Record sales of SUVs helped German carmaker BMW to beat first-quarter profit forecasts, despite slowing demand growth in China.
Shares in the world’s biggest luxury automaker rose as much as 1.7% in early yesterday trading, with analysts saying the 21% rise in operating profit could help to quell concerns BMW is losing ground to rival Daimler.
“Whilst the market has been focused on BMW’s weak product momentum, poor import sales into China and overall China headlines, the company once again printed a very strong quarter,” said Evercore ISI analysts. They have a “buy” rating on BMW shares.
Earnings before interest and tax (EBIT) came in at €2.52bn ($2.83bn), beating analysts’ average estimate of €2.19bn and helped by a double-digitmn euro gain from derivatives used to hedge currency moves.
BMW’s automotive EBIT margin was 9.5% in the quarter, remaining ahead of Daimler’s Mercedes-Benz, and at the upper end of its target range of 8-10%, thanks to record sales of high-margin sport-utility vehicles (SUVs).
By comparison, the quarterly return on sales from ongoing business at Mercedes-Benz was 9.2%, while Audi’s operating margin slipped to 9.7% from 10.1%.
The launch of BMW’s new 7-series, a face-lift for the 3-series and the new 5-series could help sales going forward.
BMW brand sales were up 5.4% in the quarter to 451,576 cars, the Munich-based automaker said, citing continued growth in Europe, North America and China, and a 30% jump in deliveries of the X5 SUV.
