In what it described as a “significantly deteriorated” market climate, the BMW group on Tuesday said it was no longer possible to forecast full year results for 2008.
“Difficult business conditions and the volatile climate on the market mean that it is as good as impossible from today’s perspective to make a reliable prediction of the earning outcome for the financial year 2008. We will, however, achieve a result that is clearly positive,” chairman Norbert Reithofer said.
“Ongoing consumer reticence on the main sales markets, the weak state of the pre-owned car markets together with difficult refinancing conditions also took their toll on the BMW Group, resulting in a perceptible drop in revenues and earnings [for the third quarter].” a statement said.
Group revenues were down 8.6% to EUR12,588m, EBIT fell 60.2% to EUR387m, pre-tax profit fell 63.5% to EUR279m and profit after tax fell 62.9% to EUR298m.
Nine-month revenues increased marginally to EUR40,425m but pre-tax profit fell 43.3% to EUR1,522m. Group net profit fell 39.7% to EUR1,292m.
BMW has increased its provision for reduced residual values and bad debts to EUR1,037m and booked EUR258m to the end of September for workforce reduction costs.
The automaker has already cut 25,000 units from this year’s production schedule and will now add “at least a further 40,000 units”. It said its flexible working-time accounts would allow it room to “breathe”. It shut Leipzig for four days last week and has closed its Bavarian plants this week.
Product plans are also being eyed. It will not put the Concept CS into production “since this vehicle does not meet the internal requirements for rates of return”.
“The BMW group has continued to achieve improvements in operational terms during the period under report, even if the general positive trend has been increasingly overshadowed by the impact of adverse external factors (risk provision and severance pay) totalling approximately EUR1.3bn,” the automaker said.
Citing reduced costs already being achieved by previously-announced efficiency measures, BMW said it is nonetheless continuing to target a group return on sales of at least 6% for 2010 but this depends on its markets recovering.
Its 2012 target of a return on capital employed over 26% and an EBIT margin of between 8% and 10% for the automobile segment is also unchanged.
BMW, Mini and Rolls-Royce vehicle deliveries in the third quarter fell 4.2% to 349,098 units.
BMW sales fell 5.3% to 290,661 units but Mini was up 1.4% to 58,105 (despite the axing of the convertible versions) and Rolls-Royce was up to 332 from 285 as its new models came on stream.
Nine-month sales edged up 1.7% to 1,113,972 units.