Despite falling sales: BMW surprises analysts with record profits

Despite the drop in sales
BMW surprises analysts with record profit

Even before the business figures are known, BMW is optimistic: the German car manufacturer expects a “significant increase” in profits. This is actually happening and even exceeding analysts’ expectations. An important building block for success: the China business.

The carmaker BMW made a record profit of 18.6 billion euros last year. That was almost half more than in the previous year, as the group announced in Munich. Revenues increased by 28.2 percent to 142.6 billion euros in 2022, and pre-tax profit soared by 46.4 percent to 23.5 billion euros.

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Analysts polled by Refinitiv had expected sales of 141.6 billion euros and pre-tax profits of 22.4 billion euros. BMW itself had predicted a “significant increase” in profits and a profit margin in the auto business of between 7 and 9 percent. At 8.6 percent, the margin was at the upper end of the range – but compared to the previous year, this corresponds to a decrease of 1.7 percentage points.

Last year, the group took over the majority in the Chinese joint venture BMW Brilliance Automotive (BBA) – the revaluation of the previously held BBA shares alone contributed 7.7 billion euros as special income or around a third of the pre-tax result of 23.5 billion euros.

The integration of the Chinese joint venture into the automotive business takes the business to a new level, said outgoing CFO Nicolas Peter. “With a strong product portfolio in the major regions of the world, we are on the right track and this year we will continue to benefit in particular from the demand for our electrified vehicles and the higher-class models.”

Stocks are giving way at times

Due to a lack of semiconductors and a lack of wiring harnesses from Ukraine, BMW only sold 2.4 million cars in 2022 – around 100,000 fewer than in the previous year. But the carmaker benefited from a high proportion of expensive models, from higher prices for new cars and for leasing returns on the used car market, and from a weak euro.

On the stock exchange, BMW shares fell by up to 3.7 percent to 97.25 euros after the figures were presented, but later limited their losses again. The dividend is to increase to EUR 8.50 per share, meaning that almost a third of the profit will continue to be distributed to shareholders. The target corridor for the payout ratio is 30 to 40 percent of net income.

CFO Peter is meanwhile leaving BMW and retiring in May. His successor is to be Walter Mertl, who is currently responsible for controlling at the carmaker. Mertl has been working for BMW since 1998 and has held various positions in the finance and sales departments.

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