BMW profit up 18 per cent on China, US

In this July 29, 2009 picture the logo of the German car producer BMW AG is photographed on the back of a car in front of the company's headquarter in Munich, southern Germany. THE CANADIAN PRESS/AP, Matthias Schrader

FRANKFURT - Booming sales in China and new versions of key models pushed automaker BMW AG's earnings higher by 18 per cent in the first quarter to €1.35 billion ($1.77 billion).

Sales were flat in Europe where the economy is slack, but the Munich-based maker of luxury cars and SUVs saw a 36 per cent jump in deliveries in China, where it now sells more vehicles than it does in the United States.

Revenue rose 14 per cent to €18.29 billion, the company said Thursday.

Sales worldwide rose 11 per cent to 425, 528. Top performers were new versions of the 1-series compact and the X3 smaller SUV. The larger X5 SUV and the large 7-series sedan, both of which reap big profit margins, also saw better sales.

Sales in China outpaced those in the United States, 80,218 to 75,931. But deliveries in Europe, which is struggling with a slow economy and a crisis over too much government debt, only edged up 0.5 per cent.

Analyst Max Warburton said a strong product mix emphasizing expensive vehicles with high profit margins helped alongside the higher sales numbers. He said more profitable vehicles, defined as the mid-size 5-series sedan and up, represented 50 per cent of sales.

"BMW's sales mix, pricing and profitability remain superb," Warburton said.

BMW's profit margins — measured as earnings before interest and taxes as a percentage of sales — came in at 11.6 per cent, down slightly from 11.9 per cent but ahead of 11.4 per cent posted by Volkswagen unit Audi AG and 8.4 per cent for Daimler AG's Mercedes brand.

Germany's luxury carmakers are making fat profits, much of it on export sales to emerging markets and the United States, while Europe's mass-market carmakers such as GM's Adam Opel AG and Fiat are struggling with tough competition and weak sales and pricing.

BMW's workforce grew by 5.4 per cent over the past year and it employed 101,260 people at the end of the quarter. Part of the increase came from the acquisition of the ICL Group car leasing unit, but the company said that "skilled workers and engineers continue to be recruited in order to keep pace with persistently strong demand for BMW Group vehicles, to push innovations and to focus on the development of new technologies."

BMW makes cars under the BMW, Mini and Rolls-Royce brands. It also sells BMW and Husqvarna motorcycles.