BMW Q3 net income falls 74 per cent

Nov 03, 2009

AP Business Writer

FRANKFURT – German carmaker BMW AG said Tuesday its net income fell 74 per cent in the third quarter as the economic downturn hurt demand and said it cannot yet assume that a lasting market recovery as taken hold.

BMW, the world's biggest luxury car company by sales, said net income for the period amounted to euro78 million ($115 million), down from euro298 million in the July-September period of 2008.

The Munich-based company said it delivered 7.2 percent fewer cars during the July-September period and that its revenue fell 6.6 percent to euro11.8 billion from euro12.6 billion a year earlier.

Net income was below analysts' prediction of about euro150 million, while revenue was largely in line.

BMW's shares slid 6.3 percent to euro31.45 in Frankfurt after the earnings announcement.

"Although there are some emerging signs that the lowest point of the current economic downturn has been passed, the BMW group only expects the situation to stabilize at a low level during the last quarter of 2009," BMW said in its report.

"For the time being at least, it cannot be assumed that an enduring recovery has taken hold. Nevertheless the BMW group has performed well despite the difficult business environment," the company said.

BMW said that total car sales would likely be between 10-15 percent lower than in 2008 provided there are no further economic setbacks. The company's brands include its namesake BMW cars, the Mini compact and the super-luxury Rolls-Royce brands. The company also builds BMW motorcycles.

Despite the likely sales decline for the year, BMW said it expected to report a positive result for 2009 and to maintain its leading position in the premium segment.

Calyon Credit Agricole analyst Christophe Boulanger noted that while BMW and the autos industry face a number of risks, management is cautiously optimistic about its outlook for 2010. He added that the new X1 SUV and BMW 5 Series Gran Turismo, which is a hatchback limousine, should help in supporting a rebound in BMW brand sales volumes next year.

Automobile group production for the first nine months of the year was 21 percent lower at 907,429.

Motorcycle production was also 21 percent lower during the first nine months of 2009 at 65,909.

The company said it had also reduced its work force by 5.3 percent during the year to Sept. 30 to 98,358 employees.

Meantime, car sales generally in Germany were up more than 20 per cent on the year in October, boosted by the lingering effects of an auto-scrapping bonus program, and the sector's exports also began to rise, industry groups said Tuesday.

Some 321,000 cars were registered in Germany last month, a 24 per cent rise over October 2008, the VDA and VDIK groups said. While that figure was below the annual rises of around 40 percent seen earlier in the year, it was still strong.

German manufacturers exported 357,700 cars in October, an 8 per cent year-on-year rise, VDA said. That was the first rise since the beginning of the economic crisis, it added.

"A turnaround can increasingly be seen in important export markets," VDA president Matthias Wissmann said.

thestar.com