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BMW reports FY'18 EPS beat but warns of challenges continuing in 2019

Bayerische Motoren Werke AG on March 15 reported EPS for full-year 2018 that beat analysts' expectations but warned of significant challenges in 2019.

The German automaker said for the 12 months to Dec. 31, 2018, earnings per share of common stock were €10.82, down 17.2% from €13.07 in 2017 but ahead of the S&P Global Market Intelligence mean consensus estimate for GAAP EPS of €10.71.

Group net profit fell 16.9% year over year to €7.21 billion from €8.68 billion. Revenue dipped to €97.48 billion in 2018 from €98.28 billion the year prior. Total deliveries to customers increased 1.1% to 2.49 million vehicles from 2.46 million in 2017.

"2018 was a challenging year for the automotive sector as a whole. Nevertheless, we achieved the second-highest group profit to date," said CEO Harald Krüger in a statement.

"The challenges facing the entire sector are unlikely to diminish in the coming months. Great efforts will therefore be needed across the entire group to help shape the sector's transformation under such conditions."

BMW said it expects headwinds in areas including "political uncertainty, a cooling global economy (partly due to international trade conflicts), rising production costs to meet regulatory requirements, exchange rate effects and rising raw materials prices." It added that it already has reduced the complexity of its product portfolio and will continue to do so in order to address these issues.

For 2019, the company said it expects further volume growth and a slight increase in deliveries, without specifying targets, though it warned that the 3 Series model change is likely to impact growth during the first half of the year. BMW will provide further information on its financial statements and outlook for fiscal 2019 on March 20.

In 2018, the company's capital expenditure rose 7.3% year over year to €5.03 billion due to the introduction of new models and the construction of a plant in Mexico. Research and development costs also rose significantly — 12.8% year over year to €6.89 billion — as the company accelerated its push into autonomous driving and electric mobility.

Automotive segment revenue increased 0.1% year over year to €85.72 billion but net profit fell 21.6% to €6.18 billion due to higher costs and the introduction of the new emissions testing standard, WLTP.

Revenue in the financial services segment rose 2.2% to €28.17 billion in 2018 from €27.57 billion while net profit dipped 0.2% year over year to €2.19 billion.

BMW increased its annual dividend to €3.50 per share of common stock and €3.52 per share of preferred stock, which it said was the second highest in its history. In total, the company will pay out to shareholders €2.3 billion, or 32% of net profit.

In lunchtime trading in Frankfurt, BMW shares were up 1.0%, or 73 cents, at 74.51.