Good financial results for the first quarter of 2012 has made BMW cautiously optimisitic but finance head Frederich Eichiner isn’t yet willing to hike the profit forecast for the year.
He told Reuters during a conference call the automaker would revisit guidance after the second quarter. It currently expects passenger cars operating margin at the upper end of its 8-10% target range – 11.6% was achieved in the first quarter, exceeding analysts’ expectations of 10.7%.
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Chief executive Norbert Reithofer said in a statement sales volume (425,000 cars), revenue and earnings set quarterly records.
Earnings before taxes improved 21.8% year on year to EUR2.076bn, BMW said. Group EBIT margin was 11.3%.
Revenues rose 12.4% to EUR16.16bn after “dynamic sales growth” in China and the US plus emerging markets in Asia and Latin America.
“However, the situation has become less favorable in a number of southern European markets, and competitive pressure has increased,” the automaker said.
“The bears might say that they (BMW) didn’t upgrade their full-year guidance but it was foolish to expect anything else this early in the year, considering the company itself said it might reexamine its target only after first-half results,” David Arnold, a specialist salesman at Credit Suisse in London, told Reuters.
Although EBIT as a percentage of revenue fell slightly to 11.6%, but exceeded analyst expectations for 10.7 percent.
“They are spending massively on R&D and that probably held back profitability in Q1. But the EUR1.6bn in free cash flow compared to the EUR1.0 to EUR1.1bn that the street had in its numbers and a cash outflow at Daimler is a monster beat that really underpins the success story at BMW,” Arnold added.
