Germany’s BMW raised its 2010 pretax profit and sales outlook yesterday, citing better-than-expected earnings at its automotive business and buoyant luxury car markets around the world.
Shares in BMW and archrival Daimler jumped on the news as robust demand for high-performance autos like the BMW Z4 roadster and the new 5-series continues to rebound from last year’s extremely low levels.
BMW said 2010 pre-tax profit would “rise more sharply than previously forecast”, as sales volumes increase around 10 per cent to more than 1.4m vehicles as opposed to the “solid” single-digit gain first expected.
The EBIT margin – earnings before interest and tax as a percentage of revenues – would surpass five per cent in its core automobile business compared to BMW’s initial conservative expectation of a figure in the low single-digits.
Daimler luxury car brand Mercedes-Benz, which enjoyed a record June sales month, had already raised its earnings expectations in April and then added a bullish bias to its forecast a month later
“I believe that this will continue at least until the end of the year and I certainly don’t see any signs of this growth trend in the premium auto sector weakening in Europe or the US any time,” Wunrau added.
BMW said last week it sold 13.7 per cent more BMW brand vehicles last month, commenting that some automotive markets were recovering more quickly than expected.
Both Mercedes and BMW are enjoying a rebound in luxury car markets driven by brand-conscious Chinese buyers, while volume carmakers like Fiat are expected to struggle with shrinking demand as scrapping schemes expire.
Unlike Mercedes, however, BMW is just beginning to enter a sweet spot in its model cycle with the recent staggered rollout of the next generation 5 Series and, to top it all off, the euro has declined substantially to most main currencies.