BMW boosts earnings with higher-priced and electric cars

By Victoria Waldersee

BERLIN (Reuters) – BMW (ETR:) reported a higher third-quarter margin in its core cars business on Friday, striking a more optimistic tone than some competitors as it confirmed its forecasts for the year.

The premium carmaker has forecast an annual margin on earnings before interest and taxes (EBIT) in its cars division of 9.0%-10.5% and was on course to hit that target with a 10.3% margin this year so far, it said.

Higher-priced and fully electric cars boosted revenues above expectations of eight analysts polled by LSEG to 38.5 billion euros ($40.92 billion), but group net profit fell 7.7% in light of last year’s figures having benefited from the BBA consolidation, BMW said.

Revenues took a hit from negative currency exchange effects on the dollar and , as well as some manufacturing costs, BMW said, without providing further details.

Its EBIT margin was 9.8% in the quarter, rising to 10.8% excluding the impact of last year’s decision to take majority control of its Chinese joint venture, BMW Brilliance Automotive (BBA).

The carmaker has maintained a cautiously optimistic tone through the year and raised its automotive margin outlook in August.

In a statement, it made no mention of high interest rates or inflation weighing on growth, in contrast to other competitors such as Mercedes-Benz (OTC:) and Porsche, which warned of a subdued market environment curbing demand.

Supply chain issues had eased, the company added, after a warning in August that they could continue throughout the year. Sales this year were up 5.1% so far.

Fully electric sales hit 15.1% in the third quarter, outstripping BMW’s end-year target of 15%. Models from the upper price segment, like the 7 Series, the updated BMW X7, and the BMW X5 and BMW X6 models, are also driving sales growth.

Free cash flow for the automotive segment so far this year came in at 5.7 billion euros, near the full-year forecast of 6 billion.

($1 = 0.9409 euros)