BMW has posted a sharp rise in second quarter earnings with profit before tax up 32.9% to EUR1.232bn.
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Group revenues climbed 8.5% to EUR13,193m from EUR12,159m a year ago. The pre-tax return on sales increased to 9.3% from 7.6% which BMW said was “well above the average for the automobile industry”.
Net profit rose 17.5% to EUR787m and earnings per share increased to EUR1.20 from EUR0.99 in Q2 2005.
BMW attributed the strong second quarter result to rising sales volume and a more favourable model sales mix.
“We have again increased earnings sharply and achieved new record figures for revenues and sales volume”, said outgoing chairman Helmut Panke.
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By GlobalDataThe group, with its BMW, Mini and Rolls-Royce brands, is “well on course” to achieving its targets for the full year 2006 and hence, as forecast, the best year in the company’s history:
“The BMW group is aiming to achieve a profit before tax of EUR4bn and a new record sales volume”, added Panke.
Half-year pre-tax profit soared 44.5% to a record EUR2,528m but this included a one-off gain of EUR375m (booked in the first quarter) for the almost complete settlement of the exchangeable bond relating to BMW’s investment in British aircraft engine maker, Rolls-Royce plc.
Profit after tax was up 45.2% to EUR1,735m and revenues rose 10.2% to EUR24,811m.
Excluding the exceptional gain on the exchangeable bond, the return on sales improved to 8.6% from 8.0% in H1 2005.
BMW noted, however, that adverse currency effects and high raw material prices continued to have a negative impact on earnings during the first half.
It attributed the currency effect – most noticeable in the first half – to the fact that its hedge rates are less favourable than in the previous year.
Such external adverse factors – expected to have less effect than in 2005 – were being countered by increased efficiency and productivity.
“The targeted sales volume record and improvements in the sales mix are also expected to make further positive contributions to earnings. For these reasons, even excluding the exceptional gain on the exchangeable bond recognised in 2006, the profit before tax should still exceed the amount reported for 2005,” the automaker said.
Full-year results are likely to helped by the on-going roll-out of new models by all three group brands.
BMW launched the new Z4 Coupé and M Coupé in June and the redesigned 3 series coupé and updated X3 small SUV will be launched globally from September. More redesigned 3-series versions, including a steel roofed coupe-cabriolet, are in the works as is a fully redesigned Mini.
Further out are a new small 1-series fabric-roof convertible and, over the next three years, the Mini range will be expanded by “a new model with a more spacious interior and greater functionality” expected to be an update of the 60s-era Traveller wagon models. A ‘concept’ of the new variant has already been exhibited widely at international motor shows.
In addition, a completely new Rolls-Royce convertible will also expand BMW’s product offer in the super-luxury segment.
Second quarter sales of all three brands rose 3.2% to 365,547 units world-wide. First half sales volume rose 8.0% to 698,470 units.
BMW brand H1 sales were up 11.0% to 597,120 units (first half-year 2005: 538,132 units), boosted by a 36.9% rise in 3 series sedan volume to 175,141 units. 3 series Touring (wagon) volume soared 95.6% to 53,728 units. The 3 accounted for 43% of BMW brand cars sold.
World-wide Mini sales were down 6.5% to 101,063 units as work to expand the Oxford, UK, plant to annual capacity of 240,000 units affected output.
Rolls-Royce Phantom sales of 287 (H1 2005: 285) were static.
