BMW Group on Thursday said it was on track for a record pre-tax profit of EUR4bn as well as a new record in retail volume for the current year.
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Though third quarter group revenues were down 1.4% to EUR11,557m, pre-tax profit rose 9.4% to EUR720m. The pre-tax return on sales reached 6.2% from 5.6% a year ago.
Due to an increased tax rate, net profit for the quarter declined 0.7% to EUR 452m while earnings per share rose to EUR0.69 from 0.68.
In the first nine months of the year, the BMW group increased profit before taxes by 34.9% to a record EUR3,248m. This includes the first-quarter book gain of EUR 375m from the partial settlement of an exchangeable bond on shares in the British aircraft engine manufacturer Rolls-Royce held by BMW. In the previous year, earnings were adversely affected by fair value losses on the exchangeable bond option.
Excluding the exceptional gain, the company achieved earnings growth of 9.5% to EUR2,888m. Profit after tax rose by 32.5% to EUR2,187m; revenues grew by 6.2% to EUR 36,368m.
Currency effects and high raw material prices continued to affect results, BMW said.
“Among other things, currency burdens could be attributed to more unfavourable hedging rates compared to last year. While the BMW group mainly had to cope with burdens caused by the US dollar throughout the first half of the year, the third quarter was characterised by a negative impact arising from the Japanese yen,” it said in the results statement.
“Despite the fact that external adverse factors are not going to reach last year’s high level again in 2006, the group is continuing to counter these effects with ongoing measures to raise efficiency and productivity. The company expects further positive result contributions from the anticipated retail record as well as from improvements in the model mix. Profit before taxes are thus going to be higher than last year, even excluding the book gain arising from the partial settlement of the exchangeable bond.”
Retail volume of BMW, Mini and Rolls-Royce vehicles increased 3.3% to 1,021,534 units in the first nine months. It was the first time in the company’s history that a nillion vehicles had been sold by the end of the third quarter.
