BMW posted a record profit margin in 2011 but fails to overtake Audi

Article by Christian Andrei, on March 12, 2012

For 2011, BMW achieved a record profit margin in its core automotive business. However, this wasn’t enough to outperform rival Audi. The earnings before interest and tax (EBIT) of the automotive segment of BMW increased as a percentage of revenue to 11.8% compared with 8.0% the previous year. However, it still didn’t do better than Audi, which posted 12.1%.

Analysts have predicted that for the full year, there would be an EBIT margin of 11.9%. In the second half, BMW spent 500 million euros to launch new versions of the 3-series sedan and 1-series compact. BMW has the top spot in the premium segment but it faces competition from Audi and Mercedes-Benz.

BMW expects that with the new models coming in 2012, its sales this year will exceed those of last year with a record 1.67 million cars. Credit Suisse analyst Arndt Ellinghorst cited an implied quarterly autos margin of 9.2% compared to his 9.8% prediction.

Meanwhile, 2011 deliveries increased by 14%. He said that it’s the “first mild disappointment in quite a few quarters.” However, he thinks that for the momentum to continue in 2012, there had been plenty of “kitchen-sinking.”

He also believes that there may soon be a remarkable growth in earnings, says Autonews. Due to record profits, BMW will raise its cash payout to stockholders by a full euro to 2.30 euros per share. This translates to a 3.3% dividend yield. BMW has a scheduled annual news conference on March 13. BMW is expected to release its full financial accomplishments and its earnings forecast for this year. BMW has been aiming for a sustainable EBIT margin of 8 to 10% in its cars business beginning in 2012.

Topics: bmw, profit, audi

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