BMW forecast slower earnings growth in 2015 because of ageing models and high spending on new technologies to fend off rivals, sending the stock down the most in almost three years.
The world’s largest luxury-car manufacturer expects pretax profit this year to show “solid” growth, which the company defined as a range of 5 percent to 9.9 percent. That compares with a 10.3 percent gain in 2014 pretax profit.
With Audi and Mercedes-Benz expanding aggressively, BMW is scrambling to stay out front as it prepares for a change of leadership this month. This year, the car maker plans to introduce 15 models, including the new seven-seat Gran Tourer wagon and a revamped version of the top-of-the-line 7-Series sedan.
BMW’s profitability from car making fell at the end of last year after the company spent more than planned to develop new cars.
“BMW has clearly shifted down a gear with its outlook,” said Juergen Pieper, an analyst for Bankhaus Metzler. “BMW is held back by a comparatively older product line-up.”
The shares fell as much as 6 percent, the biggest intraday drop since May 2012, and were down 3.9 percent to e116.25 (R1 557) at 12.36pm in Frankfurt. BMW rose 35 percent this year prior to yesterday, compared to a 22 percent increase in the benchmark DAX index.
Volkswagen’s Audi and Daimler’s Mercedes both aim to overtake BMW in sales by the end of the decade and have been closing the gap, thanks to new models like Audi A3 sedan and Mercedes GLA compact crossover. Audi outsold BMW’s main brand in the first two months of 2015, while Mercedes posted the fastest growth rate of the three German luxury-car producers in the period.
“We intend to remain the world’s leading premium-car company,” BMW chief executive Norbert Reithofer said at the company’s annual press conference in Munich. “However, many uncertainties remain. Important markets like China are losing momentum.”
Reithofer will be succeeded as chief executive by BMW’s production head Harald Krueger next Wednesday, when the company holds its annual shareholders’ meeting.
IHS Automotive estimates that the BMW nameplate will maintain its full-year lead with sales of 1.82 million cars, compared with 1.7 million deliveries by Ingolstadt-based Audi and 1.6 million by Mercedes.
BMW invested almost e4.6 billion in new models and technologies such as self-driving systems last year. That meant capital expenditures amounted to 5.7 percent of revenue. For this year, the company would again be “slightly above” that target range, chief financial officer Friedrich Eichiner said.
BMW stuck to its goal of profit margins for the automotive division in a range of 8 percent to 10 percent of sales. – Bloomberg