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

By John Rosevear 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.

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.

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But here's what BMW told us. All results are shown in euros; as of April 20, 1 euro = $1.07.

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.