BMW posts record Q1 results

thestar.com - We are maintaining our fair value estimate of EUR 75 per share of Bayerische Motoren Werke AG BMW after it reported record first-quarter results. Global demand for luxury vehicles increased 14%, outpacing the overall 7% increase in demand for automobiles during the first quarter. The company's exposure to developing markets should continue to benefit operating leverage. Facilities in BMW's home market of Germany are being kept at higher levels of utilization owing to exports even though European demand for new vehicles is at anemic levels. While the Chinese market increased 22% in the first quarter, the luxury car market doubled the growth rate of the general market at 44% growth over the previous year. BMW is the second-largest luxury car seller in China, behind Volkswagen's VOW Audi brand.

Total automobile revenue, including BMW, MINI, and Rolls Royce, jumped 35% in the first quarter of 2011 to EUR 14.4 billion from EUR 10.7 billion last year. Especially impressive was the unit sales of the newly redesigned BMW 5 series that skyrocketed 118% to 85,423 units from 39,162 during the first quarter of 2010. Equally impressive was the volume increase at Rolls Royce, up 159% to 723 units. Consolidated revenue increased by 29% to EUR 16.0 billion from EUR 12.4 billion. Operating leverage drove EBIT margin expansion for automobiles to 11.9% from 3.6% last year. Consolidated operating income more than quadrupled to EUR 1.9 billion from EUR 0.4 in the same period a year ago.