BMW Enjoys Luxury Car Boost but Cautions Over China – ABC News

Posted: Tuesday, November 03, 2015

German automaker BMW AG sounded a note of caution Tuesday over its business in China as it reported a 20 percent increase in its third-quarter net profit from a year earlier, when financial charges lowered earnings.

While BMW hit profit targets for its high-end cars and SUVs during the July-Sept. quarter, it said a slowdown in previously booming China, as well as tough competition in the United States, would cap profit rises for the rest of the year.

The Munich-based company, which makes the X5 SUV and 7 Series sedan, said profits rose to 1.58 billion euros ($1.74 billion) from 1.31 billion euros in the year-earlier period, when the company had to deduct charges for the changed valuation of financial derivatives. Revenues rose 14 percent to 22.34 billion euros, helped by tail winds from currency exchange rates.

The company said it achieved a profit margin of 9.1 percent before interest and taxes, within its target range of 8-10 percent. The company reaffirmed its forecast for increased sales and profit for the full year.

It cautioned that increases would be held down by increasing competition, rising labor costs, and what it calls the “normalization” of auto sales in China.

BMW and German competitors Volkswagen and Daimler AG have seen outsized increases in sales in China over the past several years. But growth there has shown signs of slowing recently.

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