BMW became the third German carmaker to report better-than-expected quarterly results ahead of schedule yesterday, benefiting like rival Daimler from strong demand in China and a revaluation of its stake in map maker HERE.
Pretax profit jumped 27% to €3.01bn ($3.23bn) in the first quarter, more than expected even taking into account one-off gains that included €183mn from revaluing HERE after Intel invested in it.
“The European market, China and some emerging markets are developing much better than expected.
Only the US market is tougher,” said Evercore ISI analyst Arndt Ellinghorst, explaining the strong results from German carmakers. He rates BMW shares “in line”.
German auto association VDA expects global car sales to rise 2% this year, driven by China where sales are seen rising by 6%, while demand in the United States and western Europe is seen stable.
But European car sales leapt 10.9% in March, led by buoyant demand in the region’s top five markets and extra selling days due to a late Easter this year that saw the holiday fall in April.
Analysts were impressed by the extent to which BMW beat expectations, noting increased profits from Chinese joint venture BMW Brilliance Automotive.
“While this beat might seem moderate compared to the one seen at VW, it is actually slightly better than the one at Mercedes Benz Car division... despite a less favourable product cycle,” wrote Barclays analyst Kristina Church, who rates BMW “overweight/neutral”.
The revaluation of BMW’s stake in HERE came as little surprise after Daimler — a co-owner together with Volkswagen — increased the valuation of its stake.
Other valuation effects lifted BMW’s financial result by a further €122mn.
Intel said in January it was buying a 15% stake in HERE for an undisclosed sum, after Navinfo, Tencent and Singapore’s sovereign wealth fund agreed to buy a 10% stake in December.
BMW affirmed its guidance for a slight increase in full-year group pretax profit and an operating margin of 8-10% at its automotive business, which posted a first-quarter margin of 9.0%, down from 9.4% a year earlier.
BMW’s sales rose 12% in the quarter to €23.5bn, above the average analyst forecast of €22.1bn, according to Thomson Reuters estimates.
The luxury carmaker is due to publish detailed first-quarter results on May 4.
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