BMW sees only fragile market rebound

Germany's BMW gave a tepid markets outlook and predicted the euro would stay strong after third-quarter earnings before interest and tax shrank 86 per cent amid a global economic slump.

Analysts cited disappointing third-quarter results – its core automobiles business lost €76 million (Dh412m) before interest and tax in the quarter – and a lack of apparent impetus to inspire confidence in the stock.

"We still see several risks at BMW from currencies, especially euro/sterling, and lower residuals in the future and therefore confirm our negative view on BMW," DZ Bank analyst Michael Punzet told clients.

BMW said yesterday it still saw positive 2009 earnings thanks to cost cuts even as it repeated sales volume was set to fall 10-15 per cent.

"We expect that the markets will make a gradual recovery over the coming year," CEO Norbert Reithofer said.

But the company said the traditional big three markets – North America, Europe and Japan – were expected to generate low and below-average growth in the quarters ahead and saw scant relief on the foreign exchange rate front.

"Given the current high levels of state and trade balance deficits and banks' needs to record high levels of write-downs in those two countries, there is a risk that the US dollar and the British pound will weaken further."

BMW posted its first year-on-year volume gain in September and has forecast this would be a trend during the rest of 2009 thanks to launches of new models.

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