BMW reports 1Q net loss of euro152 million

[May 06, 2009]  FRANKFURT (AP) -- German carmaker BMW AG reported Wednesday a small net loss for the first quarter as the global recession cut deeper into car sales, and said the future of the market remained uncertain for the rest of the year.

The news was not as bad as expected, however, sending the shares up 6 percent at euro29.19 in Frankfurt on Wednesday afternoon.

The Munich-based company said it lost euro152 million ($202 million) in the January-March period compared with a net profit of euro487 million in the first quarter of 2008. That was its second straight loss, but a much smaller one than in the previous quarter.

Sales for the period fell 13 percent to euro11.5 billion from euro13.3 billion.

"In view of the fact that it is almost impossible to predict how the global economy will fare in the near future, it is still currently not feasible to give reliable earnings forecasts for the full year," BMW said in its report.

"It is likely that the BMW group's worldwide sales volume will be lower than in the previous year," the company said, adding that it aims to maintain or increase its markets share.

Max Warburton at Bernstein Research in London said BMW had demonstrated excellent management of working capital and predicted the company would probably report a modest operating profit for the year.

However, he said the share probably doesn't have much higher to go from the current levels.

"While BMW has the strongest balance sheet and best ability to preserve capital in the sector, it simply doesn't have the margin and earnings upside to go much higher in our view," Warburton wrote in a research note.

BMW, whose brands also include Mini and Rolls Royce, said its car deliveries fell 21 percent in the first three months of the year, to 227,264 vehicles compared with 351,787 during the same period of 2008.

Deliveries fell 21 percent for the BMW brand, 25 percent for Mini, and 5 percent for the Rolls Royce brand. The motorcycles division saw an 18 percent reduction in deliveries.

The company said overall automobile production had been reduced by 34 percent, while motorcycle production was up 1.8 percent for the quarter.

BMW said it hoped that a new version of the BMW 7 series limousine and a convertible Mini will add to the company's top line. It plans to release the new models between 2010 and 2012.

"We intend to maintain or further increase our market share in the premium segment in the current year," Norbert Reithofer, the company's chief executive said in the report.

BMW said that despite the difficult environment, it had increased its market share in the worldwide premium auto segment to nearly 21 percent, even in the U.S., the company's largest market.

The company said it is continuing with cost-cutting measures and that it had improved cost structures and reduced inventories during the quarter, scaling back working capital in the auto segment by more than euro1 billion.

BMW, which employs about 99,100 worldwide, said about 930 employees had left the company during the first three months, many of them voluntarily, and that vacant posts were not being filled. The company made no mention of job cuts or layoffs on Wednesday.

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[Associated Press; By GEORGE FREY]

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