- Carmaking margin improved to 9.6% of sales in fourth quarter
- Investor expectations of special dividend dashed: ISI analyst
BMW AG predicted only a slight increase in deliveries this year, taking a cautious approach even as it risks losing its lead in the luxury-car market to Mercedes-Benz.
The carmaker also disappointed some investors by not offering a special dividend as it celebrates its 100th anniversary. BMW said Wednesday it plans to raise the general dividend to 3.20 euros per common share from 2.90 euros for 2014 earnings, which would be its sixth increase in a row.
The lack of an extra payout may mean new Chief Executive Officer Harald Krueger will make a case for investment, particularly in software, when he presents a new strategy for the company next week, Stuart Pearson, a London-based analyst for Exane BNP Paribas said in a note to clients. With few model niches left to explore and a brand built on driving pleasure, “BMW faces more threats than opportunities in the century ahead.”
An aging model lineup has already left the carmaker struggling to keep pace with No. 2 Mercedes, which has rolled out a slate of new vehicles in recent years including the GT sports car, GLE Coupe crossover and compact CLA sedan. Krueger on Wednesday pointed to just a single fresh car, the 7-Series sedan, to help boost sales this year.
“BMW certainly knows it’s under pressure to show they can regain growth momentum, and they need to find a way to return passion to the brand,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI.
The shares fell 1.9 percent to 78.54 euros at the close in Frankfurt. BMW has lost 20 percent this year, more than the 16 percent decrease in Mercedes parent Daimler AG’s shares.
BMW’s muted outlook compares to a forecast of sales growth at this time last year. The carmaker follows Mercedes’s cautious tone amid what it called a politically and economically volatile environment. The forecast comes as BMW reported fourth-quarter improvement in earnings and profitability, with a margin of 9.6 percent of sales from carmaking, up from 8.2 percent a year earlier.
Earnings before interest and taxes rose 5.2 percent to 9.59 billion euros ($10.6 billion) from 9.12 billion euros a year earlier, the company said in a statement. The figure was in line with the 9.56 billion-euro average of 20 analyst estimates compiled by Bloomberg. Full-year net income increased 10 percent to 6.4 billion euros.
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The carmaker is scheduled to release full 2015 earnings details and Krueger’s new strategy on March 16.