* Automotive EBIT falls 15.9 pct to 1.58 bln euros
* Operating margin 9.9 pct vs 11.6 pct
* BMW backs 2013 pretax profit, delivery, margin goals
* Group op profit 2.04 bln euros vs f'cast 1.83 bln
* Net pricing deteriorated in Q1 -CFO
By Andreas Cremer
BERLIN, May 2 BMW's operating profits
from its core car business fell more than expected in the first
quarter, weighed on by discounting in some European markets and
Earnings before interest and tax (EBIT) plunged 15.9 percent
to 1.58 billion euros ($2.1 billion), BMW said on Thursday,
short of the average forecast given by analysts of 1.6 billion
euros, while the operating margin dropped to 9.9 percent from
11.6 percent as car sales slipped 1.6 percent to 15.91 billion
"The business environment we're operating in is becoming
ever more uncertain and volatile," Chief Executive Norbert
Reithofer said on a conference call, ruling out a recovery in
the short term in European demand.
However, the Munich-based company reaffirmed its aim of
pushing total vehicle sales this year to a new record. It also
still aims to match last year's record group pretax profit and
achieve an operating margin of between 8 and 10 percent in
German luxury brands such as BMW, Volkswagen's
Audi and Mercedes have fared better in the economic
downturn than their European mass-market rivals such as Peugeot
BMW said net prices for its cars in the first three months
of the year fell by more than the 0.5 to 1.0 percentage points
projected for 2013, as manufacturers in Europe battle the slump
with ever deeper discounts.
"Pricing trends are of course not positive and, to an
extent, are weighing on margins," Finance Chief Friedrich
Eichiner said, without being more specific.
BMW is ramping up its spending on research and development
of fuel-efficient technologies as well as new models such as the
Megacity electric car, dubbed the i3. Related costs should
subside after 2014, the CFO said.
Meanwhile car sales in China may rise by a high single-digit
or low double-digit percentage rate this year, BMW reaffirmed,
compared with the company's 40 percent growth in 2012.
First-quarter sales growth in China was held back by
declining imports of vehicles such as the flagship 7-Series and
X5 and X6 sport-utility vehicles from Germany and the United
States, Bernstein analyst Max Warburton said in a note published
In comparison Audi posted a smaller drop in its quarterly
operating margin to 11.1 percent from 11.4 percent. Audi,
luxury-market leader in China and Europe, is also targeting a
range of 8 to 10 percent for 2013.
Mercedes has fallen further behind its German rivals,
struggling to match BMW and Audi's scale and efficiency in
smaller cars as well as their success in China. The brand's
first-quarter margin plunged to 3.3 percent from 8.2 percent.
Parent Daimler abandoned its earnings forecast for a second
time in six months on April 24 after its quarterly profit
plunged by more than 50 percent due to the market malaise in
Europe and Chinese distribution problems.
"While we continue to rate BMW as 'outperform' and see it as
the best of the Germans in 2013, it is hard to see the market
getting newly enthused," Warburton said.
BMW's shares were up 1.2 percent at 70.92 euros at 1101 GMT,
when shares in VW were down 1.3 percent at 151.85 euros and
Daimler was off 0.5 percent at 41.805 euros.