BMW posts 11-fold jump in third quarter net profit

• Source: Xinhua
• [09:33 November 04 2010]
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Bayerische Motoren Werke (BMW), the world's biggest maker of luxury cars, raised its profit forecast for 2010 Wednesday after reporting an 11-fold jump in the third quarter net profit thanks to surging sales in China and a recovery in the United States.

The Munich-based carmaker of BMW as well as Mini and Rolls- Royce cars made a net profit of 874 million euros (about $1.22 billion), in the three months to the end of September, up from just 78 million euros a year earlier.

Revenue in the quarter rose 36 percent to 15.9 billion euros, as global quarterly sales increased by 13 percent to 366,190 vehicles. China has proven a crucial driver to BMW's results with sales rising 91 percent. Sales in the United States rose 9 percent to 70,657 vehicles.

BMW said it would earn a 7-percent return on operating profit from car sales for the full year. The forecast for financial services remained unchanged, with a sharp improvement in profit before tax and a predicted return on equity of over 18 percent.

The chief financial officer Friedrich Eichiner said that the recovery in auto sales appeared to be sustainable although the outlook for the global economy and capital markets was still uncertain. The company said it would remain as the world's largest premium auto maker, with targeted sales of more than 1.4 million cars this year.

The third-quarter EBIT margin at BMW's car business came in at 8.1 percent, trailing the near 11.2 percent at Audi or even the 9. 5 percent at Mercedes. Some analysts estimated that BMW's profit per vehicle averaged 2,300 euros this year, compared with Audi's 2,346 euros and Mercedes' 3,395 euros.

Some industry researchers said that BMW's lower margin showed its vulnerability to its German competitors within larger groups. Audi benefited from sharing costs with other VW brands, while Mercedes was backed by the world's biggest maker of trucks and buses. ($1 = 0.71639 euros)