BMW's 2Q profit slides 76 percent

[August 04, 2009]  BERLIN (AP) -- Luxury automaker BMW AG said Tuesday that its second-quarter profit skidded 76 percent lower as consumers put off buying its pricey vehicles. It said a "lasting" economic recovery was not yet in sight.

The Munich-based company earned euro121 million ($173 million) in the April-June period, compared with euro507 million a year earlier.

Sales fell 11 percent, dropping to euro12.9 billion from euro14.5 billion.

Chief Executive Norbert Reithofer said that despite "some tentative positive signals, a lasting and wide-ranging recovery is not yet in sight."

The company opted not to provide a forecast for the rest of the year, citing "the highly volatile state of the markets and uncertainty with regard to future developments." BMW said it does not expect sales to reach 2008's total of euro53 billion.

That helped push BMW shares down 1.7 percent to euro32.36 in Frankfurt trading.

BMW, whose brands also include Mini and Rolls-Royce, said its car deliveries fell 18 percent in the second quarter to 338,190 vehicles, compared with 413,087 a year earlier.

Deliveries fell 18.6 percent for the BMW brand, 15.7 percent for Mini, and 50.3 percent for the Rolls-Royce brand. The motorcycles division saw a 14.7 percent reduction in deliveries.

Despite the fall in deliveries, the company said it did increase its liquidity.

"We managed to generate a positive free cash flow of euro516 million for the first half of the year," Reithofer said. By the end of June, the automaker's liquidity stood at euro11.9 billion.

Max Warburton, senior auto analyst at Bernstein, said the automaker's balance sheet and cash generation has made it the "standout operator in the sector on the way into this recession" but now "leaves it with much less room for improvement."

"We do not wish to take anything away from BMW but the volatility of other auto company's balance sheets arguably provides a more interesting investment opportunity than BMW's stability," he wrote in a research note.

BMW has been reining in expenses and cutting costs, last week announcing that it would withdraw from Formula One at the end of the current season.

Georg Stuerzer, an automotive analyst with UniCredit in Munich who follows BMW, has estimated the company was spending approximately euro200 million a year on its Formula One involvement.

BMW also has trimmed its work force. It said that it had 98,261 employees worldwide at the end of June, down 7.3 percent from a year earlier.

In the first six months, the company lost euro31 million, compared with last year's profit of euro994 million. Sales fell 12 percent to nearly euro24.5 billion from euro27.8 billion.

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On the Net:

http://www.bmwgroup.com/

[Associated Press; By MATT MOORE]

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