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Navigation Primary Navigation Home Singapore Asia Pacific World Business Entertainment Sports Technology Secondary Navigation Top Stories Full Coverage Most Popular Photos Search Search: Slammed by financial crisis, BMW drops full-year outlook AFP - Wednesday, November 5 FRANKFUR (AFP) - - Reeling from a head-on collision with the global financial crisis, German luxury car maker BMW said Tuesday it could no longer give an earnings forecast for this year. "No serious prognosis is currently available for the rest of 2008," chairman Norbert Reithofer told a telephone news conference just two months before the end of the year. In late October, rival Daimler acknowledged it too had been hit by the crisis as it lowered its own outlook. Reithofer said on Tuesday: "We are far from overcoming the financial crisis, in particular with respect to its consequences on the real economy in 2009." Shares in the company initially posted sharp losses but later soared higher after Reithofer told a news conference: "We will, however, achieve a result that is clearly positive" this year, following net profit of 3.13 billion euros (4.0 billion dollars) in 2007. The Munich-based group said it would take additional charges of 1.3 billion euros in the third quarter and that it would cut output by another 40,000 units this year, on top of 25,000 announced earlier. The total represents a drop of around four percent from the number of cars produced in 2007. Third-quarter sales fell by 8.6 percent to 12.6 billion euros, while net profit plunged by 63 percent to 298 million euros, the company said. BMW pointed to several negative factors, including consumer reticence in key markets, weak used car sales that hurt its leasing operations, and increased financing costs. Major markets collapsed in October, with the German auto federation VDA reporting an eight percent domestic slump in sales and 10 percent in auto production and exports. BMW's three-month unit sales slipped by 4.0 percent to around 350,000 vehicles. Reithofer told media however that for the full-year, "two of our three high-end brands -- Mini and Rolls-Royce - will advance." Sales were nonetheless way down in the United States, BMW's largest market, the group's statement said. BMW cars produced there will now be shipped to more promising destinations, the company said. Its financial services unit, which handles extensive US leasing operations, posted an operating loss of 26 million euros, compared with a profit of 176 million a year earlier. In addition, the situation "worsened in Europe, particularly in Great Britain," BMW board member Freidrich Eichiner said. BMW's nine-month net profit shed 39.7 percent to 1.292 billion euros. The group said that positive effects of the economic slowdown, including lower raw material prices and a stronger dollar, were not enough to offset high costs. "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. BMW has undertaken a deep restructuring of its personnel and aims to eliminate 8,100 posts by the end of the year. If necessary, more temporary posts would also be eliminated, Reithofer said, adding that some projects would be be cancelled as well. In late trades on the Frankfurt stock exchange, BMW shares showed a gain of 9.77 percent at 22.59 euros, despite negative comment from brokers, while the DAX index was up by 3.15 percent overall. BMW's third quarter figures were even worse than they appeared at first glance, Dow Jones Newswires quoted M.M. Warburg analyst Marc-Rene Tonn as saying. "This reaction shows how much negative news was already priced in," a trader noted. He added that many speculators had sold BMW stock in anticipation of a steep plunge and that a positive share price movement had then triggered quick and dramatic covering purchases. Email Story IM Story Printable View Blog This Recommend this article Average (0 votes) Sign in to recommend this article » Most Recommended Stories » Enlarge Photo BMW logo on a BMW vintage car in Munich. Reeling from a head-on collision with the global financial crisis, German luxury car maker BMW said Tuesday it could no longer give an earnings forecast for this year. Most Popular – Top Stories Viewed Americans flock to vote in historic elections Foods to prevent disease? DNA tests confirm death of millionaire flyer Steve Fossett Obama's grandmother, family 'rock', dies on election eve Australia anxious as Indonesia prepares to execute Bali bombers View Complete List » Search: Home Singapore Asia Pacific World Business Entertainment Sports Technology

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