BMW hikes 2nd-quarter operating profit by 26% to 2.6 billion euros

Article by Christian A., on August 7, 2014

BMW logged a 26-percent surge in operating profit in the second quarter of 2014 to EUR2.6 billion ($3.49 billion), thanks to a string of new models, recovering Europe and strong demand in China. BMW's automotive EBIT margin was 11.7 percent in the second quarter of 2014, compared to 9.6 percent in the same period in 2013.

The margin topped those at Audi (9.9 percent) and Mercedes-Benz (7.9 percent). BMW logged a 2-percent jump in revenue in the period to EUR19.9 billion. The increases in sales volume, revenues and group earnings were posted in both the second quarter and the first half of the year, said chief executive Norbert Reithofer in a statement.

Marc-Rene Tonn, an analyst with M.M. Warburg, remarked that BMW had a very strong vehicle mix for the period. Likewise, since prices have been stabilizing, it should have helped Mercedes significantly.

Tonn remarked that car prices in China have probably improved and noting that there could likely been a similar stabilization in Europe, as dealers don’t attract customers anymore by offering crispy discounts.

Mercedes saw its overall sales jump 5 percent to 533,187 in the quarter with its namesake brand surging 8 percent to 458,088 as helped by a leap in sales in China and Europe as well as the introduction of new models like the 4-series and the 2-series.

The Mini brand saw its sales drop 10 percent to 74,028 while Rolls-Royce sold 238 more cars to 1,071 units. Arndt Ellinghorst, an analyst at ISI Group, described BMW's results in the second quarter as impressive.

He said while the second half won't be as strong, BMW will have a stronger cash flow since they are selling all the products. BMW is targeting to top 2 million in unit sales in 2014 to 2 million, an annual sales target originally set for 2016. The luxury carmaker delivered 1.96 million vehicles in 2013. [source: BMW]

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