The great moment continues for the premium brands of the German automotive industry. BMW reported better-than-expected first quarter results after a large rebound in sales in all major regions, with China in the lead. Earnings before interest and taxes increased to € 2.24 billion from € 229 million the previous year, according to preliminary data released by the manufacturer. Profit also increased thanks to fixed vehicle prices and high demand for used cars, BMW said.
Operating margin almost 10%
BMW also reported a group profit before tax of 3.76 billion euros for the quarter, up from 798 million euros the previous year. The automaker expects annual pre-tax profit to be significantly higher than last year, based on a “solid” increase in deliveries. Pre-tax profit plummeted 35% to 4.8 billion euros in 2020 due to the pandemic that rocked the sector. On the other hand, the margins this year are more than double, between 6% and 8%. The Munich-based company said its first-quarter operating margin at the auto manufacturing unit rose to 9.8% from 1.3% the previous year. Full first quarter accounts will be released on May 7th.
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Numbers beyond expectations
“All the figures are really above my (and consensus) expectations,” said Juergen Pieper, an analyst at Bankhaus Metzler, via email on Tuesday. «The key factors of BMW are excellent sales momentum, positive prices as for most manufacturers and efficiency gains. Automakers are benefiting from a growing recovery in demand that began in China. Daimler last week reported significantly better-than-expected first-quarter preliminary earnings, citing strong sales across all regions. Global vehicle deliveries for both BMW and Mercedes-Benz set a record during the first quarter, driven by China and demand for newly introduced plug-in hybrid and all-electric vehicles.
The difficulties with the chips
As the effects of the pandemic began to subside, carmakers’ concerns have shifted to supply chain problems with the global chip shortage continuing to plague manufacturing. So far, BMW has handled the turmoil that has disrupted production in factories around the world better than some of its competitors. The company raised semiconductor orders last spring after Asian markets recovered, but warned it still has to work hard to secure enough shares. Executives said they are confident they can avoid production stoppages this quarter.