* Q3 revenue 18.8 bln euros vs 17.7 bln forecast
* Q3 Autos EBIT margin 9.6 pct vs 9.9 pct forecast
* Currency seen inflating revenue, but not profit
* Stock down 0.7 pct, trails sector peers
(Adds new analyst, CFO comments)
By Christiaan Hetzner
FRANKFURT, Nov 6 BMW, the world's
largest premium carmaker, warned it was beginning to feel the
pain of a sickly European market, overshadowing strong quarterly
results and a forecast for record annual profit.
For much of the year, German luxury brands like BMW, Audi
and Mercedes have exported their way out
of difficulty, selling expensive cars like the BMW 7 Series
sedan to affluent Chinese and Americans while their European
mass market peers struggle at home with massive overcapacity.
Chief Executive Norbert Reithofer said conditions were
weakening, however, after the German company posted a 14 percent
rise in third-quarter underlying profit on Tuesday that beat
"Like the rest of the sector, we are now beginning to feel
some headwind," he said in a statement. "We have to acknowledge
that we are all facing dramatic challenges and uncertainties in
the global economy today."
Finance chief Friedrich Eichiner said he still aimed to
increase full year operating profit at BMW's core car division,
implying a 25-percent improvement in the fourth quarter.
"We have to expect that market conditions will continue to
deteriorate and the competitive pressures increase further,"
Eichiner said, using a common industry term for discounting.
"You cannot entirely avoid them (high rebates) unless you
are willing to surrender your entire market share," he added.
Leasing terms on the revamped 3 Series in Germany
effectively equate to 26 percent off the list price of BMW's
single most important car - significant given the relative
stability of BMW's home market and the model's recent launch in
UBS autos analyst Philippe Houchois said Eichiner's
contention that higher incentives would knock at least 1.2
percentage points off the average revenue per vehicle was not
"They've been crying wolf a bit, and we've been getting
great numbers anyway," he said, explaining that BMW's cost base
may actually be far more competitive than investors assume.
Houchois added that BMW's healthy cashflow make it appealing
in a downturn. Nor does it suffer from corporate governance
concerns like Volkswagen, which issued a 2.5 billion euro
convertible bond issue out of the blue.
With factories running flat out to meet surging demand in
China and the United States, German premium carmakers were
considered largely invulnerable to the crisis buffeting
mass-market European car makers. But cracks are beginning to
Daimler's Mercedes luxury car business last month warned it
would fall nearly 800 million euros short of its earnings target
this year and delayed plans to reach a 10 percent operating
profit margin by 2013.
By comparison, BMW has been able to rely on its younger and
more diversified product range as well as its fast-growing
business in China, its single largest market, where vehicle
sales volume rose by 39 percent during the third quarter.
BMW and Audi in China continue to outperform Mercedes, which
delivered fewer cars to customers across the world than its two
BMW reaffirmed pretax profit would hit a record this year,
while its EBIT margin in its core Automobiles division would
reach the upper end of its 8-10 target range, compared with the
10.9 percent achieved so far this year.
"We continue to expect that this corridor of 8-10 percent
will be stable, also for 2013, I would like to emphasise that,"
Friedrich Eichiner told reporters.
($1 = 0.7823 euros)
(Editing by Erica Billingham and David Cowell)