• Mini budget: Lost trust

    The elephant in the room is a bigger danger to SA than weak finances, says Jaco Leuvennink.

  • Time to tackle floods

    Government isn't doing enough so it's up to us to take responsibility, says Mandi Smallhorne.

  • Conquering prejudice

    Every workplace would benefit from a self-critical process relating to prejudices, says Ian Mann.

Loading...

BMW reports lower profitability as growth trails

Apr 20 2017 14:11
Bloomberg: Elisabeth Behrmann

Munich - BMW posted lower first-quarter profitability than Mercedes as the luxury car maker’s growth in deliveries trailed its German rival.

BMW’s operating margin in the automotive division fell in the period to 9% from 9.4% a year earlier, the Munich-based manufacturer said on Thursday. That compares with an increase at Mercedes, with the return on sales jumping to 9.8% from 7%.

BMW’s profitability is taking a hit as its aging production lineup slows sales growth and forces the automaker to offer incentives to woo buyers. BMW’s first-quarter deliveries gained 5.2% compared with a 16% jump at Mercedes.

BMW is banking on increased demand this year for the revamped 5-Series, which went on sale in February, to counter Mercedes, which last year outsold its rival for the first time in a decade.

“The auto margin is where the question marks are - it’s still early days for the 5-Series,” said Stuart Pearson, a London-based analyst with Exane BNP Paribas, referring to a revamped version of BMW’s bread-and-butter sedan. “Generally in the auto industry, the environment for pricing has been negative.”

BMW shares fell as much as 1.2% and were down 0.4% to €83.61 as of 1:59.

Profit jump

BMW pre-released key results on Thursday after earnings beat expectations in part due to one-off items such as a higher valuation for its stake in the HERE mapping consortium.

First-quarter earnings before interest and taxes rose 7.7% to €2.65bn, exceeding the €1.45bn average of three analyst estimates compiled by Bloomberg. The company stuck with a forecast for a “slight” rise in group profit before tax for the year. That figure jumped 27% in the first quarter.

BMW’s better-than-expected earnings follow similar results at Volkswagen and Mercedes-Benz parent Daimler, which also released figures earlier than scheduled after car delivery growth and other gains helped profit beat estimates. At BMW, positive effects from special items amounted to at least €305m, compared with €690m at Daimler.

BMW is scheduled to publish full quarterly figures on May 4.

Read Fin24's top stories trending on Twitter:

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

bmw  |  industrial  |  companies

NEXT ON FIN24X

 
 
 
 

Company Snapshot

We're talking about...

Calling all social entrepreneurs - apply for The Venture now!

Are you running an innovative social business that's helping to create a better future? Then pitch for a share of The Venture’s $1m fund and receive world-class mentorship to help accelerate your business growth.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Pick n Pay launches new website for easier online shopping

Previous results · Suggest a vote

Loading...