3rd UPDATE: BMW, Porsche Cautious On 2012 Profitability, Bullish On Car Sales
14 March 2012 - 2:12AM
Dow Jones News
BMW AG (BMW.XE) Tuesday said vehicle sales and pretax profit
will rise this year but stuck to conservative guidance for its
operating profit margin despite saying it will sell more than two
million cars in 2016, four years earlier than planned.
"This is the best start to any year we have had," Chief
Executive Norbert Reithofer said.
The group, the world's biggest manufacturer of premium cars,
expects higher sales of its BMW, Mini and Rolls-Royce brands this
year after selling a record 1.67 million vehicles in 2011 amid
buoyant global demand for luxury cars.
BMW's smaller German rival, Porsche Automobile Holding SE
(PAH.XE) was also bullish about its medium-term outlook,
forecasting its sports-car unit will sell 180,000 cars by 2018 up
from 116,978 vehicles in 2011 as it reported a 22% rise in
full-year operating profit to EUR2.05 billion. Porsche said its
operating return on sales was 18.7%, confirming its position as the
world's most profitable auto maker.
But company executives remained cautious about future
profitability. As Porsche forecast a future operating return on
sales of at least 15%, BMW Chief Financial Officer Friedrich
Eichiner said the full-year operating profit margin for the group's
automotive business would be "at the upper end of our 8%-10% target
range" in 2012 compared with 11.8% in 2011 if strong sales growth
in January and February continues. BMW had forecast the same range
for 2011.
BMW's capital costs are on the rise, Mr. Eichiner said.
Investment in electric cars and increasing production capacity
outside Germany will increase in 2012 compared with last year.
"We will raise capacities in China, the US, South Africa and
India. At the same time, we are evaluating potential locations...
in Brazil, Russia, India, Korea, Turkey," Mr. Reithofer said.
The group reported lower profit for the fourth-quarter despite a
record performance for the year as whole. It had released full-year
headline figures last week.
Fourth-quarter net profit declined 34% to EUR804 million despite
a 9.6% rise in revenue to EUR18.3 billion as launch costs for the
new version of the BMW's 1-series and 3-series models weighed on
earnings before interest and tax which fell 12% to EUR1.54 billion.
BMW reported a 51% jump in full-year net profit to EUR4.91 billion
in 2011.
BMW's conservative outlook for this year's profitability weighed
on the company's shares Tuesday. The stock was down 0.4% at
EUR70.78 in late trading compared with a 0.8% gain for DAX 30
index. "The market had expected 11%," one trader said, referring to
BMW's margin target. Porsche's prefered stock was up 0.5% at
EUR48.53.
BMW is also spending heavily to develop new engines to meet
tightening environmental regulations in the EU and elsewhere as the
authorities tighten standards for carbon-dioxide and other
emissions.
"Looking ahead at 2015, the EU has set a new CO2 target of 130
grams per kilometer for all European cars. We are totally confident
we will meet the target set for the BMW group," Mr. Reithofer said.
BMW's fleet currently produces average emissions of 148 grams of
CO2 per kilometer.
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512;
christoph.rauwald@dowjones.com
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