Emerging markets drive BMW profits

BMW delighted investors with yet another record profit margin in its first quarter, driven by rapidly rising sales as the emerging markets’ newly affluent flocked to the premium carmaker’s showrooms.

BMW Q1 results
Sales Net profit Earnings per share Dividend
€6.037bn €1.212bn €1.84 -
↑28.9% ↑274% ↑276% -
The German carmaker posted an operating margin of 11.9 per cent in the first three months of the year in its automotive business.

This marked the highest ever result and clearly beat margins of main rivals Audi and Daimler, which reported 10.6 per cent and 9.3 per cent in the first quarter, respectively.

The stellar result also exceeded market expectations and spurred a 1.7 per cent rise in BMW’s share price to €64.44 on Wednesday.

Max Warburton, analyst at Bernstein Research, said: “BMW is making profits beyond anything we could have imagined a few years ago, despite US and German sales still early in the recovery phase.”

“BMW is absolutely at the vanguard of a ‘new era’ for German [carmaker] profitability,” he added.

Friedrich Eichiner, chief financial officer, put the group’s record profit down to buoyant demand for its top-of-the-range saloon models, which helped to boost overall revenues year-on-year by 28.9 per cent to €16.04bn.

“The biggest impact came from our model program and from the 5 series in particular,” Mr Eichiner said.

Between January and March, the Bavarian carmaker more than doubled sales of its revamped 5er sedan to 85,423 cars, making the model market leader in its segment.

While demand was driven by all regions, sales in emerging markets from China to Turkey once again shot up at high double-digit rates.

Sales in Asia rose by 53 per cent to more than 90,000 cars, almost a third more than BMW sold in its home market, Germany.

Norbert Reithofer, chief executive, said he expected the growth rate in China this year to slow down to below the more than 80 per cent seen in the past year.

But he said other emerging markets would pick up the fray with unabated strong growth rates.

He mentioned Brazil and India, where sales rose by around 40 per cent in the first quarter, and Turkey, where customers bought 59 per cent more BMW, Mini or Rolls- Royce cars in the first three months of the year.

Mr Eichiner said he expected a strong second quarter but warned that a pending model change of the group’s 1 series compact car would dent profit margins in the second half.

He stuck to the group’s full-year target of a more than 8 per cent operating profit margin in the automotive business.