BMW has reported 2008 financial results substantially dented by the economic crisis that intensified in the final quarter.

BMW said net profit came in at EUR330m, 89.5% down on 2007’s EUR3,134m figure. Group revenues fell to EUR53,197m, 5% down on 2007.

“The BMW Group has been able to make improvements at an operating level in the midst of extremely difficult economic times,” said Reithofer Norbert, Chairman of the Board of Management of BMW AG, on Thursday in Munich.

“Cost structures have been further optimised and, thanks to rigorous management of free cash flow, the BMW Group is in a very solid financial position,” he added.

BMW said that the additional risk provision expense for residual value risks – caused by the weak used car markets – and for bad debts (EUR1,968m in total) plus one-time personnel expenses of EUR455m, meant that earnings were reduced by exceptional expenses amounting to EUR2,423m.

The fourth quarter alone accounted for EUR1,128m in exceptional expenses and fourth-quarter revenues fell by 18.2% to EUR12,772m.

BMW said it had made good progress in 2008 at an operating level, which is reflected in reduced fixed costs and substantial cost savings in the area of purchasing. “We have set ourselves the task, by 2012, of surpassing the EUR4bn of material cost reductions targeted in conjunction with the strategy ‘number one’,” said Reithofer.

The company also said its liquidity was further strengthened in 2008, despite the turmoil on the capital markets. Holdings of cash funds and marketable securities increased by 86.3% to EUR8,107m.

“We prepared ourselves early on and swiftly for severe business conditions, for example by taking immediate steps to bring production volumes into line with lower demand, and thus enabling us to further optimise working capital. This is also reflected in reduced inventory levels,” said Reithofer.