BMW Q2 profit rose 27 percent

Strong sales in Asia helped BMW Q2 profit increase by 27% to €1.771 billion ($2.4 billion) compared to Q1 2013, the German luxury carmaker announced on Tuesday. The launch of new models also contributed significantly to a successful quarter.

Revenue increased in Q2 by 1.8% to €19.905 billion from €19.552 billion one year ago. The strong increase in sales volume pushed up income, while exchange rate factors had the opposite effect, the company said.

EBIT (Earnings Before Interest and Taxes) jumped 26% to €2.603 billion from €2.066 billion in Q2 2013.

Chairman of the Board of Management of BMW AG, Norbert Reithofer, said in Munich on Tuesday:

“The BMW Group increased sales volume, revenues and Group earnings in both the second quarter and the six-month reporting periods, continuing the successful development of our business.”

Global sales of BMW, MINI and Rolls-Royce brand cars rose by 5.3% in Q2 to 533,187 units, a new record.

BMW cars

Sixteen new BMW models and upgrades are expected this year.

All regions did well

Below is a breakdown of sales according to regions during the first half of 2014:

  • Europe: sales increased by 2% to 446,188 units from 436,709 last year. Sales in Germany and the UK increased by 0.6% and 1.8% respectively.
  • Asia: sales jumped 18.3% to 322,943 units from 272,943 in 2013. Chinese deliveries increased by 23.1% to 225,490 units.
  • The Americas: the number of automobiles sold rose 3.5% to 221,280 units from 213,867 last year. BMW sold 5.2% more vehicles in the US.

Record motorcycles segment

The world’s leading luxury carmaker also makes motorcycles, and posted the best ever half year results for this segment, which grew 11.2% to €538 million from €475 million last year.

Motocycles EBIT jumped 19.6% to €55 million from €46 million in H1 2013, while profit before tax increased by 20% to €54 million.

During the second quarter, a record 42,259 motorcycles were sold compared to 40,209 in Q1 2013.

BMW Q2 2014 results

(Data source: BMW Group)

BMW outlook

According to Mr. Reithofer, the BMW group is on track to achieving its targets for the full year within a market environment that is still “challenging”. The company predicts a significant increase in group profit before tax and deliveries to customers compared to 2013, which posted €7.913 billion and 1,963,798 units respectively.

Mr. Reithofer said:

“After our record sales volume performance in the first half of the year, we are now targeting a significant increase in the number of vehicles delivered to customers in the current year and hence a new sales record of over two million vehicles.”

“We are aiming for a Group profit before tax figure, which will be significantly higher than in the previous year.”

However, BMW added that the pace of earnings increase during H2 2014 will be influenced by:

  • High levels of spending for new technologies, with a focus on reducing CO2 emissions to comply with more stringent regulatory requirements.
  • Risks in the global economy.

There is a target to achieve an EBIT margin between 8% and 10% (2013: 9.4%). However, economic and political developments could push margins outside this range.

While taking into account the effect of exchange rates, which will dampen results, the BMW Group predicts that revenues will rise solidly during the forecast period.

Sixteen new models and model upgrades are expected during 2014, including:

  • The 4 Series Gran Coupé.
  • The BMW i8 plug-in hybrid sports car, which was launched in June.
  • the all-new X4.
  • The revised BMW X3, which entered the market in July.
  • The BMW 2 Series Active Tourer, with first deliveries starting in September.
  • The BMW M4 Convertible, with first deliveries beginning in September.

The company predicts marginal growth for the whole year in the motorcycles segment, despite unfavorable international motorcycle markets.

The Financial Services segment is also expected to grow this year. However, the return on equity will probably fall compared to last year, but should be on course for the company’s minimum target level of 18%.

Earlier this year, BMW announced a $1.5 billion investment in Mexico and an expansion of its factory in South Carolina in the United States.