BWM Second Quarter Profit Down on Spending For New Products image

BMW, the largest premium carmaker in the world, on Thursday said its second quarter profit fell 8.8% due to spending on new products, including its first electric vehicle, the i3.

BMW EBIT dropped to 2.07 billion euro from 2.27 billion euro in 2012, compared with analysts’ prediction of 2.08 billion euro. Revenue increased 1.8% to 19.6 billion euro, as auto sales jumped 6.6%.

“Due to high levels of expenditure for new technologies and models as well as investment in the production network,” 2013 pretax profit will be on the same level as last year’s 7.82 billion euro, even as sales rise, Chief Executive Officer Norbert Reithofer said in a statement.

Currently BMW is making investments in an upgrade for the X5 SUV, the new 4-Series coupe and the battery-powered i3. This expansion is part of the German automaker’s strategy to keep its lead over Audi and Mercedes-Benz, which both plan to surpass BMW by the end of the decade.

VW’s operating profit in the second quarter increased 1.8% and sales jumped 8.5%, while Mercedes’ EBIT more than doubled during this period. BMW’s increase in the US and China helped the automaker offset losses in Europe. Still, the German automaker expects sales this year to increase around 10%, surpassing 2012 sales of 1.85 million units.

BMW’s figures are “slightly disappointing compared to Volkswagen and Daimler,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “VW especially showed considerably more dynamic compared with the relatively weak first quarter.”

Source: Bloomberg