FRANKFURT -- BMW's first-quarter operating profit slid 2.5 percent due to currency headwinds, pricing pressure and higher investment in new technologies such as self-driving cars.
Earnings before interest and taxes (EBIT) dropped to 2.46 billion euros ($2.84 billion) from 2.52 billion euros a year earlier, BMW said in a statement today.
Net profit improved by 8.2 percent to 1.64 billion euros. Revenue was down 0.3 percent to 20.85 billion euros as the value of the British pound and the Chinese renminbi against the euro offset rising vehicle sales, BMW said.
Sales of BMW, Mini and Rolls-Royce vehicles rose 5.9 percent to a new quarterly record of 557,605 units.
The return on sales at BMW's automotive division narrowed to 9.4 percent from 9.5 percent a year earlier, in its target range of 8-10 percent. BMW managed to keep ahead of close rival Mercedes-Benz in profitability in the first quarter, as Mercedes spent on its growth push. BMW's automaking margin beat the 7 percent posted by Mercedes.
BMW CEO Harald Krueger said the quarter was hit by a "volatile" environment. "The decisive factor for us is not short-term profit but sustainable, profitable growth," he said in the statement. "We intend to play a pioneering role in transforming and shaping the world of individual mobility going forward," said Krueger, who in March presented his new business plan focused on electric and self-driving cars.
BMW has seen sales momentum slow down in China, the world's biggest car market, as it prepares to launch new models such as the long-wheelbase version of the X1 SUV.
The shift in buyer preferences to SUVs from sedans and pickups, in particularly in the U.S., also dented profits. That has forced makers of sedans and hatchbacks to step up buying incentives. "The shift from limousines to SUVs put prices under pressure," BMW Chief Financial Officer Friedrich Eichiner told journalists on a call to discuss the results today.
BMW is boosting production of SUVs including the X5 at its U.S. plant in Spartanburg, South Carolina, to match shifts in customer demand.
"We expect pricing will improve" as new models including the 7 series gain traction, Eichiner said.
The average price of BMW's vehicles declined 5.9 percent to about 33,700 euros ($39,100) in the quarter as demand for cheaper cars such as the X1 small SUV overwhelmed growth for the revamped 7-series sedan, according to Bloomberg calculations based on data released today.
"There is lots of growth among compact cars like the X1; not so much among the bigger, more expensive cars," said Hans-Peter Wodniok, an analyst with AlphaValue in Paris. "That's leading to a drop in average prices and therefore in the earnings."
- Download BMW quarterly report as a PDF, below