Achtung: BMW 3Q net income falls 74 percent to euro78 million

[Mark]

Source: Yahoo! ( http://news.yahoo.com/s/ap/20091103/...ny_earns_bmw_3 )

FRANKFURT – German carmaker BMW AG said Tuesday its net income fell 74 percent in the third quarter as it continued to be affected by the global economic downturn.

BMW, the world's biggest luxury car company by sales, said net income for the period amounted to euro78 million ($115 million), down from euro298 million in the July-September period of 2008.

BMW's share price slid 7.1 percent to euro31.20 in Frankfurt after the earnings announcement as net income came in well below the consensus estimate of around euro150 million.

The Munich-based company said it delivered 7.2 percent fewer cars during the July-September period and that its revenue fell 6.6 percent to euro11.8 billion from euro12.6 billion in the July-September period of 2008.

"Although there are some emerging signs that the lowest point of the current economic downturn has been passed, the BMW group only expects the situation to stabilize at a low level during the last quarter of 2009," BMW said in its report.

"For the time being at least, it cannot be assumed that an enduring recovery has taken hold. Nevertheless the BMW group has performed well despite the difficult business environment," the company said.

BMW said that total car sales would likely be between 10-15 percent lower than in 2008 provided there are no further economic setbacks. The company's brands include its namesake BMW cars, the Mini compact and the super-luxury Rolls-Royce brands. The company also builds BMW motorcycles.

Despite the likely sales decline, BMW said it expected to report a positive result for the financial year 2009 and to maintain its leading position in the premium segment.

BMW said net income for the first nine months of the year fell 96 percent to euro47 million from euro1.3 billion in the January-September period of 2008 as the company saw a large pretax loss on its automobile business during the period.

Revenue for the first nine months declined 10 percent to euro36.2 billion from euro40.4 billion.

Automobile group production for the first nine months of the year was 21 percent lower at 907,429 compared to almost 1.2 million cars in the same period a year ago.

Motorcycle production was also 21 percent lower during the first nine months of 2009 at 65,909 from 83,845.

The company said it had also reduced its work force by 5.3 percent to 98,358 employees at September 30, compared with 103,850 employees at the end of September 2008.

Observers are looking forward to the group's new models including a Mini coupe and a new Rolls Royce model called the Ghost, which should add to future revenue.

BMW has said the order book on the new super-luxury Ghost — which is a step below the top of the line Phantom — is developing well. It hopes to start selling that new car next year.

[LI E90]

tough times

[ACZakka325i]

Interesting, Ford posted a $1billion profit in the 3rd quarter. Not sure what BMW made, but over 75% down is horrendous.

[JoosyJoos]

Ford was pretty cash rich when the crisis started. Hence one of the reasons they didn't have to solely rely on the government to bail them out. Ford was able to pay off a substantial amount of their debt as a cost cutting mechanism. I'm assuming their capital structure is more ideal now and allows them the tax saving benefits they need while avoiding huge debt payments. I'm not sure what BMW's capital structure looks like but they probably have more debt currently which could be effecting their bottom line. You also have to take into account the cash for clunkers program and the fact that demand was probably greater for more affordable vehicles than premium luxury brands simply based on the fact that only older vehicles qualified (generally correlated with lesser income individuals).

[BMWI6]

Well thats what you get when you mix a recession with not listening to your customers. There is no doubt that BMW still has some great products out there, but their golden days are long gone. The brand loyalty gets lowered by the second as they keep making decisions that instantly upset their followers, they need to stop trying to patch the mistakes they made in the Bangle era and instead get back to basics again. My S.A. keeps telling me that as soon as they get an e46 m3 thats in good shape, they sell it instantly because people love it so much, now that tells us something about how customers feel about the new cars.

[jrougeux]

Originally Posted by JoosyJoos

Ford was pretty cash rich when the crisis started. Hence one of the reasons they didn't have to solely rely on the government to bail them out. Ford was able to pay off a substantial amount of their debt as a cost cutting mechanism. I'm assuming their capital structure is more ideal now and allows them the tax saving benefits they need while avoiding huge debt payments. I'm not sure what BMW's capital structure looks like but they probably have more debt currently which could be effecting their bottom line. You also have to take into account the cash for clunkers program and the fact that demand was probably greater for more affordable vehicles than premium luxury brands simply based on the fact that only older vehicles qualified (generally correlated with lesser income individuals).

Yeah, since their income fell by 75% but revenue fell only by 10-20%, there's something else happening besides selling fewer cars.

I'd like to see how their cash flow compares from this year to last; net income can be easily swayed by write-downs or other special items, while cash flow is a better indicator of how much money the company actually has coming into its coffers.

Anyone have this information?

[lm1z]

Originally Posted by jrougeux

Yeah, since their income fell by 75% but revenue fell only by 10-20%, there's something else happening besides selling fewer cars.

I'd like to see how their cash flow compares from this year to last; net income can be easily swayed by write-downs or other special items, while cash flow is a better indicator of how much money the company actually has coming into its coffers.

Anyone have this information?

Some serious expenses going on.
During times of recession there always seems to be a huge increase in R&D - whether it's technology or something else. We shall see

[DASHOCKER]

The world is ending.. Quick, run for the hills.. BMW will be fine. The trolls must be running with this story posting it elsewhere by now..

[Mia335]

Originally Posted by Stankia

We need moar 600HP SUV's...

I sure hope your kidding. That is one reason American giants collapsed. They kept building massive heavy cars with huge engines despite the price of gas climbing. It was only matter of the time.
Don't get me wrong I love the X6 M but M always stand for Motorsport, not SUV want-to-be-sport. They should go back to basic M3 and M5 and easy up on the technology. What idiot at BMW though, "ooh well lets give the cars 400 hp and if driver wants full 500, he has to tell the computer". What the f#$k was that?
One has be be an IT geek to get the car running. Thank God for the M button. That really change the car from most annoying car to best car in the world. So why not just kept the best car in the world?
BMW got to where it is today, because they figure out, how to make you part of the car so you really feel the road. Not just driving it, but feeling it. That is the magic behind BMW.

[jeremyc74]

Originally Posted by jrougeux

Yeah, since their income fell by 75% but revenue fell only by 10-20%, there's something else happening besides selling fewer cars.

I'd like to see how their cash flow compares from this year to last; net income can be easily swayed by write-downs or other special items, while cash flow is a better indicator of how much money the company actually has coming into its coffers.

Anyone have this information?

I'd be willing to bet their warranty costs have increased substantially over the last few years. Things like the HPFP issue on the N54, and other nagging issues seem to be much worse now than before. They've been buying back x35i cars left and right to avoid lemon law suits when people are on their 3rd and 4th fuel pumps, and that CAN'T be good for the bottom line. Even the replacements have to be hurting. I'm not sure what their margin is on each unit, but if you figure the pump replacement cost at $500 each (parts and labor), and them doing it multiple times on many vehicles, along with other more typical warranty costs, it has to be having an effect.

[WLS]

Thats too bad for BMW. At least they honor their warranty.

[BMWPower06]

makes me feel bad about milking my warranty soo much

[M3 vert]

Originally Posted by WLS

maybe it has to do with all the warranty claims...

my piece of junk has had over $3000 worth of parts put on in two months (all un-related)

A couple of 7 series I have had,

Full Engine Replacements

Transmission Replacements

Differentials

Full Suspension Components

Computer ECU freezez......blah blah

The 7 series we had cost an arm and a leg for BMW Warranty, but the dealership made a killing out of them

The M3 has been problem free so far, and I love it

[piezo]

Originally Posted by Mia335

...
BMW got to where it is today, because they figure out, how to make you part of the car so you really feel the road. Not just driving it, but feeling it. That is the magic behind BMW.

Well put!

[fidozoom]

After screwing all 335 owners with their software updates and excuses of "either live with turbo lag or accept the rattle noise", I hope BMW goes down the drain. I used to be a mega fan of BMWs but will probably never buy another one. With Audi stepping up with their new S4 at similar price range, I have another sporty german car choice without having to put up with BMWs switch and bait tactics. The only reason I keep coming back to this forum is to see if anyone has found a fix for the rattle/turbo lag issues.

[mantissss]

Originally Posted by Mia335

...
BMW got to where it is today, because they figure out, how to make you part of the car so you really feel the road. Not just driving it, but feeling it. That is the magic behind BMW.

Originally Posted by piezo

Well put!

+OVER 9000!!!!!!!!!11

[justice]

I wouldn't worry to much about BMW, they'll be fine.

[oneginee]

The problem with today's auto industry visible in the US more than elsewhere but other are quickly falling in the same pitfall including BMW is a company politics one. How these companies are run today versus how they were run when the first M generation came out. The bean counters, executive, marketing are now in total control of these companies more than they have ever been and are making poor decisions while the engineers have been pushed down more and more and are basically seen as a commodity resource that no longer make the big calls. All these flashy video spots saying enginners at BMW decided, found this, discovered that is marketing driven bullshit. Engineers now have little say in what new technology will be developed or not. BMW AG M director even betrayed that when he said in his interview about the M3 GTR quote : "today's cars are no longer developed as they used to". They do marketing search, find what kind of car profile is in short term demand, decide everything about the car, then try to fit a technology that would work. Which means the engineers are at the end of that decision making process and are asked to execute some stupid product imagined by a bunch of marketing boneheads on a deadline decided by the executive. That is how you get X5M, X6M, mixing the M concept with SUV and other stupid marketing ideas instead of letting engineers make the calls and revolutionize the product. Bait and switch has become BMW new strategy. Engineers are as good as they used to be but their potential has been crushed by the idiots who have over the years taken control of companies. This story should not sound too unfamiliar, the whole world is following that trend and if you think product developed nowadays lack the innovation and quality that they used to that is the reason why. Fire a bunch of useless executive and marketing " strategists " who got an MBA is how you are going to get yourself back on the path of revolutionary products success stories and concepts like the first generation M out of the pipeline again. Only Porsche seems to have not sold itself to the executive useless crowd and is still run by engineers. BMW on the other hand as shown in the last few years it has totally let that crowd take over control. What is driving this is the same thing that drove the bankfinancial crisis, a misdirected way i would call it corruption in the way a company's wealth is being distributed compensating the executive and marketing too much. Letting that crowd who never understood nothing about engineering and science make decisions result in decisions that increase their personal compensation in the short term while at the same time causing a company to go down (or in the financial crisis the whole economy). This american corrupted company model has unfortunately expanded around the world over the last two decades. When the current Porsche CEO joined Porsche at a time when the company was doing very badly he saw straight through all of this and " let go " many of these well paid but useless executives. BMW is now being run to the ground by them. The M3 GTR is another proof of it. Fire all that crowd !

[jeremyc74]

Paragraphs! Learn them...LOVE them!

[BRAISKI]

Hmmm maybe its a good time to haggle when buying a BMW

[Robert]

Originally Posted by BMWI6

Well thats what you get when you mix a recession with not listening to your customers. There is no doubt that BMW still has some great products out there, but their golden days are long gone. The brand loyalty gets lowered by the second as they keep making decisions that instantly upset their followers, they need to stop trying to patch the mistakes they made in the Bangle era and instead get back to basics again. My S.A. keeps telling me that as soon as they get an e46 m3 thats in good shape, they sell it instantly because people love it so much, now that tells us something about how customers feel about the new cars.

The e46m3 like the e36M3 and the e30 M3 will forever be pillar of yesterday BMW values. Nimble, less powered machines that makes titans like the vette and 911 quiver in their boots. Similarly the Cayman S with PDK is now giving supercar R8 and vette a run for their money. The new x6M and x5M are iconoclasts to the values that made BMW great. Although, BMW are redeeming themselves with the E92 M3 GTS it far to early to know if the bad seeds have already taken hold.