BERLIN, Germany: BMW announced on Friday that its core cars business had achieved a higher third-quarter margin, exuding a more optimistic outlook than some of its competitors, while reaffirming its yearly projections.
The luxury car manufacturer had initially projected annual earnings before interest and taxes (EBIT) margin for its cars division in the range of 9.0% to 10.5%. Impressively, it was well on track to meet this target, boasting a 10.3% margin for the current year.
The increase in revenues was attributed to the strong performance of higher-priced and fully electric cars, surpassing the expectations of eight analysts polled by LSEG, with revenues totalling 38.5 billion euros ($40.92 billion). However, despite this impressive growth, the group’s net profit saw a 7.7% decline, mainly due to the absence of last year’s boost from the BBA consolidation, as reported by BMW.
The company did acknowledge challenges, with negative currency exchange effects on the dollar and Chinese yuan, as well as some undisclosed manufacturing costs impacting its revenues.
Notably, BMW’s EBIT margin reached 9.8% for the quarter, rising to 10.8% when excluding the influence of last year’s decision to acquire a majority stake in its Chinese joint venture, BMW Brilliance Automotive (BBA).
Throughout the year, BMW maintained a cautiously optimistic stance and even raised its automotive margin outlook in August. In contrast to some competitors such as Mercedes-Benz and Porsche, BMW refrained from mentioning high interest rates or inflation as factors weighing on growth.
BMW also reported an improvement in supply chain issues, which had previously been a concern, with sales for the year up by 5.1% thus far.
Moreover, the company exceeded its target for fully electric vehicle sales, achieving 15.1% in the third quarter. Sales growth was also driven by models from the upper price segment, including the 7 Series, the updated BMW X7, and the BMW X5 and X6 models.
Finally, BMW’s free cash flow for the automotive segment reached 5.7 billion euros for the year, closely approaching the full-year forecast of 6 billion euros.
