BMW scores better than expected results
BMW BECAME the third German car maker to report better-than-expected quarterly results ahead of schedule yesterday, benefiting rival Daimler from strong demand in China and a revaluation of its stake in map maker Here.
Pretax profit jumped 27 percent to €3.01 billion (R43bn) in the first quarter, more than expected even taking into account one-off gains that included €183 million from revaluing Here after Intel invested in it.
Mercedes-Benz maker Daimler last week posted an 87 percent jump in quarterly operating profit, while Volkswagen on Tuesday reported a 28 percent rise, helped by a return to earnings growth at its core VW brand.
“The European market, China and some emerging markets are developing much better than expected. Only the US market is tougher,” said Evercore ISI analyst Arndt Ellinghorst, explaining the strong results from German car makers. He rates BMW shares “in line”.
German car association VDA expects global car sales to rise 2 percent this year, driven by China, where sales are seen rising by 6 percent, while demand in the US and Western Europe is seen stable.
Impressed But European car sales leapt 10.9 percent last month, led by buoyant demand in the region’s top five markets and extra-selling days due to a late Easter this year that saw the holiday fall into this month.
Analysts were impressed by the extent to which BMW beat expectations, noting increased profits from Chinese joint venture BMW Brilliance Automotive. together with Volkswagen – increased the valuation of its stake. Other valuation effects lifted BMW’s financial result by a further €122m.
Intel said in January it was buying a 15 percent stake in Here for an undisclosed sum, after Navinfo, Tencent and Singapore’s sovereign wealth fund agreed to buy a 10 percent stake in December.
BMW affirmed its guidance for a slight rise in full-year group pretax profit and an operating margin of 8 to 10 percent at its automotive business, which posted a first-quarter margin of 9 percent, down from 9.4 percent a year earlier.
Sales rose 12 percent in the quarter to €23.5bn, above the average analyst forecast of €22.1bn, Thomson Reuters estimates show. BMW is set to publish detailed first-quarter results on May 4. – Reuters