Sales of SUVs Help Earnings at BMW

BMW AG the luxury automaker based in Germany saw its net profit drop by 1.2% during the third quarter because of losses that were non-cash on hedges with foreign currency and the lower valued of its share in an important supplier.

Otherwise, the company enjoyed a quarter that was profitable, riding sales that were strong of its X5 sports utility vehicle, which is made in South Carolina.

Other earnings measures were up and the company Tuesday affirmed its forecast for profits to increase in 2014.

The company’s 1.31 billion euros net profit for the September 30 ending third quarter was short of expectations on Wall Street of 1.36 billion euros.

However, operating earnings that exclude some financial items such as its currency hedges and stake revaluation, were up 17% to more than 2.25 billion euros, excluding taxes and interest.

Revenues were up 4.5% to more than 19.61 billion, as BMW sold over 509,670 vehicles globally, representing an increase of more than 5.8%.

BMW showed growth in profit margin from 9% to 9.4% across its lineup of models, an important figure for its investors and gives an indication the company is receiving the benefits of focusing on the higher priced segment of the global car market.

The company, based in Munich had seen an increase of 3.4% in its sales of the 3-Series sedan, a mainstay, during the first 9 months of 2014. It also saw a big increase in the demand for its X5, which has a sticker price of between $52,800 and $68,000 in the U.S. market and returns bigger profits for each vehicle than do modestly priced vehicles.

A bill for taxes that equaled 40 million euros more than last year was another factor that reduced the net profit.

BMW said it took a charge for reducing its value of a stake in SGL Carbon, an advanced carbon-fiber material maker that is used to cut the weight of its i3 as well as i8 models.

The company also saw a non-cash charge for its losses on currency hedges for foreign currency that was intended to shield its revenues from fluctuations in exchange rate.