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

By John Rosevear Markets Fool.com

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.

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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%

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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.

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

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.