BMW profits fall cushioned by hedging


Germany's BMW announced a 7 per cent fall in second-quarter pre-tax profits today, although the result was boosted by currency and interest rate hedging.

It said it still expected 2003 profits to come in at last year's level.

BMW had been expected to post a 17 per cent drop in pre-tax earnings to €848 million in the three months to the end of June from €1.02 billion, according to the average of 25 analysts' forecasts surveyed in a Reuters poll.

A company spokesman said the result had been boosted by financial instruments used to protect against interest rate and currency moves. Excluding those effects, pre-tax profits fell 18 per cent to €875 million from €1.064 billion a year ago.

Sales in the period dropped 11.7 per cent to €10.241 billion, below analysts' expectations.

Falling sales of BMW's core luxury brand, in particular its key 5-series saloon, and the cost of a massive product expansion have been placing an additional strain on the group's traditionally healthy profits.

It said last month it had delivered 5.5 per cent fewer BMW-badged cars to customers in the first six months than by the same stage a year earlier, mainly due to weaker demand for the outgoing 5-series.

The group - which also owns the Mini and Rolls-Royce brands - is banking on the new 5-series to boost sales in the second half of the year and help it sell more than the 1.057 million vehicles it sold in 2002 while keeping profits flat.