GERMANY: BMW posts smaller than expected Q3 pretax profit

By just-auto.com editorial team | 3 November 2004

BMW reported a smaller-than-expected 7.6% rise in third-quarter pretax profit on Wednesday, but reaffirmed its forecast for record revenue, earnings and car sales in 2004, Reuters reported.

The news agency said investors it polled were not impressed with disappointing figures or the stale guidance that BMW has repeated since March, but the company nevertheless has overtaken archrival Mercedes to become the largest luxury carmaker in the world thanks to a slew of sporty new models like the new 1-series hatchback.

Quarterly earnings before taxes (EBT) rose to €779 million ($US989.6 million) from €724 million in the year-ago period, the company said, short of an average estimate of €819 million in a Reuters survey of 25 analysts.

"Bolstered by the strong third-quarter performance, the BMW Group anticipates that the development achieved during the first nine months of 2004 will be sustained in the fourth quarter," chief executive Helmut Panke reportedly said in a statement.

"The figures look relatively disappointing at first glance," Metzler Bank analyst Juergen Pieper told Reuters.

The primary reason results fell short of expectations was a €92 million swing to a loss of €43 million in BMW's reconciliation to group earnings line.

"The number of leasing contracts lead to a higher amount of profit elimination between the segments Automobiles and Financial Services," finance chief Stefan Krause explained in a conference call with Reuters.

"The deciding factor for me was the development in its core automotive division and here the gap was really small," HVB analyst Georg Stuerzer told the news agency, however, adding a growth in BMW's leasing business would shift profits into the future anyway.

Reuters said earnings at the automotive division leapt 21.8% to 694 million euros before tax on a 13.8% rise in revenues to 10.3 billion, translating to a higher margin of 6.7%. Third-quarter group revenues rose 6.3% to 10.6 billion euros and net profit gained 7.6% to 479 million.

Panke told Reuters during a conference call that BMW group car sales would rise by roughly 10% in October over the previous year, helped by a gain of around 11% in sales of its BMW brand vehicles.

The performance of its core brand is expected to be even better in the United States - BMW's most important single market. Panke reportedly forecast a rise of about 15% last month, compared to gains of only some 3% for the Mini brand.

Aided by the launch of several new models this year that also include the hot X3 compact SUV, BMW sold 887,293 cars over the first nine months of 2004, up 8.8% from a year earlier and surpassing DaimlerChrysler's luxury unit, Reuters added.

Analysts reportedly expect growth at BMW to continue into 2005, thanks in large part to the relaunch of its best-selling model, the 3-series, from March 5.