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BMW Raises Profit Forecast After Strong Quarter

03 November 2010 15:30 (UTC +04:00)

Baku â€“ APA-Economics. Bayerische Motoren Werke, maker of BMW as well as Mini and Rolls-Royce cars, raised its profit forecast for 2010 Wednesday after reporting a strong profit for the third quarter thanks to soaring sales in China and a rebound in the United States, New York Times reported.

BMW, based in Munich, said that net profit in the third quarter was â‚¬874 million, or $1.2 billion, compared to â‚¬78 million a year earlier, when the global automobile industry was in crisis. Revenue in the quarter rose 36 percent, to â‚¬15.9 billion, as sales in the United States rose 9 percent to 70,657 vehicles. In China, BMW unit sales rose 91 percent.

BMW executives cautioned that the outlook for the global economy and capital markets is still uncertain, but said that the recovery in auto sales appears to be sustainable. â€œWe donâ€™t see any change in the way markets are developing,â€ Friedrich Eichiner, the chief financial officer, said during a conference call with reporters. Profit also benefited from lower costs for production materials, he said.

The company said it would earn a 7 percent return on operating profit from car sales for the full year, compared to a previous forecast of 5 percent. BMW shares fell in early trading but by mid-afternoon were little changed from the day before.

The BMW results come days after German rivals Daimler and Volkswagen also reported strong earnings, underlining a broad recovery in the auto industry. The emergence of China as a significant and fast-growing market for German cars has helped compensate for weakness in Europe and the United States and kept alive demand for the countryâ€™s most important export.

BMW is profiting from strong sales for its redesigned 5 Series model, launched earlier this year, as well as the top-of-the-line 7 Series. Sales declined in the quarter for smaller cars including the 1 Series and Mini brand, which are older model lines.

The BMW chief executive Norbert Reithofer said that the company will continue to invest in making smaller cars that buyers are willing to pay extra for.

Mr. Reithofer said that, although U.S. sales are recovering from a severe recession, it will still be several years before the market for premium cars reaches pre-crisis levels. BMW could outperform competitors because of new models, he said, including a new edition of the X3 S.U.V. due out by the end of the year.