Soaring sales boost BMW profits

BMW is in a comfortable position

The German car maker BMW has reported a strong rise in sales and profits for the first three months of the year.

BMW's sales rose 14% in cash terms to 10.8bn euros (£6.7bn; $9.8bn) during the January to March period compared to the same period in 2001, or 17.4% when measured in terms of the number of cars sold.

The strong sales pushed profits higher too, though analysts said it was hard to say by how much as BMW has just changed its accounting methods.

Analysts said the company's focus on up-market models had helped sales.

"They are making a lot of money with their whole luxury strategy", said Invesco Asset Management fund manager Gerald Roessel.

Strong profits

BMW's profits from its normal operations reached 1.011bn euros during the January to March period, 1.8% below last year's 1.03bn profits.

BMW's new Mini has proved popular

But last year's figure included a one-off gain from property sales.

"Excluding this one-off gain, the comparable figure for the first quarter of 2002 thus represents an improvement of 5.9%," BMW said.

Net profits rose 3.8% during the period to 632m euros, BMW said.

"This result confirms our expectations of being able to deliver over a million BMW and Mini brand vehicles to customers this year for the first time," said BMW's marketing and sales director, Michael Ganal.

Divided analysts

Some analysts remained sceptical.

BMW's brand image has been rebuilt

"This is the first time for several years we are seeing lower quarter figures year-on-year," said Commerzbank analyst David Moorcroft.

"They give plenty of reasons for this but I suspect that behind this, the Mini is reducing [profit] margins," he said.

But others disagreed.

"At first glance, it all looks very solid," said Deutsche Bank analyst Lars Ziehn.

"Sales are better than consensus and profit from ordinary activity also came in better than expected."

Ahead of the competition

Analysts said BMW's strong sales - at a time of economic weakness both globally and in the car maker's key markets in the US and Germany - have resulted from careful reshaping of its image.

"BMW has moved on from the negative 'yuppy' envy provoking connotations that haunted the brand in the late 1980s - think the movie 'Wall Street' - to become a widely recognized mark of achievement," Merrill Lynch automotive analyst Stephen Reitman said earlier this year.

In addition, the car maker has rid itself of the UK car maker Rover, with the exception of its recently launched Mini which is selling well.

Taken together, this has enabled BMW to remain in good shape at a time when most of its peers are pushing ahead with sharp cost and capacity cutting measures in the face of falling sales.

"Relative to the auto sector, I see BMW as an outperformer," said Invesco's Mr Roessel.