BMW sticks to cautious forecast as profits shift up

AFP

German carmaker BMW reported Thursday a leap in profits in the second quarter, but stuck to its cautious forecast for the full year as it spends on new models and research and development.

Net profit at the group reached 2.2 billion euros ($2.6 billion) between April and June, a 13.6-percent increase compared with the same period last year.

Operating, or underlying profit grew 7.5 percent to reach 2.9 billion euros, on the back of revenues up 3.1 percent at 25.8 billion.

Positive results helped push BMW towards the top of Germany’s DAX index of leading German shares Thursday morning, with stock gaining 0.80 percent to trade at 79.49 euros ($94.13) just before 1030 GMT.

The group pointed to some 40 new models from its high-end car brands BMW, Mini and Rolls Royce scheduled for release in 2017 and 2018, an “offensive” that it hopes will boost unit sales, especially in the United States.

BMW was overtaken by historic rival Daimler’s Mercedes-Benz in 2016 as the biggest-selling luxury carmaker.

The group also highlighted its sales of electric vehicles, which reached 42,573 in the first six months.

German carmakers are under pressure from the government over high levels of harmful emissions from diesel vehicles, as a long-running scandal over cheating on regulatory emissions tests has deepened.

BMW has offered to refit hundreds of thousands of diesel cars already on German roads with a software update to reduce their emissions of nitrogen oxides, under a sector-wide deal between the government and carmakers agreed Wednesday.

The Munich-based firm will also offer discounts for owners of old diesels who trade them in for new ones.

German carmakers bet on diesels, which contribute less to global warming than petrol-powered cars, as a way of meeting European Union climate protection targets.

But the technology’s unhealthy byproducts — and the scandal caused by emissions cheating and allegations of collusion between manufacturers — has prompted companies to step up electric car development.

“We’re on track to deliver more than 100,000 electric cars for the first time this year,” chief executive Harald Krueger told journalists in a teleconference, adding that eventually all BMW vehicles will be electric.

Looking ahead to the full year, BMW expects a “slight increases” in unit sales and pre-tax profits, as well as a “solid increase” in revenues from its car business despite a “volatile” political environment worldwide.

The group was one of a number of German firms targeted by name in protectionist rhetoric from US President Donald Trump ahead of his inauguration.

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