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BMW third-quarter profits up 7.7 percent

Nov. 3, 2004

FRANKFURT - German premium carmaker BMW reported a 7.6 percent rise in third-quarter pretax profit, missing analyst expectations, but reaffirmed its forecast for record 2004 revenues and earnings.

Quarterly earnings before taxes increased to 779 million euros ($989.6 million) from 724 million in the previous year, the company said on Wednesday, short of an average estimate of 819 million forecast by 25 analysts polled by Reuters.

Buoyed by the launch of several new models this year such as the 1-Series hatchback, the company stuck to its guidance for record car sales, revenues and earnings for 2004.

“Bolstered by the strong third quarter performance, the BMW Group anticipates that the development achieved during the first nine months of 2004 will be sustained in the fourth quarter,” Chief Executive Helmut Panke said in a statement.

Third-quarter revenues rose 6.3 percent to 10.6 billion euros and net profit gained 7.6 percent to 479 million.

Earnings at its core automotive division leapt 21.8 percent to 694 million euros on a 13.8 percent rise in revenues to 10.3 billion.

Capitalising on a string of problems at Mercedes Car Group, BMW is pulling quickly away from its arch rival to become the largest and most profitable premium carmaker in the world.

BMW sold 887,293 cars over the first nine months of 2004, up 8.8 percent, and surpassing DaimlerChrysler’s luxury unit.

Mercedes reported a 62 percent decline in operating profit last week and warned that full-year results would be “substantially” lower as management struggles to get a grip on quality problems and a significant deterioration in the performance of its Smart brand.

Analysts expect growth at BMW to continue into 2005, thanks in large part to the relaunch of its best-selling model, the 3-Series, starting on March 5.

Despite BMW’s remarkable run of success, the stock has failed to outperform its peers due to concerns that negative currency effects could wipe out hundreds of millions of euros in profits.

The share has fallen 8 percent in the year to date, while the DJ Stoxx European Autos Index has only slid by 0.3 percent.



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