China sales lifts BMW profits
BMW avoids margin squeeze suffered by Audi, Mercedes
The German firm today reported earnings before interest and tax at its car business rose by a third to €2.08 billion on the back of higher car sales.
The company proposed increasing its dividend by about 8 per cent to €2.50, returning roughly a third of its overall profits to shareholders, though slightly less than analysts’ estimate.
That was a rare improvement from both the previous quarter and the same period the year before. It was contrary to an industry trend towards worsening pricing power. While BMW’s car business increased profitability by 1.4 percentage points over the previous year’s period, Audi suffered a 1.3-percentage-point decline and Mercedes reported a drop of 3 percentage points.
BMW’s shares failed to benefit, however, falling 1.1 per cent, in line with losses among auto sector peers. The firm declined to provide an earnings forecast ahead of next week’s annual press conference. Mercedes and Audi have both warned of a deterioration this year amid recession in Europe.
Mercedes expects operating profit to decline slightly while Audi has signalled its return on sales will be at the upper end of an 8-10 per cent range, after achieving an 11.0 per cent margin last year.
Germany ’s trio of luxury carmakers are in rude health, however, when compared to mass market peers like Peugeot, currently grappling with a glut in capacity, bloated workforces, eroding prices, heavy losses and tumbling demand.