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

German automaker BMW AG said Thursday its revenue and net profit hit all-time highs in 2021, despite increased spending on research and development related to electric vehicles.

In a preview of results that it will present at its annual meeting next week, BMW said its full-year net profit jumped to 12.46 billion euros, or roughly $13.7 billion, from just 3.86 billion euros in 2020. Revenue jumped 12.4% year over year to 111.24 billion euros, or about $122.4 billion.

Both profit and revenue notched records for the company.

The increase in BMW ‘s annual revenue was driven the old-fashioned way: by increased sales of cars, SUVs and motorcycles. The automaker’s vehicle deliveries, including cars and SUVs, rose 8.4% from its coronavirus-challenged 2020 result, to just over 2.5 million vehicles. That came despite production disruptions related to an ongoing global shortage of semiconductor chips.

About 13% of those 2021 deliveries were “electrified” vehicles, meaning plug-in hybrids or fully electric models. Sales of BMW Group’s electrified vehicles were just over 328,000 in 2021, up 70% from the company’s 2020 result, but still well short of EV leader Tesla’s 936,000 2021 total.

BMW is aiming to have fully electric vehicles account for at least half of its global deliveries by 2030.

The EV push is coming at a cost. BMW’s research and development spending, much of which was focused on new EV architectures and components, rose 10.7% to 6.3 billion euros. But it remained roughly consistent with 2020 when expressed as a percentage of revenue, about 6.2%.

BMW’s profitability also surged as the company prioritized production of its most profitable vehicle lines amid the chip shortage, a good sign for investors hoping that the company will be able to comfortably finance its transition to zero-emissions vehicles. The operating profit margin in BMW’s automotive segment, a widely watched figure among auto analysts, rose to a healthy 10.3% in 2021 from just 2.7% in 2020 and 4.9% in 2019, before the Covid-19 pandemic roiled global industries.

Sales of BMW motorcycles rose 14.8% in 2021, to just over 194,000. The motorcycle unit’s operating profit margin rose to 8.3% from 4.5% in 2020.

“Our business figures are proof that we were able to combine the underlying transformation and the major investment it entails with strong operational success in a very volatile environment in 2021,” said Nicolas Peter, who holds a title equivalent to a U.S. company’s chief financial officer at BMW. “We are in a good position and optimistic about the future.”

BMW plans to share some of that hefty profit with its shareholders. The company said that it will propose an annual dividend of 5.80 euros per share, up from 1.90 euros in 2020, as well as a new share repurchase program, at next week’s annual meeting.

Separately, BMW announced on Thursday that it has agreed to purchase Alpina, the brand of a longtime builder of higher-performance versions of BMW cars, some of which have been offered from time to time via BMW’s own dealership network. The Alpina brand will eventually become an in-house trim line for BMW, similar to the AMG brand at rival Mercedes-Benz.

BMW will report its complete fourth-quarter and full-year results at its annual conference for shareholders, set to begin on March 16.