BMW posts dismal earnings, cautious on outlook

FRANKFURT: German luxury car maker BMW on Tuesday joined compatriot Daimler in posting dismal third quarter figures and warned there was no guarantee a recovery is underway, though strong growth was seen in China.

BMW said net profit plunged by 73.8 per cent from the third quarter of 2008 to 78 million euros (115 million dollars).

In the first nine months of the year, net profit lost a massive 96.4 per cent from the same period a year earlier to 47 million euros, the group said.

Analysts polled by Dow Jones Newswires had forecast third quarter profit of 94 million euros, and the results underscored the global downturn's effect on manufacturers of high-end automobiles.

Small car makers have done better owing to government car scrapping schemes and other fiscal incentives, and BMW's poor figures stood in contrast to those from groups such as Fiat and Ford.

Daimler on the other hand, which makes Mercedes-Benz autos, was also hit by a slump in the luxury car market, and reported last week a 74 per cent drop in third quarter net profit to 56 million euros.

Despite signs of improvement, particularly in China which is now the group's largest Asian market, "the BMW Group only expects the situation to stabilise at a low level during the last quarter of 2009," it said in a statement.

BMW forecast that full-year unit sales would be between 10-15 per cent lower than in 2008.

"For the time being at least, it cannot be assumed that an enduring recovery has taken hold," the statement said.

Core earnings before interest and tax (EBIT) were also sharply lower, shedding 85.8 per cent to 55 million euros in the three-month period, while sales edged down to 11.76 billion euros from 12.6 billion.

BMW nonetheless said that it aimed for a full year profit, following "some early signs of recovery, particularly in August and September."

Unit sales of BMW, MINI and Rolls-Royce brand autos were 7.2 per cent lower at 324,100 in the third quarter, and 15.7 per cent lower at 939,554 for the first nine months of the year.

The auto sector has begun to hear better news elsewhere however, with Ford posting surprise quarterly earnings of nearly a billion dollars and saying it was on track to become "solidly profitable" by 2011 after years of losses.

Fiat said last month that it had made a slight profit of 25 million euros in the third quarter following two consecutive quarterly losses, and that it expected market conditions to improve by the end of the year.