BMW AG (BMWYY) posted weaker-than-expected third quarter earnings Tuesday but boosted its full year profit guidance amid optimism that it can generate record sales for luxury cars over the final three months of the year.
BMW said operating earnings for the three months ending in September came in at €2.3 billion, down 3.2% from the same period last year and shy of the FactSet consensus of €2.41 billion. Group revenues, the company said, rose 0.3% from the same quarter last year to €23.424 billion, led by a 3.9% gain for BMW-branded sales and a 2.8% increase for its MINI vehicles. Rolls Royce car sales, however, fell 10.7% from last year, the company said, to 2,343 units.
""We continue to expect higher expenditure in the fourth quarter for key technological and strategic projects," said chairman Harald Krueger.
"The BMW Group remained on course for continued growth despite difficult market conditions in some areas," the company said. "Business is expected to develop positively in the financial year 2017. The introduction of numerous new automobile and motorcycle models as well as the expansion of services around individual mobility give reason to expect further profitable growth during the current year."
BMW expects to see a "solid increase" in pre-tax profits for this year compare to last year, the company said, which likely means an increase of between 5% and 10%. It made no changes to its operating margin target of between 8% and 10% but anticipates a "slight decrease" in return on equity.
Earlier this fall, the luxury carmaker said it would offer a range of 25 electric cars by 2025, some of which will have a range of more than 430 miles, in one of the biggest challenges to Tesla Motor's (TM - Get Report) clean energy dominance.
Kreuger unveiled the group's ambition ahead of the Frankfurt motor show, where he said the industry was facing "fundamental change" and indicated that the electric offerings will including both the Rolls Royce and BMW M brands.
"Our market share for electric drives in Europe is already three times higher than our market share for combustion-powered cars," Kreuger said. "This year, we will deliver over 100,000 BEVs and PHEVs to customers. By 2025, our customers will have 25 all-electric or partially electric vehicles to choose from."
BMW shares were marked 2.15% lower in the opening 30 minutes of trading in Frankfurt to change hands at €88.07 each, trimming their three-month gain to around 8.5%, a figure that tops the 9.5% advance for the benchmark DAX performance index but trails the 24.5% gain for domestic rival Volkswagen AG (VLKAY)
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