BMW pleasantly surprised investors on Thursday by proposing to buy back up to 10% of its shares after it reported 2004 pre-tax profit that met analysts’ forecasts, according to Reuters.

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A strong result at its core automotive division boosted last year’s earnings before tax by 10.9% to a record €3.554 billion ($US4.75 billion), in line with a consensus estimate of €3.544 billion, the report said, adding that pre-tax profit at the auto division rose an even stronger 14.4% to €3.159 billion last year, increasing its margin by 0.2% to 7.4%.


Proposing to hike its dividend for common shares to 0.62 euros from last year’s 0.58 euros, the Munich-based premium carmaker also said it would ask shareholders for permission to buy back and cancel up to 10% of the company’s share capital, Reuters saod.


“The positive development of cash flows over the past years has enabled the BMW Group to accumulate a substantial level of cash funds and to achieve a solid equity ratio,” it reportedly said in a statement, adding that cash flow would continue to grow “dynamically” over the coming years.


Analysts told Reuters they welcomed the share buyback, saying the company was finally willing to surrender some of its cash in the name of shareholder value.

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The news agency noted that BMW has not provided an official earnings guidance for 2005, but, in January, chief executive Helmut Panke told investors not to expect profit growth to match the 6-9% increase in group vehicle sales he expects this year. He reportedly cited added hedging costs and higher raw material prices.