From Friday's WSJ...no mfg'er is immune to the tough times.
BR,mD
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MARCH 13, 2009 BMW Swings to $1.24 Billion Loss as Luxury-Car Sales Plunge
By CHRISTOPH RAUWALD
FRANKFURT --
BMW AG swung to a rare loss in the fourth quarter and its full-year net profit fell 90%, as sales of luxury cars plunged in the final three months of 2008.
The Munich-based company indicated it sustained a net loss of €962 million ($1.24 billion) for the quarter, compared with net income of €991 million a year earlier. Revenue fell 18% to €15.6 billion as auto sales dropped 30%.
BMW reported its full-year results but gave only fourth-quarter figures for revenue and earnings before interest and taxes. A comparison of the full-year results with those it previously reported for the first nine months revealed the size of its net loss and the deep decline in its auto business.
The company said it booked charges of €1.13 billion in the fourth quarter, comprising €931 million for risk provisions and €197 million for a reduction in head count. BMW cut its work force last year by 7% to 100,041.
The loss at BMW underscores the deep trouble roiling the auto industry.
Hurt by the global financial crisis and slumping economies around the world, auto sales have plunged in the U.S. and Europe over the past several months, and growth has slowed significantly in formerly booming markets like China and India.
As a result, almost every auto maker in the world is struggling.
Toyota Motor Corp. now expects a loss of about $3 billion in its current fiscal year.
General Motors Corp. and Chrysler LLC need billions of dollars in government loans to stay afloat.
On Thursday,
Volkswagen AG warned it might record a loss in the first quarter and that earnings this year would be "significantly lower" than in 2008. In the first two months of the year, Volkswagen's sales declined 15% to 809,200 vehicles, with its core VW passenger-car brand posting a 7.5% decline to 516,300 cars.
A worker cleans the hood of a BMW 3-series automobile on the production line.
The global auto market "appears to not have reached the bottom yet," VW Chief Financial Officer Hans Dieter Poetsch said at a news conference. VW also suffered a dramatic decline in business in the fourth quarter, although VW managed to remain profitable.
In the fourth quarter, BMW sold 321,908 vehicles. BMW was particularly hard hit by the downturn in the U.S., which is its biggest single market.
The company is overhauling its U.S. strategy to focus on profitability rather than sales volume. Higher provisions for residual-value risks and bad debts relating to its financial-services business slashed €1.97 billion from earnings last year.
Full-year net profit fell to €330 million. Pretax profit slumped 91% to €351 million. Earnings before interest and tax fell 78% to €921 million.
BMW slashed its 2008 dividend to 30 European cents per common share and to 32 cents for preferred shares from €1.06 and €1.08, respectively, a year earlier.