BMW scores bet­ter than ex­pected re­sults

The Star Late Edition - - BUSINESS REPORT - Ge­orgina Prod­han prof­its from Chi­nese joint ven­ture BMW Bril­liance Au­to­mo­tive.

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 Jump in car maker’s pre­tax profit in the first quar­ter owner 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

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