Profitability thus far in 2013 is fully in line with expectations. Global EBT margin of 10.6% for Q3 2013 is at par with that of 2012. By and large, Western Europe auto market decline continues. Europe sales are stable while US and Chinese markets, and other emerging markets have reported double-digit growth.
Investments to the tune of 1 billion euros in 2013 looks into production network expansion, improving process efficiency, strengthening brands, and enhancing customer care to affect the automotive segment and impact Q4 significantly.
In Q3 2013, segment revenues reached nearly 17.2 billion euros and are at par with last year. While currency conversion effects have had an impact, EBIT for the Automotive Segment totalled almost 1.55 billion euros, 6% decrease when compared with the same period of last year.
Despite challenges in Europe and high level of investment in future projects, expected EBIT margin for 2013 remains within BMW Group’s target range of 8-10%. At the end of September this year, the group’s free cash flow was 2.45 billion euros. With high level of capital expenditure in Q4, BMW expects free cash flow below 3 billion euros for 2013.
While financial services segment has attracted new business, leased or financed 45% of new BMW Group vehicles in the first 9 months of 2013, margins are narrower due to increasing competition.
BMW Group sales development is expected to remain largely positive for Q4 2013 with a single-digit sales growth target for 2013. Pre-tax earnings target for 2013 is on par with 2012 earnings. Q4 will be impacted to a greater extent by capex and costs. For 2014, the Group is in an excellent position with their young vehicle range to provide new sales momentum. In 2014, a number of brand new models will be introduced, and this year’s new launches are expected to generate growth too. Growth forecasts for major emerging markets of Brazil, Russia and India have been lowered slightly. The new Z4 roadster was launched in India last month, and the new BMW 5 Series in October. China and the US are returning favourable business volumes.
While the motorcycles market contracted by 4.3% worldwide, BMW Motorrad retail sales for Q1-Q3 2013 grew 8.4% to 93,154 units. F 800 GT and the R 1200 GS contributed to this sales growth. Revenues for the year to September rose 1.6% at 1.23 billion euros. EBIT stands at 93 million euros for the first 9 months at 13.4% increase from 2012