BMW Backs Guidance Despite Drop in Automotive Profitability — Update
By Dominic Chopping
BMW's key automotive unit reported slightly lower-than-forecast profitability in the first quarter as manufacturing costs rose, but the group maintained full-year guidance.
The German luxury-car maker's operating margin was 8.8% in the division, short of a company-compiled consensus of 9.2%.
Deliveries of its BMW, Rolls-Royce, and Mini brands rose 1.1% to 594,533 units in the quarter, buoyed by sales of its BMW branded cars in Europe. Volumes declined in China though as demand for higher-end cars eased.
Higher sales volumes and more favorable mix from higher-priced cars and electric vehicles boosted automotive revenue, and it said prices across the product range this year are expected to be in line with last year's level.
The company has previously outlined expectations for its fully-electric vehicles and upper-premium range to drive growth this year as it invests heavily in its manufacturing plants, premium cars and technology to speed up electrification plans.
Research and development costs rose sharply in the quarter as it continued to spend on the electrification and digitalization of its vehicle fleet in addition to the continued development of automated driving functions and development of the Neue Klasse models.
"This year, it will be more important than ever to maintain our strategic course," said Chief Financial Officer Walter Mertl. "The investments needed in the digital and electric future of our company are the highest they have ever been."
BMW is embarking on a step change in its electric vehicle line-up with the Neue Klasse. The first models of the new range will debut in 2025 with a sports activity vehicle and a sedan, and a rapid rollout of further models planned afterwards. The launch of at least six Neue Klasse models across BMW's global production network is scheduled to start within the first 24 months after the start of production.
It said Wednesday that deliveries of fully-electric vehicles grew by 28% in the quarter to 83,000 cars.
The company's group earnings before interest and tax margin slipped to 11.4% from 13.9%, but the figure still beat consensus that had been looking for 10.8%.
Group EBIT fell to 4.05 billion euros ($4.36 billion) from EUR5.38 billion a year earlier. A company-compiled consensus had seen EBIT at EUR3.96 billion.
Revenue edged 0.6% lower to EUR36.61 billion.
The company still expects to see slight growth in worldwide customer deliveries in 2024, with the automotive EBIT margin finishing the year at between 8% and 10% and group pretax earnings falling slightly.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
May 08, 2024 02:50 ET (06:50 GMT)
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