BMW says 2021 profits surged as it favored higher-margin vehicles during a chip shortage

German automaker BMW AG said on Thursday that its revenue and net profit hit record highs in 2021 despite increased R&D spending related to electric vehicles.

IN results preview BMW said its net profit for the year jumped to 12.46 billion euros, or roughly $13.7 billion, from 3.86 billion euros in 2020. Revenue grew by 12.4% year on year to 111.24 billion euros. or about $122.4 billion.

Both profit and revenue were record-breaking for the company.

The increase in BMW’s annual revenue was driven the old-fashioned way: increased sales of cars, SUVs, and motorcycles. The automaker’s vehicle shipments, including cars and SUVs, rose 8.4% from the coronavirus-driven 2020 result to just over 2.5 million vehicles. This happened despite disruptions in production due to the ongoing global shortage of semiconductor chips.

About 13% of those deliveries in 2021 were “electrified” vehicles, i.e. plug-in hybrids or all-electric models. BMW Group’s 2021 electrified vehicle sales were just over 328,000, up 70% from 2020, but still far short of EV leader Tesla’s 936,000 in 2021.

BMW aims to have all-electric vehicles account for at least half of global deliveries by 2030.

The promotion of electric vehicles is not cheap. BMW’s R&D spending, most of which was focused on new EV architectures and components, rose 10.7% to 6.3 billion euros. But it remained roughly at the level of 2020 when expressed as a percentage of revenue, about 6.2%.

BMW’s margins also rose as the company prioritized producing its most profitable vehicle lines amidst a chip shortage, which is a good sign for investors hoping the company can comfortably finance a transition to zero-emission vehicles. Operating profit margins in the BMW automotive segment, a widely monitored metric among automotive analysts, rose to 10.3% in 2021 from just 2.7% in 2020 and 4.9% in 2019, before the Covid-19 pandemic. shocked the world industry.

BMW motorcycle sales are up 14.8% in 2021 to just over 194,000 units. The motorcycle division’s operating margin rose to 8.3% from 4.5% in 2020.

“Our business performance is proof that we have been able to align the underlying transformation and the massive investment it entails with strong operational success in a very volatile environment in 2021,” said Nicholas Peter, who holds the equivalent position of US CFO. companies. at BMW. “We are in a good position and are optimistic about the future.”

BMW plans to share some of this huge profit with its shareholders. The company said it will offer an annual dividend of €5.80 per share, up from €1.90 in 2020, as well as a new share buyback program at next week’s AGM.

Separately BMW announced on Thursday, the company agreed to acquire Alpina, a longtime brand of high-performance versions of BMW vehicles, some of which have been offered from time to time through BMW’s own dealer network. The Alpina brand will eventually become BMW’s own trim line, similar to rival Mercedes-Benz’s AMG brand.

BMW will report its full fourth-quarter and full-year results at its annual shareholder conference, due to begin on March 16.