Despite the fall in profit against the same quarter last year, which enjoyed an exceptional gain, the company recorded record sales. It also held on to its outlook and maintained its high profit margins on automobile sales.
However, BMW cited "intense market competition" and warned that any worsening of Europe's economic crisis or a growth slowdown in China could hurt its business. It is already facing headwinds from Europe's debt crisis, which has devastated economies in nations such as Spain and Greece and kept Europe sales flat from the year before.
Net profit fell to 1.28 billion euros ($1.57 billion) from 1.77 billion euros a year ago. Sales rose 7 percent to 19.2 billion euros. The fall in net profit in part results from 464 million euros in one-time pluses from the year-ago quarter, which also saw record profits that made it harder for BMW to equal the previous year figure.
BMW said "higher personnel costs, increased expenditure on development and new technologies, intense market competition and the higher baseline of the previous year's record second-quarter earnings all contributed to the lower earnings figures in 2012."
The company reported record sales of 475,000 vehicles and said its profit margins remained at a strong 11.6 percent on car sales, the same as in the first quarter though slightly down from a year ago. That's a key figure indicating the company is maintaining its ability to generate good profits from sales.
Earnings were supported by continuing sales increases in China, where they rose 31 percent, and by a 10 percent increase in the U.S.. Strong global sales of the X3 sport utility, which jumped 38 percent, helped profits.
"The BMW Group continued to perform extremely well," CEO Norbert Reithofer said in a statement.
The company, which has also invested in electric cars and the use of high-tech carbon fiber parts, said it had increased technology and development costs and cited investments in its production network. It also has 5 percent more workers, at 102,000, than it did in the quarter last year.
BMW's earnings fell short of the consensus estimate for 1.38 euros bill compiled by FactSet. It held onto its earnings prediction for the year of exceeding last year's sales volume and pre-tax earnings but said those forecasts are "based on the assumption that worldwide economic conditions will not deteriorate sharply. The BMW Group sees risks primarily in a further deterioration of the economic situation in Europe and a slowdown of growth in China."
Analyst Max Warburton at Sanford C. Bernstein in London wrote that "BMW's numbers are still good but they are not great, unlike second-quarter 2011." He said profit margins had fallen from 13.9 percent in the year-ago quarter due to tough price competition in Germany and China.
He said model mix also affected results, with lower sales for the X6 and large 7-series sedan, probably the vehicles with the fattest per-car profits. However the new version of the mainstay 3-series midsize car have yet to hit their stride since it was introduced earlier this year and could make a stronger contribution in coming months.
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