BMW's profits tumble nearly 90%

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BMW's net profits tumbled nearly 90% to 330m euros ($423m; £306m) last year, as the global economy weakened and reduced demand for cars.

Earnings were hit by 2.4bn euros of exceptional costs linked to bad debts, personnel costs and provisions to cover risks on used car markets.

Separately, the European Investment Bank made a 400m euros loan to BMW as part of a wider industry package.

The EIB approved 3bn euros in loans to the European auto industry.

The money will go to German, Italian, French and Swedish carmakers, the EIB said.

Most of it will be aimed at improving fuel efficiency and cutting carbon emissions.

The bank added that it expected to approve a further 2.8bn euros of loans to the industry in April and May, which would take its total lending to the sector to 6.3bn euros since December.

BMW is not the only carmaker to struggle. VW reported on Thursday that sales fell 15% in January and February.

And troubled carmaker Saab said that it planned to cut 750 jobs in Sweden.

BMW gloom

Shares in BMW fell 8% to 21.04 euros on the news of its profit fall.

BMW did not provide an outlook for the year ahead. However, Norbert Reithofer, BMW's chief executive said in a statement: "The BMW Group has been able to make improvements at an operating level in the midst of extremely difficult economic times."

He added: "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."

BMW is to cut its dividend by two-thirds to 0.30 euros. "We want to pay a dividend even in difficult economic times, demonstrating both the confidence we have in our operating strength and the interest in our shareholders," Mr Reithofer said.

Volkswagen hit

Announcing the fall in sales, Volkswagen said that 2009 sales and profits would not match the record levels of 2008.

"The group's sales revenue in 2009 will be below that of the previous year due to the declining unit sales situation," VW said in a statement.

"In such a situation, it will not be possible to reach the high level of earnings achieved in previous years," it added.

Separately Saab, whose US parent General Motors wants to sell it, announced job cuts.

"We announced this morning we would see to make 750 redundancies in our production facility in Trollhaettan," Saab spokesman Joe Oliver told the AFP news agency.

"This is a necessary action to increase liquidity and the top priority for Saab at the moment is to reorganise efficiently in order to attract new investors."

Source: http://news.bbc.co.uk/2/hi/business/7939450.stm