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Thursday, 17 November 2011 00:12 - - {{hitsCtrl.values.hits}}
FRANKFURT (Reuters): German premium carmaker BMW’s third-quarter earnings surpassed expectations and outperformed rival Mercedes-Benz , bolstered by robust growth in China and demand for its 5-Series sedan.
“The Chinese market is still strong in our segment,” Chief Financial Officer Friedrich Eichiner told journalists on a conference call.
BMW’s third-quarter pretax profit jumped 21 per cent to 1.64 billion euros ($2.26 billion), above the 1.48 billion euros average analyst estimate in a Reuters poll.
It said it still expects 2011 pretax profit to rise significantly from a year earlier, with vehicle sales rising to more than 1.6 million from just below 1.5 million.
BMW sold 9 per cent more automobiles in the third quarter than a year ago, driven by a 21 per cent jump in China, the world’s biggest car market.
“Of course we cannot expect the high double-digit growth rates (in China) that we used to see, but we expect growth to continue next year and have no reason to believe that this will not be the case,” Eichiner said.
BMW’s biggest single market is the United States, where its quarterly sales were up 7.5 per cent at almost 76,000 cars.
The introduction of the next generation 1-Series in mid-September will help boost demand in the fourth quarter, BMW said. Its new 3-Series sedan was unveiled in mid-October and will hit the market in February next year.
BMW expects to book about 500 million euros of costs associated with the market launch of the two models, one third of which it said was accounted for in the third quarter. The rest will be booked in the fourth quarter.
The 3-Series is the top-selling BMW model, followed by the 5-Series, which posted a 31 per cent jump in sales volume during the quarter. Deliveries of the 1-Series, meanwhile, shrank by 28 per cent ahead of the launch of the new model.
The core automobiles business improved its profitability during the third quarter, with earnings before interest and tax (EBIT) representing 11.9 per cent of sales.
That was better than consensus of 9.5 per cent and outpaced Mercedes-Benz’s figure of 8.0 per cent. But it still remained second to Volkswagen’s premium carmaker Audi, which posted an operating margin of just over 13 per cent.
BMW still expects to post a 2011 EBIT margin or more than 10 per cent and an EBIT margin of 8-10 per cent in 2012, but declined to give a more precise outlook due to economic uncertainty.
“There are two scenarios. Either we see growth at a muted pace but still with an upward trend or there will be a recession,” Eichiner said, adding BMW had contingency plans for both scenarios.
Fellow German carmakers Daimler and Volkswagen last week gave downbeat forecasts for demand in Western Europe, adding to concerns that the euro zone crisis could hurt earnings for months to come.
In Britain, car dealer H.R. Owen , which sells new and secondhand luxury marques such as BMWs, Aston Martins, Rolls-Royces, Bentleys and others, said on Monday that market demand had deteriorated in recent weeks.
Car parts and tyre maker Continental AG’s Chief Financial Officer Wolfgang Schaefer earlier said his expectation for the development of the auto market next year had weakened in recent weeks.
