BMW Rides Luxury Demand
FRANKFURT— BMW AG's third-quarter earnings rose 24 percent on Thursday and the auto maker confirmed a goal of selling more than 1.6 million vehicles this year despite economic worries in Europe and the U.S.
Profit rose to €1.08 billion ($1.48 billion) in the third quarter from €871 million a year earlier. Earnings before interest and tax—a closely watched figure by analysts—rose 44 percent to €1.72 billion from €1.19 billion. Revenue increased 3.8 percent to €16.5 billion from €15.9 billion, reflecting a 9 percent sales rise to 399,218 vehicles, reported The Wall Street Journal.
"We achieved new records for sales volume, revenues and earnings," Chief Executive Norbert Reithofer said in a statement, the latest sign that demand for luxury cars appears to be unaffected so far by wider economic concerns.
Mr. Reithofer said he expects markets to remain volatile until at least 2015 and that economic growth is poised to slow in 2012, but he doesn't expect a recession.
"We expect to see continued volatility due to the high level of national debt, the euro crisis and rising inflation," Chief Financial Officer Friedrich Eichiner said during a conference call, adding that BMW "explored various scenarios and made the necessary preparations."
The world's best-selling luxury auto maker said it is well placed for further growth as it has one of the market's youngest product line-ups, following several model changeovers including the new-generation 5-series, a key model both in terms of sales volume and revenue per vehicle.
Mr. Eichiner said the positive sales trend is expected to continue in the fourth quarter, but a big chunk from the €500 million in launch costs for the revamped 1-series and 3-series, a less favorable model mix as well as seasonal effects will weigh on earnings in the final quarter and push profit margin below the 11.9 percent reached in the third quarter.
The German car maker repeated that it wants to sell more then 1.6 million vehicles this year for the first time, and Mr. Reithofer said the company expects to achieve its financial targets for its full year.
Stocks from auto makers and their suppliers were hard hit during the recent stock market rout, but BMW has held up relatively well as investors expect the Munich-based firm to cope better with a weakening economic environment than many industry peers due to its large footprint in the lucrative premium segment and surging demand in China.
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