Investing.com -- BMW (ETR:BMWG) shares edged lower in European trading on Wednesday after the quarterly profit margin at the German carmaker's key automotive unit slightly missed forecasts.
The firm has been focusing heavily on building up its electric vehicle offerings to address fierce competition from EV players like Tesla (NASDAQ:TSLA) and China's BYD (SZ:002594), a push that has lifted research and developments costs. Higher manufacturing expenses, which have weighed on BMW's results since the second quarter of last year, bled into the first three months of 2024 as well.
An easing of pandemic-era supply chain constraints has also hit demand for used cars, denting prices of vehicles being resold at the end of leases.
In the lucrative Chinese market, demand for premium cars "declined slightly," BMW said, offsetting "dynamic" volumes for its cheaper models in the country.
Automotive division earnings before interest and taxes (EBIT) margin in the first quarter slipped to 8.8% from 12.1% in the year-ago period -- a timeframe that BMW said did not yet fully reflect inflationary pressures. While BMW noted that this figure was within its full-year target range of 8% to 10%, analysts flagged that it was also below consensus estimates of 9.2%.
Group-wide, revenues fell marginally by 0.6% to 36.61 billion euros, missing expectations despite an uptick in sales volumes.
But BMW still confirmed its guidance for the 2024 fiscal year. Total annual pre-tax profits are seen decreasing slightly due to elevated input costs, but deliveries are projected to grow worldwide thanks to solid demand for its high-end luxury models.
"The tone is confident about a relatively stable trend in the coming quarters," analysts at UBS said in a note to clients.