Third-quarter net profit of luxury automaker BMW AG jumped up 78 percent, driven higher by increased sales, and raised its sales outlook for the rest of 2007 on Tuesday.
The Munich-based automaker earned 803 million EUR(US$1.2 billion) in the July-September period compared with 452 million EUR a year earlier and beating the 605 million EUR(US$876.5 million) that analysts polled by Dow Jones Newswires had forecast.
Sales at BMW, which also makes the popular Mini, the expensive Rolls-Royce and motorcycles, climbed 19 percent to 13.78 billion EUR(US$19.96 billion).
Despite some market worries about the company's exposure to the falling U.S. dollar, BMW said it was "well on its way toward achieving its earnings and sales volume targets for the full year."
"The BMW Group will focus its attention on profitability and increasing value over the long term," said Chief Executive Norbert Reithofer.
Pretax profit rose 6.3 percent to 765 million EUR(US$1.1 billion), up from 720 million EUR a year earlier, but below the 900 million EUR(US$1.3 billion) analysts had forecast.
"BMW's (third-quarter) numbers mark a slightly better performance after a very disappointing year so far, with at least some of the top-line strength feeding through into earnings growth," said auto analyst Stephen Cheetham at Sanford C. Bernstein Ltd.
"However, apart from higher net income due to lower taxes, the numbers came in below our estimates, and do little to dispel investor fears of the company's continued exposure to a weaker U.S. dollar."
The euro currency hit another new high of US$1.4571 on Tuesday, but BMW said it did not expect the negative impact to be bigger than the 666 million EUR it posted in 2006.
"All of the main currencies are fully hedged for the business year 2007," the company said, adding it had been "confronted with higher purchase prices for steel, precious metals and other materials. The additional cost is likely to be on a similar scale to the previous year's level of 178 million EUR(US$257.89 million)."
But Cheetham said markets would likely take a "wait and see approach" to the company's improvement plans, and BMW shares fell 3.3 percent to close at 43.31 EUR(US$63) in Frankfurt.
In terms of sales, the company said it saw strong demand in all of its markets, including the United States, its biggest market, and it expects to sell more than 1.4 million cars by the end of the year. Reithofer said BMW hopes to sell more than 1.8 million vehicles a year by 2012.
Third-quarter sales rose 13 percent to 364,564 vehicles from 323,064 last year, while nine-month sales rose 7.2 percent to 1.09 million vehicles from 1.02 million in the same period in 2006.
Chief Financial Officer Michael Ganal said he expects the company to post a strong fourth quarter, and added that the earnings impact from the rising euro is likely to ease through the second half of this year compared to the first six months.
BMW earned 2.1 billion EUR(US$3.04 billion) in the first nine months of the year, down 2 percent from 2.18 billion EUR in 2006. It attributed the slip to costs related to new market launches for models and production startups, as well as higher costs for raw materials and the "development of even more efficient and fuel-saving engines and the ongoing weakness of the U.S. dollar and Japanese yen."
The company introduced its new 6-Series Coupe and convertible and is developing its new Mini Clubman that is expected to go on sale worldwide later this month.
Nine-month sales rose 11.1 percent to 40.4 billion EUR(US$58.53 billion) from 36.3 billion EUR.
Near the United Nations Glass Palace in New York, there is a metallic sculpture entitled "Evil Defeated by Good", representing Saint George transfixing a dragon with his lance. It was donated by the USSR in 1990 to celebrate the INF Treaty concluded with the USA in 1987