Reuters take on BMWs quarter
05-03-2005, 04:27 AM
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BMW keeps outlook despite drag from auto profits
Tuesday, May 03, 2005 6:15:21 AM (GMT-05:00)
Provided by: Reuters News
(Adds comments from executives, updates stock pricce)
By Christiaan Hetzner
FRANKFURT, May 3 (Reuters) - BMW's <BMWG.DE> first-quarter pretax profit fell 4.6 percent, the world's largest premium carmaker said on Tuesday, as the weak dollar and the changeover in its key 3-Series car dragged on its core automotive result.
BMW reaffirmed though that it expects earnings this year to roughly match its record 2004 result, helping soothe investor fears after rumours of a profit warning surfaced last week.
Earnings before taxes declined to 812 million euros ($1.05 billion), compared with an average Reuters poll estimate of 834 million and 851 million euros for the first quarter last year.
"Significantly higher raw material prices, currency factors and increased competitive pressure all had a negative impact during the first quarter 2005," the company said in a statement.
Shares in BMW had risen 0.7 percent to 33.21 euros by 1047 GMT, outpacing a flat DJ Stoxx European autos index <.SXAP>.
"The figures didn't come out necessarily better than consensus, but better than some had feared, which is why there's a bit of a relief rally in the share today," said Fredrik Westin, analyst at WestLB.
"Personally I find little negative but also little positive in the results," he added, rating the shares "neutral".
BMW said automotive pretax profit fell a steeper 5.4 percent to 702 million euros due to the weak dollar and model changeovers, leading to a first-quarter earnings margin for the division of 7.05 percent versus 7.6 percent a year ago.
"The big unknown in the equation here is the launch costs of the 3-series, which are very hard to guesstimate," said Michael Raab of Bank Sal. Oppenheim.
Group net profit was bang in line with expectations, though, falling a marginal 0.8 percent to 519 million. Cashflow in the quarter rose nearly 13 percent to 1.29 billion euros.
HEDGE DEPLETES
During a conference call with reporters, finance chief Stefan Krause said that the market launch of new products like the 3-Series saloon led to a 5.5 percent increase in sales and administration costs to 1.11 billion euros.
He added however, that profits took a bigger hit due to the decrease in 3-Series sales in the run-up to its March relaunch.
Krause warned that results in the coming quarters would be negatively impacted by the ongoing depletion of currency hedging contracts executed in the past at more favourable rates.
The 30 percent decline in the value of its interest and currency derivative assets to 1.89 billion since the end of 2004 reflected this in part, he said.
"We expect for the rest of the year a rise in (negative) currency effects, and you can see that in the development of this figure," the CFO said during the call.
He confirmed more than half the group's net dollar exposure was still hedged for this year. In March, Krause forecast a 2005 earnings impact that would be "far more negative" than the "low-triple-digit-million euro" currency hit seen last year.
The United States is BMW's biggest market and accounts for nearly a quarter of group car sales.
DOLDRUMS
Equipped with a raft of hot new models including its 1-Series hatchback and the X3 offroader, BMW has raced from one record to another, leaving rival Mercedes Car Group <DCXGn.DE> in its dust.
Early last month, BMW said robust demand for its compact 1-Series helped boost group car sales by 8.2 percent in the first quarter to a record 292,207 vehicles.
The launch of its revamped 3-Series saloon means its core BMW brand may take over the pole position from Mercedes-Benz as the world's best-selling luxury marque this year.
Chief Executive Helmut Panke told reporters during the call that the car's launch in early March had gone "magnificently" and surpassed the company's expectations, adding that group vehicle sales rose roughly 7 percent in April.
But while most analysts agree that BMW remains one of the most fundamentally solid companies in the industry, the market has yet to really reward the stock.
Shareholders who have owned equity in BMW since October 2001 haven't realised any better return on their investment than the performance of the DJ Stoxx European auto index.
Only recently has the stock managed to steer itself out of the doldrums after BMW said in early March that for the first time ever it would buy back up to 10 percent of its shares.
BMW trades at 10 times estimated 2005 earnings, the lowest among the four German carmakers, according to Reuters Estimates.
(Additional reporting by Michael Shields in Frankfurt)
((Reporting by Christiaan Hetzner, editing by Rory Channing; E-mail: christiaan.hetzner@reuters.com; +49 69 7565 1249))
($1=.7772 Euro)
? Reuters 2005. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
BMW keeps outlook despite drag from auto profits
Tuesday, May 03, 2005 6:15:21 AM (GMT-05:00)
Provided by: Reuters News
(Adds comments from executives, updates stock pricce)
By Christiaan Hetzner
FRANKFURT, May 3 (Reuters) - BMW's <BMWG.DE> first-quarter pretax profit fell 4.6 percent, the world's largest premium carmaker said on Tuesday, as the weak dollar and the changeover in its key 3-Series car dragged on its core automotive result.
BMW reaffirmed though that it expects earnings this year to roughly match its record 2004 result, helping soothe investor fears after rumours of a profit warning surfaced last week.
Earnings before taxes declined to 812 million euros ($1.05 billion), compared with an average Reuters poll estimate of 834 million and 851 million euros for the first quarter last year.
"Significantly higher raw material prices, currency factors and increased competitive pressure all had a negative impact during the first quarter 2005," the company said in a statement.
Shares in BMW had risen 0.7 percent to 33.21 euros by 1047 GMT, outpacing a flat DJ Stoxx European autos index <.SXAP>.
"The figures didn't come out necessarily better than consensus, but better than some had feared, which is why there's a bit of a relief rally in the share today," said Fredrik Westin, analyst at WestLB.
"Personally I find little negative but also little positive in the results," he added, rating the shares "neutral".
BMW said automotive pretax profit fell a steeper 5.4 percent to 702 million euros due to the weak dollar and model changeovers, leading to a first-quarter earnings margin for the division of 7.05 percent versus 7.6 percent a year ago.
"The big unknown in the equation here is the launch costs of the 3-series, which are very hard to guesstimate," said Michael Raab of Bank Sal. Oppenheim.
Group net profit was bang in line with expectations, though, falling a marginal 0.8 percent to 519 million. Cashflow in the quarter rose nearly 13 percent to 1.29 billion euros.
HEDGE DEPLETES
During a conference call with reporters, finance chief Stefan Krause said that the market launch of new products like the 3-Series saloon led to a 5.5 percent increase in sales and administration costs to 1.11 billion euros.
He added however, that profits took a bigger hit due to the decrease in 3-Series sales in the run-up to its March relaunch.
Krause warned that results in the coming quarters would be negatively impacted by the ongoing depletion of currency hedging contracts executed in the past at more favourable rates.
The 30 percent decline in the value of its interest and currency derivative assets to 1.89 billion since the end of 2004 reflected this in part, he said.
"We expect for the rest of the year a rise in (negative) currency effects, and you can see that in the development of this figure," the CFO said during the call.
He confirmed more than half the group's net dollar exposure was still hedged for this year. In March, Krause forecast a 2005 earnings impact that would be "far more negative" than the "low-triple-digit-million euro" currency hit seen last year.
The United States is BMW's biggest market and accounts for nearly a quarter of group car sales.
DOLDRUMS
Equipped with a raft of hot new models including its 1-Series hatchback and the X3 offroader, BMW has raced from one record to another, leaving rival Mercedes Car Group <DCXGn.DE> in its dust.
Early last month, BMW said robust demand for its compact 1-Series helped boost group car sales by 8.2 percent in the first quarter to a record 292,207 vehicles.
The launch of its revamped 3-Series saloon means its core BMW brand may take over the pole position from Mercedes-Benz as the world's best-selling luxury marque this year.
Chief Executive Helmut Panke told reporters during the call that the car's launch in early March had gone "magnificently" and surpassed the company's expectations, adding that group vehicle sales rose roughly 7 percent in April.
But while most analysts agree that BMW remains one of the most fundamentally solid companies in the industry, the market has yet to really reward the stock.
Shareholders who have owned equity in BMW since October 2001 haven't realised any better return on their investment than the performance of the DJ Stoxx European auto index.
Only recently has the stock managed to steer itself out of the doldrums after BMW said in early March that for the first time ever it would buy back up to 10 percent of its shares.
BMW trades at 10 times estimated 2005 earnings, the lowest among the four German carmakers, according to Reuters Estimates.
(Additional reporting by Michael Shields in Frankfurt)
((Reporting by Christiaan Hetzner, editing by Rory Channing; E-mail: christiaan.hetzner@reuters.com; +49 69 7565 1249))
($1=.7772 Euro)
? Reuters 2005. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
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