BMW profits rise on higher China demand

 
City A.M. Reporter
BMW, the world’s top maker of luxury cars, reported forecast-beating profit for the second quarter yesterday, driven by sales of its popular 5 Series model and rising demand from brand-conscious China.

The German group saw earnings before interest and tax (EBIT) as a percentage of revenue grow to 9.6 per cent in the three months to June from a loss last year thanks to rising volumes and better pricing.

The firm made €834m (£692.8m) between April and June, up from €121m a year earlier. Sales climbed by 18.3 per cent to €15.35bn.

BMW reaffirmed its 2010 sales and earnings forecast that it raised in mid-July, predicting retail volumes would increase by around 10 per cent to more than 1.4m vehicles while the automotive EBIT margin would surpass five per cent. Pre-tax profit is growing even faster than initially expected, it said, adding its 2012 return targets remained in place.

All three German premium carmakers including Volkswagen’s Audi reported second-quarter operating margins north of nine per cent just one year after the biggest industry crisis since the second World War.

Both Mercedes and BMW are enjoying currency tailwinds along with a rebound in luxury car markets driven by China, while volume carmakers like Fiat are expected to struggle with shrinking demand as scrapping schemes expire.

Meanwhile, data published yesterday showed that overall, US auto sales rose 5.1 per cent in July from a year ago to 1,049,101 cars and light trucks, according to Autodata Corp. Autodata estimated the annualised selling pace in the month was 11.98m vehicles, compared with 11.24m in July 2009, although the research firm warned that figure may be revised.

If confirmed, the July sales pace would be the second-highest rate since September 2008, surpassed only by August 2009, when the government’s “cash for clunkers” incentive programme caused auto sales to spike.