BMW reported weaker profitability from its auto operations in the fourth quarter as the world’s largest maker of luxury cars fights to maintain its lead over rivals. Earnings before interest and taxes in the auto division narrowed to about 8.2% of sales in the period from 9.2% a year earlier, according to calculations by Bloomberg News Service. BMW’s group operating profit, meanwhile, rose 11% to 2.17 billion euros ($2.3 billion), boosted by lower eliminations, which include leasing activities and other items.
“The underlying automotive business was less profitable than the market thought,” said Dominic O’Brien, a London-based analyst with Exane Paribas. “They got a positive swing from what we’d call non-core business.”
BMW’s main nameplate is under increasing pressure to fend off Audi and Mercedes-Benz as delivery growth rates slow because of aging models like the flagship 7-Series sedan and a recent dispute with dealers in China. Second-ranked Audi outsold the brand in the first two months of 2015, while Mercedes posted the fastest growth rates of the German luxury-car makers.
BMW’s shares fell as much as 2.5% to 116.35 euros and were down 2.2% at 12:59 p.m. in Frankfurt trading. The stock has climbed 30% this year to value the company at 75 billion euros.
Fourth-quarter figures were derived by subtracting nine-month from preliminary full-year numbers that BMW published Thursday. A company representative confirmed the calculations.
The luxury-car maker is targeting a fifth consecutive record in annual vehicle sales this year as it introduces 15 new or revamped models, including at the Mini and Rolls-Royce brands. To lure new customers, BMW is reaching into segments it once shunned, such as with the seven-seat 2 Series Gran Tourer van.
Still, the brand failed to keep pace so far this year. Through February, Audi sold 260,250 vehicles, beating BMW’s deliveries of nearly 256,000. Its growth rate of 5.7% trailed Audi’s 7.4% gain and Mercedes’s 14% jump. The Daimler AG unit is attracting customers with a new version of its top-of-the-line S-Class sedan as well as a widening range of compact models
After BMW’s full-year net income increased 9.2% to 5.82 billion euros, the company plans to raise the annual dividend to a record of 2.90 euros per common share from 2.60 euros for 2013 earnings. The carmaker is scheduled to release full details of 2014 earnings on March 18.