BMW is sticking to the long-term targets set out in its so-called Number One strategy despite the current challenging economic times, the automaker said as it announced a fall in 2008’s net profit of almost 90% on Wednesday.

“2009 will be a transitional year for which we cannot yet make any reliable forecasts. Nevertheless, our long-term profitability targets for 2012 remain intact. We want to preserve the independence of the BMW group,” chairman Norbert Reithofer told the annual accounts press conference in Munich.

BMW currently assumes auto sales volumes will fall 10 to 20% this year but Reithofer expects the economy to pick up in 2010.

“At that point we will also gain additional momentum from our renewed product range. The ramp-up of our highest-volume models between 2010 and 2012 will reinforce this trend,” he said.

The company previously forecast a return on capital of 26% and a return on sales of 8 to 10% based on EBIT in its automobiles segment for 2012.

The automaker said its performance “held up well under difficult market conditions during the 2008 financial year” as it made operating efficiency improvements offset by adverse currency effects.

Additional exceptional provisions for lower residual values caused by weak used car markets, liabilities totalling EUR1,968m and one-time workforce reduction expenses of  EUR455m reduced earnings by EUR2,423m.

EBIT fell 78.1% to to EUR921m in 2008. Net profit was off 89.5% at EUR330m on group revenues down 5% to EUR53,197m.

Exceptional expenses booked in the fourth quarter totalled EUR1,128m. Negative fourth-quarter EBIT was  EUR718m (vs EUR1,308m in Q4 ’07) on revenues off 18.2% to EUR12,772m.

BMW said it made good progress in 2008 at an operating level, reducing fixed costs and making “substantial” purchasing cost savings.

“We have set ourselves the task, by 2012, of surpassing the EUR4bn of material cost reductions targeted in conjunction with the strategy Number One”, Reithofer said.

Finance head Friedrich Eichiner said in his presentation: “We have been regularly holding talks on pooling purchasing volumes with Daimler. Both parties have identified a double-digit number of suitable components. None of these components help differentiate between the brands or are relevant from a customer perspective. Both companies – as well as our suppliers – will benefit from this in the foreseeable future.”

Automobiles segment profit for 2008 was hit by increased provision for residual value risks and workforce reduction measures totalling EUR1,363m.

EBIT fell 80.0% to EUR690m and profit before tax was off 90.2% to EUR318m on revenues down 9.4% to EUR48,782m.

Group vehicle sales were down 4.3% to 1,435,876 units.