BMW Group posts fourth-quarter profit gain on 3-series demand

BMW sold 500,332 3-series vehicles last year, accounting for nearly a third of overall annual brand sales of 1.65 million.

(Bloomberg) -- BMW Group reported a surprise gain in fourth-quarter profit boosted by stronger demand for the 3-series sedan and wagon.

Earnings before interest and taxes rose to 1.95 billion euros ($2.72 billion) from 1.87 billion euros a year ago, the company said today in a statement.

The figure beat the 1.83 billion euro average of 10 analyst estimates compiled by Bloomberg. Revenue fell 2 percent to 20.2 billion euros.

"We forecast further sales volume growth in the current year which will again bring us a new all-time high," CEO Norbert Reithofer said in the statement.

BMW is stepping up investment in technology and expanding production to hold off rivals Audi and Mercedes-Benz, which have both vowed to take the premium-sales crown by the end of the decade.

The race is tightening as Audi outsold BMW's namesake brand in the first two months of 2014, while the Mercedes brand has grown at a faster pace than its two larger rivals in recent months.

Automotive earnings for the group, which makes the BMW, Mini and Rolls Royce brands, fell to 9 percent of sales in the fourth quarter from an operating profit margin of 11 percent a year ago. For the full year, BMW's auto margin was 9 percent, compared with 10 percent at Audi and 6 percent at Mercedes.

“BMW’s numbers look good,” said Erich Hauser, an analyst with International Strategy and Investment Group in London. “The fourth-quarter margins were stronger than expected.”

Spending rates

BMW said in November that spending will continue at a high rate in 2014. The manufacturer planned to invest about 4.8 billion euros last year to add production capacity and develop new technology, exceeding its capital expenditure target.

With the German carmakers vying for the top spot and brands such as Jaguar and Maserati expanding their lineups, competition in the luxury-car segment is "more intense than ever," Audi CEO Rupert Stadler said earlier this week. Audi, which has never held the top post for an entire year, will introduce 17 new or revamped vehicles in 2014, including a reworking of the iconic TT coupe.

Mercedes is rolling out 30 vehicles by the end of the decade, including a dozen all-new cars, while BMW is responding this year with the upgraded X5 SUV as well as new models like the 4-series Gran Coupe, the 2-series Active Tourer hatchback and the i8 plug-in hybrid sports car.

BMW forecasts sales for the group, including Mini and Rolls Royce, to exceed 2 million autos for the first time this year. IHS Automotive estimates that the BMW brand will sell 1.77 million cars in 2014, beating Audi's 1.66 million and Mercedes's 1.56 million. That would make BMW the best-selling premium nameplate globally for the 10th straight year.

BMW recommended a dividend of 2.60 euros per common share, compared with the 2012 dividend of 2.50 euros. Net income for 2013 rose 5 percent to 5.34 billion euros.

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