BMW sees 2010 results improving across business

BMW, the world's biggest premium carmaker, forecast a hefty rise in 2010 pretax profit with better results across its entire business, boosted by new car models like its popular BMW 5 Series.

Analysts expect economic growth to spur corporate fleet sales at premium carmakers while rivals in terms of volume, such as Fiat, suffer from an end to the scrapping incentives that inflated sales of cheap minis and subcompacts in 2009.

"We want to see visible progress in 2010 toward achieving our profitability targets for 2012," Chief Executive Norbert Reithofer said Wednesday during a news conference on its annual results.

A Reuters poll of 10 analysts published before last week's results showed the market expects pretax profit to rise to 1.45 billion euros this year from just 413 million in 2009.

With investors already expecting a sharp improvement, BMW shares failed to get a boost from the comments. At 1152 GMT, the stock was trading 0.6 percent lower compared with a 0.2 percent fall in the Stoxx European car sector index .SXAP.

However, Morgan Stanley analysts called the 2010 outlook and fourth-quarter earnings "a relief" and said market expectations were well underpinned.

BMW said group vehicle sales would rise at a "solid" single-digit rate to more than 1.3 million vehicles thanks in part to the release this month of the new 5 Series saloon and the September debut of the Mini Countryman SUV.

If the economy keeps improving in 2011, volumes should continue to grow next year, with a corresponding increase in earnings, the company said.

BMW said its core Automobiles segment would post an operating margin in the low-single-digit percentage range this year while maintaining roughly the 1.46 billion euros in adjusted free cash flow it generated in 2009.

The segment swung to a loss before interest and tax last year mainly due to a sharp drop in sales but 194 million euros from foreign exchange effects added to the pain, mainly from a weaker pound.