Carmaker BMW saw its profits tumble last, the group has reported that its profit before tax fell 90.9 per cent to €351 million compared to €3,873 million in 2007. Net profit came in at €330 million compared to €3,134 million in 2007 down a staggering 89.5 per cent.
BMW blame a high proportion of the damage on additional risk provision expense associated with residual value risks – caused by the weak used car markets, bad debts (€1,968 million in total) plus one-time personnel expenses of €455 million and exceptional expenses earnings amounting to €2.423 million.
Yet the BMW Group believe their performance held up well in considering the difficult trading conditions.
“The BMW Group has been able to make improvements at an operating level in the midst of extremely difficult economic times,” stated Reithofer Norbert, Chairman of the Board of Management of BMW AG, on Thursday in Munich. “Cost structures have been further optimised and, thanks to rigorous management of free cash flow, the BMW Group is in a very solid financial position,” he added.
The BMW Group increased its liquidity to cope with weakening car sales. Holdings of cash funds and marketable securities increased by 86.3 per cent to €8,107 million compared with €4,352 million in 2007.
Measures to increase cash flow included reducing the BMW headcount. The number of employees was reduced over the past year and by the end of 2008, the worldwide workforce comprised 100,041 employees compared with 107,539 employees in 2007, a 7.0 per cent decrease.
