BMW Profit Growth Lags Jump in Revenue

By William Boston 

        FRANKFURT-- BMW AG, the German luxury car maker, reported a 4% jump in first-quarter net profit on sharply higher sales, boosted by strong demand in the U.S. and Europe as well as the euro's weakness against the dollar.
        The world's leading premium car maker by sales said on Wednesday that net profit rose to EUR1.52 billion from EUR1.47 billion on a 15% rise in revenue to EUR20.92 billion. BMW's profit growth was in line with analysts' forecasts while revenue was slightly better than expected.
        BMW has been warning of slower growth in China where sales rose 6.4%, well behind more robust markets in Europe, where BMW reported an increase of 9.6%, and a nearly 13% increase in the U.S.
        "We have got off to a good start in 2015," Chief Executive Norbert Reithofer said in a statement.
        The company said it is sticking to its existing forecast for growth in revenue and pretax profit this year despite tough trading conditions in Russia and less dynamic growth in China.
        The overall profit picture masks relatively sluggish sales and a weaker pretax performance by BMW's core automotive division which sells cars under the group's namesake, MINI, and Rolls-Royce brands.
        BMW brand sales rose 5.4% in the first quarter, slower than the growth of rivals Audi AG and Mercedes-Benz, a unit of Daimler AG.
        Pretax profit in the automotive division declined 0.5% to EUR1.63 billion despite a 14% rise in earnings before interest and taxes, in contrast with strong growth at BMW's financial-services division and smaller motorcycles unit.
        BMW reaffirmed its forecast of an automotive EBIT margin in a range of 8% to 10% after reporting a margin of 9.5% in the first quarter.
        More uneven geographic demand for BMW's vehicles weighed a little on its performance.
        In Europe, BMW's sales of 234,849 vehicles were driven higher by strong growth in the U.K., BMW's biggest European market outside Germany, where they rose 15%.
        BMW sales rose 9.9% in North America overall, growing 13% to 91,479 vehicles in the U.S.
        Sales growth in Asia slowed, with growth of 5.1%, the bulk of which comes from China, well below the double-digit advances of past years. In the first three months of the year, BMW sales in China rose 6.4% to 115,078 cars.
        Car loans and leasing is becoming a larger contributor to BMW's earnings. The financial-services division reported a 11% increase in new lease and financing contracts in the first quarter. Pretax profit in the division surged 24% to EUR559 million on a 23% increase in revenue to EUR6.06 billion.
        Write to William Boston at william.boston@wsj.com and Monica Houston-Waesch at nikki.houston@wsj.com
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        (END) Dow Jones Newswires

        May 06, 2015 03:33 ET (07:33 GMT)

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