BMW Raises 2010 Earnings Forecast

German premium automaker, BMW AG, has raised its 2010 pretax profit and sales forecast. The company cited better-than-expected earnings and higher demand for luxury automobiles in a number of global markets.

News of higher demand for high-performance premium models like BMW’s Z4 roadster and new 5-Series drove shares in BMW and its German archrival, Daimler AG, higher.

BMW expects global sales volumes to increase by about 10% to 1.4 million and said its pretax profit will “rise more sharply than previously forecast.” BMW had previously forecast a “solid” single-digit sales increase for 2010 and predicted global demand would reach 1.3 million vehicles.

Combined BMW, Rolls-Royce and Mini sales during the first six months of the year reached 696,026, up 13% from the same period in 2009. The majority of sales during the period have come from China, Russia and a number of other emerging markets.

In the U.S., BMW has seen its sales increase by 8% in 2010 compared with an industry-wide increase of 17%. Mini sales in the U.S. have fallen 61% compared with last year.

BMW had previously predicted its earnings before interest and tax as a percentage of revenues (EBIT) margin to remain in the low single-digits but has now forecast that it will surpass 5%.

In April, Daimler AG raised its earnings forecast on increasing demand for its luxury Mercedes-Benz brand. The following month, the German automaker added a bullish bias to its prediction, and last month, Mercedes set a monthly sales record with U.S. sales increasing 26% compared with last year.

BHF Bank analyst Alexsej Wanrau said, “Finally BMW has also raised its outlook. This shows that this development in the auto industry is not just a short term blip but a long term trend.” He said, “I believe that this will continue at least until the end of the year and I certainly don’t see any signs of this growth trend in the premium auto sector weakening in Europe or the U.S. any time.”

Earlier this month, BMW said some of its markets are recovering more quickly than expected and reported a 13.7% increase in sales of its flagship BMW brand vehicles in June.

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