BMW sees profit drop due to high development costs image

German luxury carmaker BMW reported its third-quarter operating profit at its key automotive division dipped more than previewed because of higher costs of new technology and price discounts in core European markets.

BMW said on Tuesday the division’s earnings before interest and tax (EBIT) went down 6 % to 1.55 billion euros ($2.09 billion), missing analysts’ average forecasts. That shrank its automotive EBIT margin by half a percentage point to 9 % in the quarter, compared with 9.4 % at Volkswagen’s Audi and 7.3 % at Daimler’s Mercedes-Benz.
Revenue was modestly down 0.4 % to 18.8 billion euros, even though car deliveries soared 11 %.

BMW is revamping its product line-up, launching no less than 25 new vehicles this year and next. The cost of launching the all-electric i3 compact, ready to hit showrooms this month, and other technologies is taking its toll on the company books.

BMW retained its forecast for a full-year automotive EBIT margin ranging from 8 to 10 % and group pretax profit on a similar level to last year’s 7.82 billion, though it said developments in auto markets may stay “volatile and challenging” in coming months.

The carmaker is counting on new models including the refreshed 5-Series saloon, the next generation of the X5 SUV and the 4-Series coupe to keep up its sales power. Global deliveries, also including Rolls-Royce and Mini brand cars, may achieve a single-digit percentage rise to a new record, BMW said.

Via Reuters