FRANKFURT — BMW’s third-quarter operating profit rose 33 percent on stronger sales of crossovers as well as the absence of one-off factors that had depressed earnings a year earlier.
Earnings before interest and taxes (EBIT) increased to 2.29 billion euros ($2.54 billion), up from 1.72 billion euros, BMW said in a statement on Wednesday.
The operating margin at its automotive division rose to 6.6 percent from 4.4 percent in the year-earlier period, when new emissions rules led to heavy stockpiling and discounting by competitors and hit BMW’s profit margin on cars.
Sales of BMW’s vehicles rose just 3.6 percent in the quarter, but shifted from sedans to crossovers, including its higher-margin X3 and X4 models.
BMW is showing signs of recovery under its new CEO, Oliver Zipse, after stumbling in recent quarters with low profitability and a series of operational and regulatory issues.
The earnings represent “a first positive sign after several disappointing quarters,” Juergen Pieper, an analyst at Bankhaus Metzler, said in a note to investors.
BMW reiterated it expects a significant fall in group pretax profit, a slight increase in vehicle deliveries, and an EBIT margin of between 4.5 percent and 6.5 percent in the automotive division as it prepares to roll out electric cars.
The automaker sees demand for electrified vehicles doubling by 2021, and sees sales of electrified cars growing by 30 percent annually between 2021 and 2025.
BMW faces higher manufacturing costs as it prepares factories to build plug-in hybrid and full-electric cars, forcing it to cut costs elsewhere, with the aim of achieving more than 12 billion euros ($13.3 billion) in efficiency gains by the end of 2022.
The automaker also needs to increase investments in digital features such as automated driving.
“The vehicle of the future, with all its integrated digital functions, is a high-tech product of a complexity that is still underestimated,” Zipse said in the statement.
The need for cost cutting is evident amid a slump in car sales in key markets such as Europe and China and mounting investment costs.
“The efficiency-boosting measures we have implemented are bearing fruit,” CFO Nicolas Peter said. “Nonetheless, we aspire to achieve more than that.”
BMW said it will cut development times of vehicles by a third and reduce the number of drivetrains by 50 percent from 2021 onwards.
To fund investment BMW has been relying on sales of high-end cars, including the new X7, and demand from China, where deliveries have surged 15 percent this year.
The push into battery-powered vehicles is picking up pace.
The full-electric variant of the Mini will start production this month, followed by the BMW iX3 next year.
BMW is straining to meet tighter environmental regulations that start next year in Europe and would impose tough fines on automakers whose average car emissions exceed 95 grams of carbon-dioxide per kilometer.
Bloomberg contributed to this report