Tuesday, November 04, 2008BMW's 3Q net profit drops 63%
Posted by: Anthony Lim
BMW AG said today that its net profit for the third quarter dropped 63% as the global economic turmoil made consumers more reluctant to shell out for its sports and luxury cars and credit costs made it difficult for consumers and the company to borrow.

The Munich-based company said net profit for the July-Sept period fell to 298mil euros (US$375.5mil) from 803mil euros a year ago.

"The knock-on effects of the international financial crisis and a downturn in the global economy had a significant negative impact on the performance of the automobile industry," BMW said in a statement.

"Ongoing consumer reticence on the main sales markets, the weak state of the preowned car markets together with difficult refinancing conditions also took their toll on the BMW group, resulting in a perceptible drop in revenues and earnings."

Sales for the quarter fell 9% to 12.6bil euros (US$16bil) from 14bil euros in the same quarter a year ago.

The company said it couldn't give a concrete outlook.

"Due to the worsening of the financial crisis, it is currently impossible to make stable forecasts for the rest of the year and beyond," BMW said in a statement.

The company said overall car production fell 10% to 335,000 cars for the quarter from 372,000 in the year-ago quarter, and deliveries of its flagship BMW branded cars saw a 5.3% decline in deliveries, to 290,661 cars from 306,964 a year earlier.

The motorcycles division, however, saw a 15% increase in production to 23,284 motorcycles, while ultra-luxury brand Rolls Royce also increased deliveries, by 17% to 332 cars delivered from 285 in the year-ago period. Good news too for the MINI brand, which reported a 1.4% gain in deliveries for the quarter to 58,105 from 57,315 a year ago.

In terms of regions, BMW said European sales developed unevenly. It said it saw "positive impetus" in some countries including Germany, France, Belgium and Luxembourg, but nine month European sales fell 5% overall.

In North America, the company sold 6% less cars than in the year ago quarter, "dominated by the ongoing financial crisis," and an increase in fuel prices, BMW said.

Meanwhile, the company saw "sharp growth" in central and Eastern Europe as well as in Latin America and Asia.

Total Asian sales were up 9.4% in the first nine months, with China, Hong Kong and Taiwan sales up 26% compared with the Jan-Sept period a year ago. But sales in Japan fell by 16% for the period. - AP