Tuesday April 29, 01:05 PM
BMW earnings hit by financial crisis
By Lenaig Bredoux
FRANKFURT (AFP) - BMW (Xetra: 519000 - news) said Tuesday that the global financial crisis had hurt its first quarter results but the German luxury car group maintained its forecast for record sales this year.
Net profit fell 17 percent from a year earlier to 487 million euros (713 million dollars) while pre-tax earnings dropped 25 percent to 641 million euros, the company said in a statement.
BMW sales nonetheless rose 11 percent to 13.3 billion euros and the group confirmed its full-year outlook for a higher pre-tax profit, once a one-off gain booked last year was stripped out.
Last week, the company had warned that the international financial crisis would trim 236 million euros from its first-quarter earnings.
"Without that, our results would have improved," chief executive Norbert Reithofer told a news conference on Tuesday.
The German group's leasing activities in the United States, its main market, suffered from credit defaults, late payments and problems in selling second-hand cars turned in by customers.
"The United States is our biggest market," Reithofer said. "We have profited there in previous years but the financial crisis carries with it risks for our activities."
In recent weeks, "the international financial crisis worsened and the climate for consumer spending became gloomier," he added. "That could not be forseen."
The group's financial services division reported that its first quarter earnings slumped 58 percent to 79 million euros while pretax profit fell 54 percent to 84 million euros.
BMW said used car prices -- and hence the level of revenues that could be generated on vehicles at the end of lease contracts -- had fallen.
But it reiterated an outlook for record 2008 new car sales at its three major auto brands -- BMW, Mini and Rolls-Royce.
The German auto manufacturer also said it expected stronger sales in emerging markets such as China while planning measures to trim costs and improve productivity. It (Frankfurt: A0MLX5 - news) did not provide further details.
Reithofer said there were no plans to eliminate more jobs on top of the 8,100 already announced.
Shares in the company gained 1.48 percent to 35.69 euros in midday trade on the Frankfurt stock exchange where the Dax index (Xetra: news) was down 0.59 percent overall.
Although the results came in below market forecasts, these estimates had been issued before BMW warned it would book the first quarter charge.
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