BMW posts solid Q3 result with 3.2% rise in net profit to EUR1.33 bil.

The BMW Group has posted a reasonably robust set of figures for the third quarter, with net profit rising by 3.2% year on year (y/y) to EUR1.33 billion (USD1.80 billion) for the quarter, according to a company statement. This quarterly figure was remarkably consistent with the figures posted in the first half of the year, with combined net profit for the first three quarters of the year rising by 3.0% y/y to EUR4,034 billion. These figures were generated off the back of a third-quarter revenue figure that remained almost entirely static y/y at EUR18.75 billion, very slightly down on the third-quarter 2012 revenue figure of EUR18.82 billion. The combined revenue figure for the first three quarters of the year came to a combined figure of EUR55.85, which was a 0.8% y/y decline on the EUR56.31 billion. The company's EBIT figure for the quarter stood at EUR1.93 billion, which was a 3.7% y/y decline. BMW stated that this lower figure was down to "expenditure on new technologies, increased personnel costs" and perhaps most interestingly on "growing competition". EBIT in the first three quarters of the year fell by the more rapid rate of 5.7% y/y to EUR6.04 billion. Third-quarter profit before tax (EBT) rose to EUR1.99 billion, an 0.1% y/y increase. Profit before tax for January–September was EUR6.02 billion, a 0.3% decline on last year's EUR6.04 billion. The EBIT margin for the first nine months of the year stood at a healthy 10.8%.

BMW CEO Norbert Reithofer professed himself satisfied with the development of the company's financials in the third quarter and in the first three quarters of the year. He said, "Reported figures for both the third quarter and the nine-month period have developed positively despite the higher level of expenditure on new technologies and a challenging market environment in Europe. We have recorded best-ever worldwide sales volume figures to date and remain within our targeted margin range for the Automotive segment."

These figures were generated from a strong overall sales volume trend despite the ongoing difficult nature of the environment in Europe. BMW Group sales rose by 10.7% y/y in the third quarter to 481,657 units, which was in itself an acceleration on combined sales for the first nine months, with sales rising by 7,5% y/y to 1,436,178 units. BMW brand sales rose 11.7% y/y in 405,350 units, and by 9.0% y/y in the first three quarters to 1,209,598 units, with the company claiming segment leadership from its 1,3,5,6 and 7-Series models. The X cars also recorded strong growth despite the introduction of the new X5 in November. Mini's sales also performed well, with sales rising by 5.8% y/y to 75,842 units in the third quarter and by 0.5% y/y to 224,280 units in the first nine months. Mini sales will be bolstered on 2014 when the third-generation model is launched. Rolls Royce sales rose by 13.6% y/y in the third quarter to 825 units, a marked improvement on the 1.1% y/y decline posted in the first three quarters to 2,326 units.

The BMW Group was able to record sales volume growth in almost all the major regions under review. The number of cars sold by the group in Europe in the third quarter rose 1.0% to 204,828 units. For the nine-month period, sales in this region were up 0.2% y/y at 641,537 units. Sales in Asia increased by 24.5% to 149,834 units in the third quarter and by 17.7% to 422,777 units in the first three quarters of 2013. Nine-month sales of BMW and Mini brand cars rose 20.2% in China and by 10.8% y/y Japan to 46,564 units. The group's figures continued to develop strongly in the Americas with a 15.9% y/y rise in the third quarter to 111,810 units, with sales in the first three quarters rising 11.7%. Group sales in the US between January and September rose by 11.6% y/y to 262,745 units.

Outlook and implications

The world's leading premium car group has posted another strong set of quarterly results thanks largely to a very robust sales development in the Asian region (of which the Chinese market makes up the vast majority of sales) and the Americas (for which the US is the main sales generator). The company's model range is exceptionally well regarded in all the major regional markets in which it operates and it has benefitted from investing in state of the art conventional ICE powertrain technology and in making sure that its cars are the dynamic benchmarks in their respective classes. BMW's mainstream model range is selling well in the form of the 1-, 3- and 5-Series ranges and the company is continuing to expand into new segments and market territories, with the new X4 crossover model due next year, while the new UKL1 front-wheel drive architecture will also underpin a massive expansion on the company's compact and sub-compact model ranges over the next three years, across both the Mini and BMW brands. The company will generate more high-value sales in the final months of 2013 and into 2014 as a result of the launch of the new 4-Series (which will replace the 4-Series Coupé and Cabriolet models in the company's range) and the new X5, which goes on sale in November. The latter model will have a lot to live up to as the previous-generation X5 was a huge success and was able to generate sales gains even right at the end of its model cycle, albeit with some hefty discounts in some markets. BMW is expecting to meet its previously stated financial and sales goals for 2013, which include exceeding last year's sales figure while matching last year's profit before tax figure in 2013. This discrepancy is as a result of rising costs, particularly associated with the launch of the company's new "i" range, with the i3 now on sale, and the i8 plug-in sports car joining it next year.