BMW Reports Smaller-Than-Expected Profit Decline (Update1)
March 11, 2010, 7:28 AM EST(Adds analyst quote in fourth paragraph, Daimler shares.)
By Chris Reiter
March 11 (Bloomberg) -- Bayerische Motoren Werke AG, the largest manufacturer of luxury cars, reported a smaller-than- expected decline in full-year profit and maintained its dividend to signal a recovery in the high-end market.
Net income fell 36 percent to 210 million euros ($287 million), or 31 cents a share, from 330 million euros, or 49 cents, a year earlier, the Munich-based company said today in a statement. BMW kept its dividend unchanged at 30 cents a share, surpassing analysts’ estimate of a 25 cent payout.
The maker of BMW, Mini and Rolls-Royce vehicles eliminated 3,800 jobs, or about 3.8 percent of its workforce, amid the worst auto-industry crisis in decades. The company expects to “grow profitably” this year, boosted new models such as the 5- Series sedan and Mini Countryman crossover.
“BMW has done well to remain profitable in a difficult environment,” said Mike Tyndall, an automotive specialist at Nomura Securities in London. “The dividend payout suggests optimism in the future.”
BMW rose as much as 99 cents, or 3.1 percent, to 33.26 euros and traded at 32.55 euros as of 1:01 p.m. in Frankfurt, valuing the carmaker at 20.9 billion euros. Daimler AG, the maker of Mercedes-Benz cars, added 0.4 percent.
Dividend Cuts
Global auto markets are likely to grow 2 percent to 53.3 million vehicles in 2010, as a rebound in North America offsets a drop in western Europe, according to researcher IHS Global Insight. BMW reported a drop in sales in its two largest markets last year, with deliveries tumbling by 9.4 percent in Germany to 258,000 cars and sport-utility vehicles and by 20 percent in the U.S. to 241,700 vehicles.
BMW’s German competitors have either canceled or lowered their dividend payments. Daimler scrapped its payout after posting a 2009 net loss of 2.64 billion euros. Volkswagen AG, Europe’s largest carmaker, cut its dividend by 17 percent to 1.66 euros per preferred share after profit fell 80 percent.
Revenue declined 4.7 percent to 50.7 billion euros last year, BMW said. The company had been expected to report net income of 167 million euros, according to the average estimate by 12 analysts compiled by Bloomberg. Sales had been projected at 49 billion euros.
“Our cost management and efficiency improvement measures has a positive impact, even though the effects of the worldwide financial and economic crisis were still being felt,” Chief Executive Officer Norbert Reithofer said in the statement.
5-Series Changeover
The automotive division, despite posting a 93 million-euro profit before interest and taxes for the fourth quarter, had a full-year loss of 265 million euros after a profit of 690 million euros in 2008. The manufacturer’s auto deliveries fell 10 percent. Motorcycle sales fell 14 percent.
BMW’s Ebit fell 69 percent to 289 million euros, missing analysts’ estimate of 438 million euros.
“The underlying operating business is weaker than expected,” said Tyndall. “People will forgive them, because of the changeover in the 5-Series, but nobody likes a miss.”
BMW said it’s “cautiously optimistic” for 2010 and intends to defend its position as the market leader. The company is targeting sales of at least 1.3 million cars and sports utility vehicles, a “single-digit” percentage rise from last year’s 1.29 million cars.
--Editors: Kenneth Wong, David Risser
To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net.
