Bayerische Motoren Werke AG’s share price up, posts strongest profitability since 2011 on increasing China demand

The largest luxury auto manufacturer in the world – Bayerische Motoren Werke AG (BMW) made an official statement today, posting the highest profitability from car manufacturing in three years. The upbeat result was tied to increasing demand in China and a larger number of customers attracted by the X5 sport-utility vehicle, the company said in its statement.

According to BMW, the earnings before interest and taxes of the companys auto division over the second quarter of the current fiscal year increased to 11.7% of sales from 9.6% over the same period a year ago. The indicator, which is also known as operating profit margin and is closely watched by analysts, was reported as the strongest since the third quarter of 2011. It also topped figures of 9.9% at Audi AG, the world’s second-largest maker of premium cars, and 7.9% at Daimler AG’s Mercedes-Benz Cars unit.

The Munich-based car manufacturer also revealed that its net profit increased by 27% and reached 1.77 billion euros (2.37 billion dollars) on a 1.8% increase in revenue, which was 19.91 billion euros.

Mr. Norbert Reithofer, who is the Chief Executive Officer of the company said in a statement, which was cited by Reuters: “The BMW Group increased sales volume, revenues and Group earnings in both the second quarter and the six-month reporting periods, continuing the successful development of our business.”

The improved results of the company are considered to be due to a 30% jump in sales of the X5 SUV model. The company also reported an 8% increase of the sales of its 5 Series saloon. In addition, Bayerische Motoren Werke AG revealed that the sales of its lower-margin 1 Series compact vehicles declined by 11%, and so did the Mini sales over the period in question.

One of the analysts, who work at ISI Group – Mr. Arndt Ellinghorst said in a telephone interview that was cited by Bloomberg: “It’s very impressive. The second half won’t be as strong, but they’ll have a stronger cash flow because they’re selling all the product.”

Bayerische Motoren Werke AG added 1.05% to trade at 89.34 euros per share by 12:13 GMT, giving the company a market valuation of 57.09 billion euros. BMWs shares have returned investors 23.77% over the past twelve months. According to the information published on the Financial Times, the 31 analysts offering 12-month price targets for Bayerische Motoren Werke AG have a median target of 100.00 euros, with a high estimate of 123.40 euros and a low estimate of 82.00 euros. The median estimate represents a 13.11% increase from the last price of 88.41 euros.