By Victoria Waldersee
BERLIN (Reuters) -BMW reported a higher third-quarter margin in its core cars business on Friday, striking a more optimistic tone than some competitors as it confirmed forecasts for the year.
The premium carmaker has forecast an annual margin on earnings before interest and taxes (EBIT) in its cars division of 9.0%-10.5% and is on course to hit that target with a 10.3% margin so far this year, it said.
Higher-priced and fully electric cars boosted quarterly revenues above expectations of eight analysts polled by LSEG to 38.5 billion euros ($40.92 billion), but group net profit fell 7.7% after last year’s figure benefited from a one-off boost when BMW took majority control of its Chinese joint venture.
The company saw some slight relief in raw material prices in the quarter versus last year but nonetheless felt an impact of 200 million euros from the net balance of currency and raw material positions, Chief Financial Officer Walter Mertl said.
Materials and logistics costs remain high, with a notable negative impact across the first nine months of 2023 due to factors including high labour costs from partners, he added.
BMW’s EBIT margin was 9.8% in the quarter, rising to 10.8% excluding the impact of last year’s decision to take majority control of Chinese joint venture BMW Brilliance Automotive.
The German group has maintained a cautiously optimistic tone through the year, and raised its automotive margin outlook in August.
In a statement, it made no mention of high interest rates or inflation weighing on growth, in contrast to competitors such as Mercedes-Benz and Porsche, which warned of a subdued market environment curbing demand.
Supply chain issues had eased, BMW added, after warning in August they could continue throughout the year. Sales this year were up 5.1% so far.
Fully electric sales hit 15.1% of total sales in the third quarter, outstripping BMW’s end-year target of 15%. Models from the upper price segment, like the 7 Series, the updated BMW X7, and the BMW X5 and BMW X6 models, are also driving sales growth.
Free cash flow for the automotive business so far this year came in at 5.7 billion euros, near the full-year forecast of 6 billion.
($1 = 0.9409 euros)
(Reporting by Victoria Waldersee; Editing by Elaine Hardcastle and Mark Potter)
