BMW enjoys strong 2015 with net profit rising 10% y/y to USD7 bil.

The BMW Group has posted a strong set of financial results for full-year 2015, with record financial metrics across the board and a rise in net profit of 10% year on year (y/y) to EUR6.396 billion (USD6.966 billion), according to a company press release. This figure was posted off the back a record set of sales figures and other financial metrics, with positive currency effects bolstering group revenue by 14.6% y/y to EUR92.175 billion, up from EUR80.401 billion in 2014. The group also posted a positive earnings before interest and taxes (EBIT) figure of EUR9.593 billion, which was a 5.2% y/y increase on last year's figure. Profit before tax rose by a similar amount with a 5.9% y/y increase to EUR9.224 billion. These figures were all generated off the back of group sales volumes figures that rose by 6.1% to 2,247,485 units.

Commenting on the 2015 result, CEO Harald Krueger said, "The exemplary commitment of our workforce and the unfailing trust placed in us by our shareholders are the key topics that run through the BMW Group's success story." He added, "To mark the company’s centenary, we are once again raising the associate bonus for our permanent staff in Germany, the highest amount paid in the German premium auto industry. Dividend payments to our shareholders will also exceed the two billion euro mark for the first time, reflecting the BMW Group's fine performance in 2015." At the company's AGM in May, the board will recommend increasing the dividend from EUR2.90 to EUR3.20.

The company generated these strong numbers off a positive sales development in all its major regional markets, although growth momentum is slowing in China. In Europe, sales rose by the extremely healthy figure of 9.4% y/y to 1,000,427 units, with sales in Germany rising by 5.0% y/y to 286,098 units and with UK sales rising by 12.6% y/y to 230,982 units. Overall sales growth in Asia rose by 4.2% y/y to 685,792 units but with this regional sales block dominated by China, this result was heavily influenced by the normalisation that occurred in the world's largest automotive market in 2015, with BMW sales in China rising by just 1.6% y/y to 464,086 units. Combined sales in the Americas rose by 2.8% y/y to 495,897 units, with 405,715 units of this tally being sold in America, which witnessed a 2.2% y/y rise to 405,715 units.

Outlook and implications

BMW's 2015 financials are another set of strong numbers from the world's leading premium passenger car manufacturing group. The fact that it posted such a strong set of financials amid a significant slowdown in the momentum of the Chinese market, and nominal growth recorded in the United States, is doubly impressive. It also managed these numbers amid something a weak point in the model cycle of its core passenger car model ranges, with the 5-Series due for replacement next year and with the 1 and 3-Series also moving into the second half of their current model lifecycles, with both models receiving facelifts, or what BMW terms as life cycle intermediate (LCI) refreshes in 2015.

However, other newer models in the brand's portfolio helped to stoke sales in all major markets, with the company enjoying strong 2-Series (with the range further supplemented in 2015 with the new 2-Series Gran Tourer in 2015). The 4-Series family continued to perform extremely well with an uplift of 27.4% y/y to 152,390 units, while sales of the X5 and X6 were also strong, with respective uplifts of 14.1% to 165,143 units and a 53.1% y/y to 46,205 units, respectively. Mini sales were also strong during the first full-year of sales of the third-generation hatchback, with sales rising by 12% y/y to 338,446 units. However, when Mini is taken out the equation, the BMW passenger car brand has almost been overtaken by the Mercedes-Benz car brand in 2015 as the world's best-selling premium marque for the first time in 10 years, with BMW posting sales of 1.90 million units to the Mercedes-Benz brand's 1.87. This is partly due to the aforementioned model cycle issues, but it is also to do with the huge strides Mercedes has made in recent years in revitalising and expanding its model range into new segments, especially in the compact car and SUV segments. BMW will begin a new phase of launching important new models this year, with the new X1, which should drive strong sales momentum in Europe.

However, Mercedes-Benz is forecast to overtake BMW in terms of brand sales in 2016, with 1.98 million units to BMW's 1.94 million units, according to IHS Automotive's latest forecast. Nevertheless, we expect BMW to regain top spot in 2018 when the new 5-Series comes on stream and Mercedes-Benz starts suffering from its own model cycle issues. BMW is still expecting a robust financial result for 2016, although the company also warned that "the global political and economic environment is also expected to remain volatile".