BMW posted 8.8% drop in EBIT in second quarter 2013

Article by Anita Panait, on August 1, 2013

BMW Group logged an 8.8-percent dive in earnings before interest and taxes (EBIT) in the second quarter of 2013 to EUR2.07 billion ($2.75 billion), compared to EUR2.27 billion in the same period in 2012, as spending on new models offset higher sales. BMW said in a statement that its revenues for the quarter grew 1.8 percent to EUR19.6 billion, thanks to a 6.6-percent hike in car sales.

According to BMW, its automotive division posted a 13-percent dive in second-quarter EBIT to EUR1.76 billion in line with expectations. The German carmaker said that EBIT drop was primarily due to increased spending on fuel-efficient technology as well as discounts in markets in Europe. The carmaker auto margin in the second quarter of 2013 dropped to 9.6 percent from 11.6 percent in the same period in 2012. BMW said that its auto division’s profit margin for 2013 will be between 8 percent and 10 percent of sales.

BMW chief executive CEO Norbert Reithofer said in a statement that the carmaker was able to achieve a strong second-quarter performance despite the “headwinds on many automobile markets in Europe," adding that German company's automotive margin was "at the top end of our targeted range."

Reithofer expects the carmaker’s pre-tax profit for 2013 to be similar to the EUR7.82 billion posted in 2012, despite a possible increase in vehicle sales, as BMW spend large amount of money for new technologies and models as well as in its production network.

According to BMW Chief Financial Officer Friedrich Eichiner, the investments will place a EUR1 billion ($1.33 billion) net burden on the carmaker's books in 2013, something that cannot be offset by cost-cutting. He noted that BMW will make more investments in the second half of the year. [source: Bmw]

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