New BMW models to lift sales, '09 earns seen mixed

BMW will rely more on a raft of new models than a material improvement in luxury car markets to boost sales in 2010, the world's biggest luxury carmaker said on Thursday.

While the economic crisis will continue to hurt the auto industry, BMW expects its new 5-series, X1 compact SUV and the new offroad Mini Countryman will drive a sales increase in Germany, Brazil, China, India and the United States.

"We fully intend to remain the world's leading provider of premium cars in 2010 and plan to increase sales within the single-digit percentage range to over 1.3 million vehicles," Chief Executive Norbert Reithofer said in a statement, reaffirming the group's volume target for this year.

BMW said cost management and efficiency measures had helped achieve an 18 percent rise in 2009 pretax profit to 413 million euros ($560.4 million), easily surpassing an average estimate of 253 million by analysts despite a double-digit decline in revenue in its automotive business.

In September 2007 BMW presented its "number ONE" cost management strategy, designed to shave off a total of 6 billion euros in expected costs through the following five years.

A tax burden 10 times higher than last year meant however that BMW's bottom line shrank 36 percent to 210 million euros this year -- its worst result since 1999 when the Rover debacle forced it to post a massive loss.

MIXED BAG

The carmaker released earnings ahead of the scheduled March 17 date. It did not provide a detailed breakdown of earnings, leaving the market guessing about the quality of the premium automaker's performance.

Pending further details about its profit outlook for 2010, analysts at BHF Bank decided to keep their "strong buy" recommendation for now, but said the results were a mixed bag with the positive surprise due "mainly (to) gains from fixed income derivatives" at its financial services business.

In its financial services segment, BMW posted earnings before interest and taxes of 355 million euros in 2009, a turnaround from 2008 when charges for falling residual values and credit defaults led to a 216 million euros operating loss.

BMW emphasized it planned to grow profitably in a clear signal that the days are over when it would win market share using non-cash incentives and cheap leasing deals that ultimately reduced its profit by billions two year ago.