GERMANY: Tougher market conditions affect BMW earnings
The BMW group has reported a reduced pre-tax profit of EUR2,375m for the first nine months of 2005, 12.5% off the EUR2,714 m earned in the same period of 2004. Third quarter pre-tax earnings were also off - by 16.9% - at EUR647m.
In a statement BMW said, as it had already forecast for the full year, that Q3 2005 earnings were affected by currency factors, higher raw material prices and more intense competition.
"Despite the dynamic growth of sales volumes and extensive measures to improve efficiency, the impact of these external factors could not be fully offset," the Munich-based car maker added.
Q3 2005 net profit was down 6.5% to EUR448m, and off 2.6% to EUR1,630m for the first nine months.
Q3 earnings per share were EUR0.67 (Q3 2004: EUR0.71). For the nine-month period, EPS were EUR2.42 compared with EUR2.48 a year ago.
BMW said that, "despite persistently difficult market conditions", 341,932 BMW, Mini and Rolls-Royce branded cars were delivered to customers in the third quarter of 2005, 15.4% more than in the previous year.
Nine-month sales rose 11.4% to 988,463 cars.
Group revenues for Q3 2005 increased 10.5% to EUR11,721m while nine-month revenue climbed 2.7% 2.7% to EUR34,237m.
Third quarter profit was also adversely affected by EUR175m due to a 'fair value loss' recorded on the exchangeable bond option relating to the group's investment in Rolls-Royce plc.
Nonetheless, BMW chairman Helmut Panke was upbeat.
"The group continues to grow dynamically in line with our long-term strategy. Despite persistently difficult conditions, we will continue to perform successfully," he said in the statement.
"For the full year 2005, we continue to forecast a sales volume growth in the high single digit range. On the earnings side, currency factors, high raw material prices and intense competition are all having an adverse impact. Against this background, the [group's] unchanged aim for 2005 is to achieve approximately the high earnings level of 2004".
Automobile division revenues increased 13.5% in Q3 to EUR11,707m, while nine-month revenue of EUR33,572m was up 6.3%.
Autombile pre-tax was, however, off 7.9% in the third quarter at EUR639m and fell 10.7% to EUR2,149m in the nine-month period.
290,454 BMW brand cars were delivered in Q3, 16.9% more than in the previous year, while 828,586 units (+11.4%) were sold in the nine-month period.
Mini sales increased again - by 7.5% - to 51,299 in Q3; 159,413 (+11.6%) found homes during the first nine months.
For a model line in its fifth year, this is a fine result though the range has recently been refreshed with styling tweaks and equipment upgrades and a full line of convertible models has been launched in the last year or so.
Rolls-Royce increased sales to 179 Phantoms (+7.8%) in the third quarter of 2005 but year to date sales of 464 were off 4.3% compared with a year ago.
The Financial Services segment Q3 pre-tax profit was up 18.4% to EUR167m and rose 16.9% to EUR478m for the nine-month period.