2nd UPDATE: BMW, Porsche Profits Rise On Higher Sales
03 Mai 2012 - 2:49PM
Dow Jones News
BMW AG (BMW.XE) and Porsche Automobil Holding SE's (PAH3.XE)
sports car unit reported robust profit gains in the first quarter
from a year ago, reassuring investors that rising costs are so far
doing little to offset the impact of strong global demand for
luxury cars on the German manufacturers' performance.
BMW, the world's best selling manufacturer of premium cars ahead
of Volkswagen AG's (VOW.XE) Audi brand and Daimler AG's (DAI.XE)
Mercedes-Benz unit, still stuck to its conservative profit guidance
for 2012, saying underlying profitability should decline as it
invests heavily in extra production capacity and new
technology.
"We are cautiously optimistic, but the economic risks remain,"
Chief Financial Officer Friedrich Eichiner said.
It was too early for BMW to make a more specific forecast for
the full-year, but the group might update its guidance after the
second-quarter results, Eichiner said.
"We are still aiming to achieve new record figures for sales
volume and pretax earnings in 2012," BMW Chief Executive Norbert
Reithofer said.
BMW's outlook comes as strong worldwide demand, particularly in
China and the U.S., ensured German luxury car makers sold more cars
than ever before in the first quarter despite a shrinking car
market in Western Europe.
BMW's first-quarter net profit rose 18% on the year to EUR1.34
billion, while its closely-watched earnings before interest and
taxes rose 19% at EUR2.13 billion. Pretax profit increased 22%
year-on-year to EUR2.08 billion. Analysts had expected profit to
come in lower than in the first quarter last year due to launch
costs for new vehicles such as the new-generation BMW 3-series and
1-series.
Eichiner said BMW benefited from a streamlined cost structure,
improved efficiency and a strong model mix with larger, more
lucrative cars accounting for a bigger chunk of sales.
First-quarter revenue was up 14% at EUR18.29 billion as BMW
notched up an 11% rise in sales to 425,500 cars, a new quarterly
sales record helped by the recent launch of new versions of the
high-volume BMW 1-series and 5-series models as well as continued
strong demand for the X3 and X5 sports-utility-vehicles.
BMW is targeting new global sales records for its BMW, Mini and
Rolls-Royce brands this year after selling a record 1.67 million
vehicles in 2011, fueled by booming demand in China. But the pace
may be hard to keep up in an increasingly competitive market in
China particularly if the Chinese economy slows more sharply than
expected.
Eichiner dismissed concerns about softening demand in China. BMW
is struggling to produce enough cars to meet demand. Individual
rebates for older cars such as the previous BMW 3-series generation
are no indicators for general pricing pressure in China, he
said.
"Who knows what happens next in that market, but investors can
remain assured that whatever the opportunity or risk, BMW will
probably handle it best," Sanford Bernstein analyst Max Warburton
said in a note to clients. He rates BMW stock as outperform.
BMW reiterated its full-year margin on earnings before interest
and taxes for its automotive business is expected to be at the
upper end of its 8% to 10% long-term target range this year after
11.8% in 2011. It was 11.6% in the first quarter, compared with
11.4% at Audi and 8.4% at Mercedes-Benz.
Porsche's profit margin came in even higher with 17.5%, making
its the world's most profitable car maker.
Operating profit at BMW's smaller rival rose 18% on the year to
EUR528 million, while revenue improved 32% to EUR3.03 billion.
Porsche's first-quarter sales increased by 29% to 30,231 cars,
driven by the new-generation 911 sports car and the Cayenne sports
utility vehicle. Porsche didn't provide a net profit figure.
At 1028 GMT, BMW shares were up 3.3% at EUR73.40, while the
DAX30 bluechip index was up 1%. Porsche's preferred stock, its only
traded securities, were up 2.9% at EUR46.99.
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512;
christoph.rauwald@dowjones.com
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