Aug 03
The quarterly earnings exceeded expectations of BMW
BMW first automaker upscale world, released on Tuesday a quarterly profit above expectations, thanks in part to the success of its Series 5 and the growth of Chinese demand.
The German poster for the second quarter operating margin before interest and tax of 9.6%, while analysts polled by Reuters had expected an operating margin of only 6%.
"This is the highest level of profitability since 2006," said Max Warburton, analyst at Sanford Bernstein, in a note, adding that BMW, Mercedes-Benz and Audi could enter a new period of record profitability when demand from China and U.S. dollar remains at current levels.
The three major German luxury brands posted higher operating margins to 9% for the second quarter, a year after the worst crisis faced by the sector since the Second World War.
"The crisis forced them to accelerate the reduction of costs. Now they have new models valued by the market, like the BMW 5 Series, Mercedes E Class and Audi A8, and they have for the first time since years of favorable currency effects, "said Georg Stuerzer, an analyst at UniCredit.
"The question is whether demand will remain stable.I think that any economic slowdown would have a moderate impact on high-end automakers, and I expect the second half shows only a seasonal decline in results, "he adds .
BMW's chief financial officer said on a conference call that we should not expect that second half results are as strong as the first, due to seasonal effects and costs associated with modernizing some models.
FORECASTS 2010 considered prudent
At the Frankfurt Stock Exchange, the action BMW gained 4.07% to 43.585 euros at 11.15 GMT, the fastest rise in pan-European Stoxx sector, which then progressed from 1.49%.
The group, which also owns brands Mini and Rolls-Royce, has reaffirmed its earnings forecast and sales for 2010, it was reported in mid-July, predicting an increase of approximately 10% of sales volumes more than 1.4 million vehicles and a higher EBIT margin of 5% in its automotive division.
Second-quarter sales of core automotive group increased by 26.2% over the same period last year to 13.67 billion euros.
The BMW brand delivered 319,946 cars in April to June, or 14.2% more than last year over the same period.Deliveries of the Series 5 show a jump of 23.6%.
"It now seems prudent in light of the results of the second quarter," noted Morgan Stanley in a note to clients.The bank expects that the consensus margin, currently at 5.2%, increasing by about one third.
BMW has also confirmed its 2012 targets, which include an EBIT margin of 8% to 10% for automotive operations.
"We believe that the value remains on track to reach a new peak in terms of profit to seven euros (per share) by 2013," says Morgan Stanley.
The situation of high-end manufacturers contrasts with that of generalists such as Fiat, which should meet shortly difficulties due to the gradual expiration of incentives for the purchase of new vehicles.
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