A weak yen and dollar, higher raw material costs and high launch costs for new models and engine technology have reduced second quarter and half year profits at BMW.
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“Group earnings for the period from April to June were held down more than expected as a result of the on-going weakness of the US dollar and Japanese yen and higher raw material costs. In addition, launch costs for new models and substantial expenditure for the development of even more efficient and fuel-saving engines were incurred,” the company said on Wednesday.
Though unit deliveries rose 8.6% to a new quarterly record of 397,009, and group revenues rose 11.3% to EUR14,683m, profit before tax fell 13.6% to EUR1,065m, net profit was EUR753m and earnings per share were EUR1.15 (EUR1.20 a year ago).
Half-year revenues were up 7.3% to EUR26,634m but profit before tax fell 24.2% to EUR1,917m.
Last year’s figure included a one-off book gain of EUR375m from shares in British aero engine maker Rolls-Royce and if this exceptional item is excluded, the profit before tax would have fallen only 13.4%.
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By GlobalDataBMW said its automobile segment earnings were again adversely affected by the exchange rate effects and higher raw material prices plus production start-up and market launch costs for new models as well as higher depreciation and research and development costs.
Q2 segment revenues rose 10.2% to EUR14,257m but the profit before tax fell 15.4% to EUR801m.
Financial services’ Q2 profit before tax rose 5.0% to EUR189m and business volume rose 17.8% to EUR48,811m.
“Although conditions remain difficult in some aspects, the BMW Group nevertheless expects to make good progress over the coming months. In particular, adverse currency effects are having a greater impact on earnings than previously forecast. However, based on [our] current assessment, the negative impact will not exceed the previous year’s level,” the automaker said.
Undaunted, chairman Norbert Reithofer reiterated the company’s outlook for the current financial year: “We are still aiming to achieve a pre-tax profit that, adjusted for the one-off gain on the Rolls-Royce exchangeable bond, is above the record level posted for the previous year. The company is heading towards a sales volume growth rate in the high single-digit percentage range and a sales volume of over 1.4m vehicles“, he said, noting that all three brands are forecast to achieve new sales volume records.
The automaker boosted first-half unit volume 4.6% to 730,285 units, breaking the 700,000 cars mark for the first time in six months.
BMW brand sales rose 4.2% to 622,415 units in the first half and by 7.1% to 336,230 units in the second quarter, led as usual by the 3 series.
Mini sales rose 17.6% in the first quarter to 60,598 and 6.4% to 107,576 units (first half)..
Rolls-Royce sales were flat, up just 2.4% to 294 in the first half.
