namesake brand in the first two months of 2014, while Daimler AG (DAI)’s Mercedes has grown at a faster pace than its two larger rivals in recent months.
“BMW’s numbers look good,” said Erich Hauser, an analyst with International Strategy and Investment Group in London. “The fourth-quarter margins were stronger than expected.”
The shares gained as much as 3.3 percent to 82.88 euros, the biggest jump since Oct. 15, and were up 2.8 percent as of 11:33 a.m. in Frankfurt trading. The stock has advanced 16 percent in the past 12 months, valuing the company at 53.2 billion euros.
Sales for the group last year rose 6.4 percent to 1.96 million vehicles, lifted by a 23 percent gain in deliveries of the BMW 3-Series to more than 500,000 autos.
The model faces stiffer competition this year as Mercedes rolls out an upgraded version of the C-Class. The Stuttgart-based manufacturer plans to add additional variants of its best-seller to better target customers across the globe.
Automotive earnings for the maker of BMW, Mini and Rolls-Royce vehicles fell to 9.2 percent of sales in the fourth quarter from an operating profit margin of 10.6 percent a year ago. For the full year, BMW’s auto margin was 9.4 percent, compared with 10.1 percent at Audi and 6.2 percent at Mercedes.
BMW said in November that spending will continue at a high rate in 2014. The manufacturer planned to invest about 4.8 billion euros last year to add production capacity and develop new technology, exceeding its capital-expenditure target.
With the German carmakers vying for the top spot and brands such as Jaguar and Maserati expanding their lineups, competition in the luxury-car segment is “more intense than ever,” Audi Chief Executive Officer Rupert Stadler said earlier this week.
Audi, which has never held the top post for an entire year, will introduce 17 new or revamped vehicles in 2014, including a remake of the iconic TT sportster. Mercedes is rolling out 30 autos by the end of the decade, including a dozen all-new cars.
BMW is responding this year with the upgraded X5 sport-utility vehicle as well as new models like the 4-Series Gran Coupe, the 2-Series Active Tourer hatchback and the i8 plug-in hybrid sports car. BMW forecasts sales for the group, including Mini and Rolls-Royce, to exceed 2 million autos for the first time this year.
IHS Automotive estimates that the BMW brand will sell 1.77 million cars in 2014, beating Audi’s 1.66 million and Mercedes’s 1.56 million. That would make BMW the best-selling luxury nameplate globally for the 10th straight year.
BMW recommended a dividend of 2.60 euros per common share, compared with the 2012 dividend of 2.50 euros. Net income for 2013 rose 4.5 percent to 5.34 billion euros. BMW will release further details of 2013 earnings on March 19.