Bayerische Motoren Werke AG (FRA:BMW) (ETR:BMW) posted lower than expected third quarter profits on Tuesday. The German luxury car maker said that its third quarter earnings before interest and tax (EBIT) plummeted 3.7% to $2.6 billion (1.93 billion euros). Earnings were hurt by shrinking operating profits in its automotive division. The Munich-based company is investing heavily in a new line-up of electric cars such as i3. Earnings at its automotive division plunged 6% to 1.55 billion euros ($2.09 billion). Analysts polled by Thomson Reuters were expecting the unit to earn 1.59 billion euros during the third quarter. Profit margins also declined to 9% from 9.6% in the same period last year.
BMW CapEx to exceed targets this year
During the first three quarters of this year, the company spent 4.3 billion euros on developing new models and ramping up its production network. Bayerische Motoren Werke AG (FRA:BMW) (ETR:BMW) said it will take another 500 million euros in charges for the fourth quarter. BMW had planned to spend 7% of its revenues on capital expenditure. But now the company estimates capital expenditure to exceed that target.
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Bayerische Motoren Werke AG (FRA:BMW) (ETR:BMW) lowered its fourth quarter profitability estimate citing heavy expenditure on new cars. The company said its Q4 margins will be at the lower end of its 8% to 10% estimate. For the full year, pretax profits will be in the similar range of last year’s 7.82 billion euros despite record deliveries.
BMW to launch 25 new models through 2014
The maker of popular cars such as BMW, Rolls-Royce and Mini is developing electric car i3 and plug-in hybrid sports car i8. Bayerische Motoren Werke AG (FRA:BMW) (ETR:BMW)’s third quarter sales rose 11% to 481,657 vehicles as demand for its 3-Series line soared. The company plans to launch 25 new models through 2014. The i3 car will go on sale on November 16 in Europe before being launched in the U.S. and China next year.
Bayerische Motoren Werke AG (FRA:BMW) (ETR:BMW) shares plunged 3.6% to 81.03 euros.