BMW posted a profit increase in the first quarter of 2022 on Thursday (5/5). This was driven by a re-evaluation of the German automaker's stake in joint ventures with China and strong selling prices. BMW was able to maintain its 2022 outlook despite volatile commodity and energy prices.
BMW said a re-evaluation of its stake in the joint venture with Brilliance Auto Group had resulted in an initial profit of 7.7 billion euros ($8.2 billion).
In February, BMW said it would pay 3.7 billion euros to increase its stake in the joint venture to 75% from 50% after securing the required license from Beijing.
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In a client note, Jefferies analyst Philippe Houchois wrote that the stock had complicated BMW's results, "but these numbers look like a significant hit".
BMW posted a 16.3% increase in revenue for the quarter. Although the 6.2% drop in car sales due to higher prices helped lift the value of revenue.
"The strength and resilience of the BMW Group is evident in this challenging environment," said CEO Oliver Zipse in a statement.
The auto industry has been hit by a series of supply chain issues related to the pandemic, in particular the global shortage of semiconductor chips.
Automakers including BMW have focused on producing higher-margin vehicles. And a lack of supply has raised prices for both new and used cars.
BMW said the higher prices have also increased revenue from vehicle sales derived from rentals, particularly in the US and UK markets.
Strong prices for its vehicles also helped partly offset rising raw material and energy prices.
Despite the volatility, the automaker said operating margins for the auto segment should still be in the 7% to 9% range.
The company reported a net profit of 10.2 billion euros compared to 2.8 billion euros a year earlier. Excluding the impact of its stake in the Chinese joint venture, BMW generated an operating profit of 3.4 billion euros, up from 3 billion.
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