BMW posts hefty quarterly loss
BMW, the German luxury car maker, said on Tuesday that it could no longer give a forecast for 2008, after it was hit head-on by the international financial crisis.
The Munich-based group said it would have to take additional charges of €1.3 billion ($1.64 billion) in the third quarter, and that it would cut production by an additional 40,000 units this year.
Third quarter sales fell by 8.6 percent to €12.6 billion, while net profit plunged by 63 percent to €298 million. BMW pointed to several factors that had slammed its results, including consumer reticence in its main markets, the weak state of used car markets
that affected leasing operations, and increasing financing costs.
"Taking all of these factors into consideration, the BMW group estimates that it will no longer surpass the previous year's record sales volume figure in its automobile business," a statement said.
Owing to the poor market climate and "uncertainties caused by the financial crisis, the profitability targets set for 2008 are no longer achievable," it added. "The likely progress of business over the coming months cannot be forecast with any exactitude. For this reason, it is not possible to predict the level of group earnings for the year, other that they will continue to remain clearly positive."
The group sold 349,098 of its BMW, MINI and Rolls-Royce cars between July and September, a fall of 4.2 percent. It also sold 24,818 motorcycles, an increase of 5.4 percent, though "market conditions for the motorcycle business were also difficult."
In the nine months since January, BMW said it had sold 1,113,972 automobiles, a slight increase of 1.7 percent. In the United States, BMW's largest market, "private consumption and consumer confidence have dipped perceptibly," the statement said.
On Monday, rival Porsche said its North American sales had plunged by 39 percent in October from the same month a year earlier. BMW's nine-month net profit fell by 39.7 percent to €1.292 billion. The group said that positive effects of the economic slowdown, including easing pressure on raw material prices and a stronger dollar "are nowhere near sufficient to off-set the extremely high level of expenses" it had to bear.
"It cannot be ruled out that the risk provision for bad debts and lease financing will have to be increased again before the end of 2008," it warned.
In early trading on the Frankfurt stock exchange, BMW shares had shed 5.27 percent to €19.49, while the DAX index was off by 0.18 percent overall.