Bayerische Motoren Werke AG, the world’s largest maker of luxury vehicles, raised its profit and sales forecasts, saying strong second-quarter demand across global auto markets will prevail in the next months.
BMW’s automotive division now anticipates that earnings before interest and taxes will exceed 10 percent of revenue in 2011 on a sales of more than 1.6 million vehicles, the company said. The previous forecast was for an Ebit margin wider than 8 percent and deliveries in excess of 1.5 million units, reported Bloomberg.
“The revision is better than expected,” said Aleksej Wunrau, an analyst at BHF-Bank AG in Frankfurt with a “market weight” rating on BMW. “A double-digit margin is great news. Demand for luxury cars is undeniably in place and BMW is clearly benefiting. They’re heading for excellent financial results.”
Chief Executive Officer Norbert Reithofer is looking to hire 2,000 people this year as BMW seeks to add capacity in emerging markets and fend off Volkswagen AG’s Audi brand, which has outsold Daimler AG’s Mercedes-Benz this year. Munich-based BMW said today it’s aiming to strike a “reasonable balance” in sales volumes between Europe, Asia and the Americas.
Shares of the maker of BMW, Mini and Rolls-Royce brand cars jumped almost 4 percent from their intraday level following the release and closed at 67.24 euros in Frankfurt, up 0.7 percent.
“Thanks to strong demand on the international auto markets during the second quarter and for the full year, BMW now expects that business performance and earnings will be significantly better than previously forecast,” the group said in a statement.
Full-year pretax earnings will show a “greater improvement” than originally predicted, the carmaker said, while more attractive market conditions and a less acute risk situation will allow its Financial Services unit to post second- quarter earnings of more 100 million euros ($140 million).
Chief Financial Officer Friedrich Eichiner said on May 4 that second-half growth will likely slow because of tougher year-earlier comparisons, while models including an overhauled version of the 1-Series compact and a new Mini coupe will add about 500 million euros to expenses.
BMW said today that sales and earnings growth in the automotive segment “is likely to be dampened” during the second half by changes in the model portfolio, as well as new products and the production start-up of successor models.
BHF’s Wunrau said that negative effects from model changeovers and one-time items “won’t cause profitability to slump as initially expected.”
BMW is expanding its lineup to reach a goal of selling more than 2 million cars and SUVs annually by 2020. The “I” sub- brand will debut in 2013 with the i3, a battery-powered city car, and the company is also planning the i8, a hybrid supercar based on the Vision Efficient Dynamics prototype.
BMW said today it will continue to target a return on capital employed in excess of 26 percent and an Ebit margin of between 8 and 10 percent in 2012. The number of vehicles handed over to customers jumped almost 20 percent to 833,366 in the first half. Second-quarter results will be released on Aug. 2.
Growing demand for luxury vehicles also spurred sales at Porsche SE’s automotive division, which today reported a 29 percent gain in first-half deliveries to 10,667 cars. Volkswagen AG, seeking to merge with Porsche, said today six-month sales of namesake-brand vehicles rose 12 percent to 2.53 million units.
BMW’s new guidance underlines its ability to benefit from strong demand, though the potential for earnings improvement may be “limited,” Jasko Terzic, an analyst with Frankfurt-based DZ Bank AG, said in a note, adding that he favors Daimler and VW.
