Tough auto market dents BMW earns, sales in Q1

May 02, 2013 by David Mchugh

Tough auto markets worldwide—including a deep slump in Europe—and investment in new technology dented first-quarter earnings at German automaker BMW AG.

BMW's net fell 3 percent to 1.312 billion euros ($1.73 billion) as revenues declined 4.1 percent to 17.55 billion euros.

The earnings figures follow a quarter in which the European car market shrank 9.8 percent as many countries have sunk back into recession.

Still, the company's drop in profit for the quarter was smaller than its German competitors, Daimler AG and Volkswagen AG.

"Despite the current weakness of car markets in Europe, the has made a good start to the new financial year 2013," CEO Norbert Reithofer said in a statement Thursday. "Despite high expenditure on new technologies and challenging market conditions worldwide, we managed to keep revenues and earnings at high levels."

The maker of the 1-series compact and the X5 sport utility noted that its overall auto profit margin of 9.9 percent, a key earnings figure, was near the top end of its 8-10 percent goal. Profit margin is what's left over from the price after the expenses of making and selling the car. The group net profit figure also beat the estimate for 1.102 billion euros among analysts surveyed by financial information provider FactSet.

Munich-based BMW said earnings would continue to be affected by higher expenses for investment in new technology and production facilities. Renewing the model line with fresh designs and the latest technology is considered key to the automaker's profitability down the road. BMW's identity also depends in part on deploying the latest technologies such as the lightweight carbon- used in its i3 electric compact.

And the drop in profit was not as big as at Volkswagen, where earnings fell 38 percent in the quarter, or at Daimler, where they were off 60 percent. U.S. based Co.'s European operation lost $462 million in the same quarter.

BMW gave a cautious outlook, staying with its forecast for "on a similar scale" to last year's and for increased in unit sales.

"We do not expect to receive a great deal of impetus from most European markets over the next few months and economic conditions in these areas are likely to remain challenging," Reithofer said.

Numbers of vehicles sold improved in all regions, up 3.1 percent in Europe, 5 percent in the Americas, and 9.5 percent in Asia. Europe's problems were evident in drops of 5.1 percent in Italy and 7.4 percent in France.

Analyst Max Warburton at Sanford C. Bernstein said the quarter was "not fantastic" but still "better than most of us had anticipated given some tough end market trends." He noted BMW sales growth has slowed in the key China market, and that a larger share of sales there came from lower-margin vehicles produced with local partner Brilliance, resulting in a less profitable product mix.

BMW shares rose 2.7 percent after the announcement to 71.95 euros in morning trading in Europe.

Explore further: Atos shares soar after Xerox acquisition

not rated yet
add to favorites email to friend print save as pdf

Related Stories

BMW earnings fall 28 percent

Aug 01, 2012

(AP) — German luxury automaker BMW AG said earnings fell 28 percent in the second quarter due to higher costs for staff and investments in new technology and warned that a worsening of Europe's debt crisis ...

GlaxoSmithKline says Q3 net profits drop 18.5%

Nov 01, 2012

British drugmaker GlaxoSmithKline said Wednesday that third-quarter net profits fell 18.5 percent from a year earlier to £1.12 billion ($1.80 billion, 1.39 billion euros), hit by weak conditions in Europe.

BMW rolls out electric i3 and i8 models

Jul 29, 2011

German luxury carmaker BMW presented two electric models on Friday, signalling its arrival to a segment that is key to the industry's fortunes.

Toyota, BMW strike green-car technology pact

Dec 01, 2011

Automakers Toyota and BMW on Thursday struck a partnership to share eco-friendly technologies, including in the joint development of lithium-ion batteries for next-generation electric cars, the companies said.

Recommended for you

Atos shares soar after Xerox acquisition

4 minutes ago

Shares in French tech firm Atos soared nearly five percent on Friday as traders cheered the news it had bought the IT wing of Xerox for more than $1 billion.

Two more former Sony workers sue over data breach

16 hours ago

Two more former employees of Sony Pictures Entertainment are suing the company over the massive data breach in which their personal and financial information was stolen and posted online.

Constantly changing online prices stump shoppers

17 hours ago

Online shopping has become as volatile as stock market trading. Wild, minute-by-minute price swings on everything from clothes to TVs have made it difficult for holiday shoppers to "buy low."

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.