BMW, which has blossomed into the world's biggest and most profitable premium carmaker since unburdening itself of Rover in 2000, expects record earnings this year, chief executive Helmut Panke said in Munich yesterday.
Lower currency and raw material burdens as well as one-off gains from the disposal of shares in aero engine group Rolls-Royce, combined with soaring sales for its BMW, Mini and Rolls-Royce cars, will drive profits in 2006, he predicted.
"Our target is to achieve a profit before tax of four billion euros (#2.76 billion) in the current financial year at group level," Dr Panke said.
Such a figure would represent an increase of nearly 22 per cent over the 3.29 billion euros (#2.27 billion) that BMW made last year.
Chief financial officer Stefan Krause said, however, that it was a "pretty tough target" since BMW still faced robust industry conditions and would find it hard to match last year's efficiency gains of 426 million euros (#294 million).
The combined impact of the strong euro, which wiped 677 million euros (#467 million) off pretax profits in 2005, and higher material costs, which accounted for a further 237 million euros (#163 million), are likely to be reduced this year, Mr Krause added.
BMW added that it expected a non-cash extraordinary gain in the full year from the sale of its shares in Rolls-Royce, which will boost first-quarter results by a total of 350 million euros (#241 million).
The group's pretax profit, announced last week, was eight per cent down on 2004's record figure but ahead of forecasts.
Revenues rose last year by five per cent to a record 46.7 billion euros (#32 billion) on the back of a record unit sales of 1.3 billion cars.
BMW's three UK plants - the Hams Hall factory near Birmingham that produces all of its four cylinder petrol engines, Oxford, which last year produced a record 200,000 Minis, and the Swindon pressings operation - are estimated to directly contribute #1 billion a year to the country's economy.
The group is gearing up to expand Hams Hall to accommodate production of engines for the next generation Mini and the Oxford assembly plant, formerly owned by Rover, is undergoing a multi-million revamp.
Globally, BMW is pursuing a long-term, high level investment programme which, far from reducing returns, are "increasingly paying off", Dr Panke said.
"We follow a consistent, reliable corporate strategy, which focuses on the long-term success of the company.
"The advantage of this approach is that you stay on course even when short-term irritations occur. In addition, you avoid premature reactons and wrong decisions," he added.
One of the many feathers in BMW's cap is the runaway success of the Mini, which it launched in 2001 amid predictions that an attempt to revive one of the all-time British brands would bomb.
Ironically, as Dr Panke pointed out, that success means fewer Minis will be produced this year.
"As we intend to build even more Mini vehicles for our customers in the future, we are extending our production capacities at Plant Oxford.
"With a seven-day working week, we need to stop production due to construction measures and we have no way to compensate for that.
"These measures are preliminary conditions for the extension of the Mini family and the growth of the brand." ..SUPL: