BMW Profit Jumps 27% on Strong Sales and a Self-Driving Investment

| April 21, 2017 | 0 Comments

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Bayerische Motoren Werke AG (NASDAQOTH: BAMXF), better known as German automaker BMW, released a preliminary “ad-hoc” summary of its first-quarter results on April 20.
The results showed a 27% year-over-year jump in pre-tax profit. Here’s what investors need to know.
BMW earnings: The raw numbers

BMW won’t release its full, audited first-quarter results until May 4. The results released on April 20 are preliminary and incomplete, and could change a bit before the final report.
But here’s what BMW told us. All results are shown in euros; as of April 20, 1 euro = $1.07.

Metric
Q1 2017
Q1 2016
Change

Revenue
23.448 billion
20.853 billion
12.4%

Earnings before interest and tax (EBIT)
2.646 billion
2.457 billion
7.7%

- Automotive EBIT
1.871 billion
1.763 billion
6.1%

- Automotive EBIT margin
9%
9.4%
(0.4 ppt)

- Motorcycles EBIT
125 million
94 million
32.9%

- Financial services EBIT
604 million
591 million
2.2%

Pre-tax profit (EBT)
3.005 billion
2.368 billion
26.9%

Data source: BMW AG. Figures (except percentages) are in euros; “ppt” = percentage points.
BMW’s world headquarters in Munich. Image source: BMW AG.
What drove the 27% jump in pre-tax profit
In its preliminary statement, BMW said that the fat year-over-year increase in pre-tax profit was largely due to three factors:

A jump in the valuation of HERE, a mapping service jointly owned by BMW and several other companies working on self-driving vehicles. BMW’s stake in HERE increased in value (on paper) by 183 million euros after Intel (NASDAQ: INTC) bought 15% of the company in January.
Year-over-year profit growth at BMW’s joint venture with Chinese automaker Brilliance China Automotive Holdings.
Other “valuation effects” (not detailed) that were worth 122 million euros.

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Another key factor driving the year-over-year increase in profit: Sales were up in the first quarter.

Sales at BMW’s automotive unit rose 5.3% in the first quarter, to 587,237, with increases in all regions and for all three of BMW’s automotive brands (BMW, Mini, and Rolls-Royce).
Sales at BMW Motorrad, the company’s motorcycle arm, rose 5.5% in the first quarter, to 35,636 units.

BMW reiterated its cautious guidance

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BMW reiterated the conservative guidance it gave earlier in the year. It still expects a “slight increase” in full-year pre-tax profit versus its 2016 result, and an EBIT margin for its automotive unit in the range of 8% to 10% for the year.
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John Rosevear has no position in any stocks mentioned. The Motley Fool recommends BMW and Intel. The Motley Fool has a disclosure policy .

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