BMW Profit Is Short of Forecasts

By REUTERS
Published: November 3, 2006


BMW’s third-quarter profit fell short of expectations as accounting charges put the brakes on what should have been an easy comparison with the 2005 period, when it took a big hit from a derivative contract. Norbert Reithofer, who succeeded Helmut Panke as chief executive in September, also damped investor hopes that he might be more generous in returning cash to shareholders than was his predecessor, causing the stock price to drop. Pretax profit rose 9.4 percent, to 720 million euros ($919 million) in the quarter, below expectations of 742 million euros, despite in-line results at its core automotive business as write-downs on financial instruments again hurt earnings. A year ago, BMW had to book a 175 million euro noncash pretax expense for a bond option exchangeable into shares of the British aircraft engine maker Rolls-Royce, after the latter’s stock sharply appreciated in the third quarter. BMW reaffirmed its forecast for 4 billion euros in full-year pretax profit, which includes a one-time gain of 375 million euros from selling Rolls-Royce shares this year.