BMW strikes a cautious note despite record Q1

VEHICLE manufacturer BMW has warned economic conditions in some of its trading regions are likely to pose challenges to its performance as the year progresses.

The German company said the situation in Russia was likely to remain difficult, while ongoing normalisation within the Chinese market is also likely to continue, resulting in less dynamic growth.

The group, which has a large engine production facility in Hams Hall, has also warned of rising personnel costs over the course of the current financial year as well as expenditure in support of future growth and new technologies.

The political and economic environment is also expected to remain volatile, it added in its first quarter update.

Nevertheless, it said was looking ahead to the rest of the year with confidence; a position largely attributed to its range of vehicles.

“The BMW Group expects tailwind in 2015 due to its attractive model range, the market launch of 15 new models and model revisions and because of the forecast positive development of international automobile markets,” it said.

It said it remained on course to meet its full year targets, a situation buoyed by a solid Q1 performance which shows group revenue rising by almost 15% to £15,476.7m (€ 20,917m), with pre-tax profit up more than 5% at £1,678.86m (€ 2,269m).

Additionally, sales volumes climbed by 8.1% to 526,669 units (2014: 487,024 units) – a new Q1 record.

Group chairman Norbert Reithofer said: “”We have got off to a good start in 2015. We are aiming to achieve solid growth in 2015, and hence new record figures for sales volume and profit before tax.”

The group, in a challenge to its rivals, also predicted it would remain the world’s leading manufacturer of premium vehicles in 2015.

It has said automotive segment revenues are forecast to grow significantly due to the increase in sales volume and exchange rate factors. The company had previously expected a solid growth in revenues. The EBIT margin in 2015 is forecast to remain within the targeted range of between 8 and 10%.