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BMW Group raises sales volume and earnings forecast for 2010

Featured Posts, News | July 13th, 2010 by 19
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Business performance better than expected. BMW Group expects sales volumes in 2010 to rise by around 10% to over 1.4 million units. Full-year EBIT margin …

Business performance better than expected. BMW Group expects sales volumes in 2010 to rise by around 10% to over 1.4 million units. Full-year EBIT margin of over 5% expected for the Automobiles segment. Financial Services segment aiming for earnings considerably above last year–return on equity of over 18% achievable in 2010

Munich. Improved business conditions on the international automobile markets mean that the BMW Group now expects to report much better second-quarter and full-year earnings than previously forecast.

13.1% more cars were sold during the first half of the year compared to the same period last year.

For the full year, the company expects sales volumes to rise by around 10% to more than 1.4 million units. In addition to the recovery of the worldwide markets, strong demand for new models such as the BMW 5 Series and BMW X1 has had a positive impact on the business development.

BMW Group raises sales volume and earnings forecast for 2010

In view of the improved situation on the car markets, the BMW Group now forecasts a full-year EBIT margin of over 5% for its Automobiles segment.

As a result of attractive market conditions and a less acute risk situation, the Financial Services segment is striving for a significant increase in pre-tax earnings with a target return on equity of over 18 %.

Based on this much improved outlook, the BMW Group expects the full-year profit before tax to rise more sharply than previously forecast.

A significant improvement in Group earnings had already been predicted for 2010. The Automobiles segment was forecast to achieve solid, single-digit sales volume growth and an EBIT margin within a low, single-digit percentage range. An improvement in Financial Services segment earnings had also been forecast.

Given that numerous economic risks remain in the second half of the year, the new outlook is based on the condition that the economic recovery continues and that general business conditions are not significantly dampened.

For the year 2012, the BMW Group continues to target an EBIT margin of between 8% and 10% and a return on capital employed (ROCE) in excess of 26% for its Automobiles segment. The Financial Services segment is aiming to achieve a return on equity of at least 18%.

The Quarterly Report to 30 June 2010 will be published on 3 August 2010.

[Source: BMW ]

  • bob

    For anyone who can TRULY analyze/understand BMW AG’s sales, this comes as no surprise…

  • FreudeKing

    Good news in absolute terms. I say that because current shareholders of the BMW Group will be pleased with the increase in earnings forecasts. As objective fans and potential investors, we tend to look at the bigger picture and compare to rivals’ earnings increase as well (which is not revised yet).

    • bob

      Bad news for you.

  • efoza

    I bet the success of the 5GT has helped these sales figures

  • kcsnyud

    Why is it so much on “profit?” as it is on how happy the customers are? Wait and see- their sales will start dippin.

    • bob

      “Why is it so much on “profit?” as it is on how happy the customers are?”

      Um, because BMW AG is a *for-profit* enterprise. It’s silly, if not stupid, to think that BMW AG should operate at a loss to keep a few selfish customers ‘happy’.

      “Wait and see- their sales will start dippin.”

      You don’t have any actual evidence to support that, do you?

      • kcsnyud

        Yes i do, profit is enough, why do they want maximum profit as u already make money when u make a profit, but a business is not about making money, its about offering customers a service.

        If bmw starts exhilarating its customers i will never support bmw again.

        • FreudeKing

          You would want to maximise profit as it generates a greater return for the shareholders. Think of yourself putting money in the bank, wouldn’t you want to earn more interest for your money? You would naturally find a bank with a higher interest rate to invest your money in (with lower transaction costs obviously). It is all about maximum returns and which one is a better profit (returns) generating business. It is not sufficient just to make a profit. In fact, making a profit may decrease shareholder value as it may be below the required return (break even return for shareholders). If you are earning 0.5% profit and the shareholder could have put his money in the bank for 1%, you are decreasing shareholder value.

          It is in a way offering the best to customers, but there is a balance. You need customers to generate your returns, but you also need to earn a decent return from the customers so that shareholder value can be created as they are the people who are actually funding the company. So you need both and a company needs to find a balance between the two with long term value creation in mind – not short term. The managers should be incentivised appropriately for them to concentrate on the long term objective and not boosting the short term share price (which I think is what is happening at the moment). Also, alarm bells should be on now with the rise of another competitor (audi), that is eating away BMW’s market share in chunks. Many customers also feel that BMW is not delivering anymore, which is sad.

          • kcsnyud

            Then go ahead and buy a rubbish audi. Two weeks later u will start complaining on an audi forum too.

          • FreudeKing

            I am BMW’s forever. But what I am saying is that many are falling for Audi’s lies and perceived quality and elegant designs.

        • wazon8

          I don’t get your point. Do you suggest that BMW doesn’t offer service to customers? That’s bizzare. They still provide high quality products as expected by customers, don’t they? They still provide great serive during guarantee on car and after that, don’t they? So, why do you have problem with the fact they they try to generate profits? Every single company want to generate profits and after financial crisis it should be clear enough that profits are more than important in order to surivive weak years. I would understand your complain, if they devoted quality in favour of profits, but nothing like this happens. Contrary, BMW smartly spends their profits, they buildt the most advanced wind tunnel, extended production lines, made inspiring models (M3 GTS and 1er M coupe are nice examples), keep great engineers with them and so on. You talk as if you didn’t know that next to generating profits BMW works hardly on great opinion about them. Have you noticed that they’re most respected car-maker on the world and is really high rated in ranking of the most respected companies in the world? You wouldn’t be listed in such place, if you were only good in generating profits. Plaese, take a look on the whole picture, because it’s getting harder and harder to understand the reasons for what you write here. You talk as if you were a child who started to learn about economics and notice that there are no volunteers in business. What do you try to say? That they don’t love cars, because they think about profits eighter? I just guess, but it sounds along this line to me. I heard similar things thousends of time in varied contexts and it always sounds bizzare. I’m rather happy that BMW developes.

          • FreudeKing

            Who’s point don’t you get?

          • kcsnyud

            I want a supercar. The end.

  • Kenee

    Huge success in new models and a move away from just making big cars is making BMW open to all sorts of increased market share but BMW needs to be very careful as it cannot afford to make too many mistakes like the new 5er which is proving to be a disaster both in respect of sales and image. This is the mistake that Benz made in the 1990s and should not be repeated by BMW.

  • EMPOWER

    kenee cant you read. read the aritcle again.
    strong demand for new models such as the BMW 5 Series and BMW X1 has had a positive impact on the business development

    • kcsnyud

      Relax, He doesnt seem to like the model, but its ok, about a ton of people will.

    • efoza

      it seems that it is you who cannot read. It actually does state the 5 GT,

      • wazon8

        It seems that your world fixed around 5GT (you’re even ready to be in contradiction with laws of physics in order to “prove” how great 5GT is). BMW announced that they have more orders on 5-er than they expected and they did after releasing 5-er sedan f10, not 5GT. 5GT is on a market some time and I’ve never heard anyone had problem with receiving 5GT. Of course, the last doesn’t mean that 5GT is not doing well. But please, start taking a context in which given utterance occured into consideration, when you try to assess to which car they refer. I take it as plausible that if it concerned 5GT, some journal would write about it, instead they refer clearly to 2011 5-er (or 5-er sedan, or 5-er f10 or however they like to call it). Another point of concern for you is whether 5GT wasn’t sold out when it appeared and needed to be half year on market to become more popular? I take 5-er F10 success as more plausible for at least two reasons: 1. 5-er was always popular and has loyal customers for who 5GT is very different from what they expect, 2. e60s sell went down and explanation of it is that customers waited on F10. At least, I know people who acted exactly this way.

  • 100$ GUY

    It happens even on the best forums!

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