A big jump in sales of SUVs like the 2015 BMW X5 helped fuel a strong first-quarter profit for BMW. Source: BMW.

BMW (BAMXF 0.58%) said on Wednesday that its net profit rose 4% in the first quarter, to 1.52 billion euros, as strong demand for luxury SUVs helped drive a big jump in revenue.

BMW's earnings before interest and taxes rose over 20% to 2.52 billion euros ($2.83 billion), beating the 2.2 billion-euro Wall Street estimate. Revenue rose 15% to 20.9 billion euros.

All were first-quarter records for the world's largest luxury automaker.

BMW is riding booming global demand for luxury vehicles
Two factors helped drive BMW's big year-over-year gain. The first was a big shift in currency exchange rates that made U.S. dollars more valuable when translated into euros. That same factor helped other European automakers during the quarter, while hurting results at U.S.-based companies.

But strong sales gains were also a big contributor to BMW's jump in revenue and profit. BMW has struggled a bit in China recently relative to its key competitors, but its sales in the U.S. and Europe have been very strong. Sales of BMW's three automotive brands (BMW, MINI, and Rolls-Royce) rose 12.6% in the U.S. and 9.6% in Europe during the period. Sales in China were up 6.4%.

The best news is that an outsize proportion of those gains came from sales of BMW-brand crossover SUVs. Crossover SUVs generally share engineering costs and many "under-the-skin" parts with sedan models, but generally speaking, the SUVs can be sold at higher prices -- generating fatter profit margins.

BMW was able to take good advantage of booming demand for premium SUVs in both the U.S. and China during the quarter, as sales of its midsize X5 SUV were up 29.7% during the period. Sales of the new X4 model were also very strong, and the niche X6 posted a nearly 5% gain. But BMW's trademark sedans held their own, as its top-selling 3 and 4 series managed a combined 7% increase.

BMW is also making good gains with its electrified models. Sales of the BMW "i" line, which includes the compact i3 sedan and the i8 hybrid sports car, more than tripled during the quarter. Overall sales are still modest, at 6,636 units for the period, but both models have received very strong reviews and demand has been brisk.

Sales at the MINI brand rose 28.4%, while deliveries at Rolls-Royce fell 13% from a record year-ago result.

Strong margins continue as BMW's other divisions performed well
Those strong SUV sales helped BMW sustain its impressive global margins. BMW's EBIT profit margin for its automotive unit was 9.5% in the quarter, unchanged from a strong year-ago result and ahead of the 9.2% margin posted by BMW's longtime arch-rival, Daimler's Mercedes-Benz unit. 

The S 1000 XR is one of several new BMW motorcycle models that helped drive the division to a good result in the first quarter. Source: BMW. 

BMW's Motorrad unit also posted good results on the strength of several new models. Revenue at the motorcycle division rose 20.1% to 567 million euros on a 9.5% increase in worldwide sales. Its pre-tax profit rose 81% to 114 million euros. 

BMW's Financial Services division reported a pre-tax profit of 559 million euros, a 23% gain driven largely by those "favourable exchange rate developments," the company said in a statement.

Those gains contributed to a 12.1% EBIT margin for the company as a whole, up from 11.5% a year ago.

Looking ahead: BMW's CEO reaffirmed his upbeat full-year guidance 
CEO Norbert Reithofer reaffirmed BMW's previous (good) guidance for 2015, saying that the company expects "solid growth" to drive "new record figures for sales volume and profit before tax." In a conference call for analysts and media, he said that the company "plans to remain the world's leading premium car company" and will continue to target an EBIT margin in the 8% to 10%range.

The company is still investing aggressively in new products and technology as it works to stay a step ahead of Mercedes-Benz and Volkswagen's Audi brand. While research and development costs were 4.4% of revenues during the first quarter, CFO Friedrich Eichiner said that they would climb to between 5% and 5.5% by year end.

Reithofer noted that BMW's first-quarter gains in China kept pace with the growth of the overall premium car market there, and emphasized BMW's view that China's huge new-vehicle market is now "normalizing," with more moderate growth to be expected going forward.

He warned, however, that conditions in Russia are likely to remain "a challenge" because of an ongoing economic crisis, and said that BMW has postponed a decision about whether to build a factory in the world's largest nation.

But responsibility for that effort will soon fall to Reithofer's successor, Harald Krüger, as Reithofer is set to retire shortly after a strong nine-year run as BMW's chief executive.