In a preliminary release of its fourth-quarter results, German automaker BMW AG (BAMXF 0.04%) (BMWYY -1.25%) said its fourth-quarter operating profit jumped 32% from a year ago, to 2.332 billion euros ($2.6 billion), on strong sales of some of its highest-priced vehicles.
The strong quarter wasn't quite enough to offset weakness earlier in 2019, though, as BMW's full-year operating profit fell 17% to 7.4 billion euros.
Good sales of high-margin models, including BMW's 8 Series, drove margin gains in the fourth quarter. Image source: BMW AG.
The raw numbers
All financial results are shown in euros. As of March 13, 2020, 1 euro = about $1.11.
| Metric | Q4 2019 | Change vs. Q4 2018 | 2019 | Change vs. 2018 |
|---|---|---|---|---|
| Revenue | 29.366 billion | 19.9% | 104.2 billion | 7.6% |
| Autos sold | 665,803 | 1.4% | 2,538,367 | 2.2% |
| EBIT | 2.332 billion | 32.1% | 7.411 billion | (17%) |
| EBIT margin, automotive segment | 6.8% | 0.5 pp | 4.9% | (2.3 pp) |
| Net profit | 1.408 billion | 6.7% | 5.022 billion | (28.9%) |
| Earnings per share (common stock) | 2.09 | 5.6% | 7.47 | (29.5%) |
Data source: BMW AG. EBIT = earnings before interest and tax. PP = percentage points.
Highlights of BMW's preliminary report
- BMW delivered just over 2.5 million vehicles in 2019, an all-time record for the company and up 2.2% from 2018.
- BMW's full-year profit was impacted by the need to set aside a reserve of 1.4 billion euros in anticipation of European Union antitrust charges, and a 11.9% increase in research and development spending (to 5.952 billion euros) from 2018, as the company geared up to launch a new range of electric vehicles.
- That impact was offset somewhat by increased sales of higher-margin SUVs and luxury vehicles, particularly in the second half of 2019. BMW's pre-tax profit rose 18.8% in the second half of the year from the same period in 2018.
- The year-over-year improvement in EBIT margin in the fourth quarter was driven by stronger sales of high-priced models, including Rolls-Royce vehicles and the BMW 8 Series.
- Rolls-Royce delivered 5,100 vehicles in 2019, an all-time record driven by high demand for the new Cullinan SUV.
- BMW Motorrad, the company's motorcycle unit, generated EBIT of 194 million euros in 2019, up 10.9% from a year ago, on a 9% increase in revenue driven by stronger sales.
- BMW Financial Services earned 2.27 billion euros in pre-tax profit in 2019, up 6% from 2018.
Rolls-Royce sales hit an all-time record in 2019, powered by global demand for the Cullinan, the brand's first-ever SUV. Image source: BMW AG.
Cash flow and dividends
BMW said it generated full-year automotive segment free cash flow of 2.567 billion euros, down 5.4% from 2018 on higher R&D spending, as noted above.
At the company's annual meeting in May, BMW's Management and Supervisory Boards will recommend that shareholders approve an annual dividend of 2.50 euros per share of common stock and 2.52 euros per share of preferred stock for 2019. If approved (which is likely), the total payment will be about 1.65 billion euros, for a payout ratio of 32.8%.
BMW paid a dividend of 3.50 euros per share of common stock in 2018. The car stock's total payment was 2.3 billion euros, a payout ratio of 32%.
Looking ahead
BMW will report its complete 2019 results and provide its guidance for 2020 at a press conference before the U.S. markets open on Wednesday, March 18.
