BMW suffers biggest fall in profits
BMW’s profits for last year slumped by nearly 90%, while Germany’s industrial output dropped by 7.5% in January 2009. The results indicate 4th quarter loss of €718m (£666m) which pulled BMW’s annual net profit down to €330m as against huge profit of €3.13bn it made in 2007. Revenues declined 5% to €56bn.
The car maker had to lay off 850 employees of its Mini plant at Cowley, Oxfordshire. The fourth quarter was loaded with €2.4bn cost of extra risk provision, personnel expenses and bad debts. BMW has decided to slash dividend to €0.30 from €1.06 it paid last year. The chairman, Reithofer Norbert, claimed that company has decided to pay dividend even in tough economic conditions.
Germany’s export-led economy is a big victim of collapse in global demand. Europe’s largest economy registered a massive decline of 7.5% in manufacturing output in January, the biggest monthly drop since country’s reunification in 1990. The out put has fallen 3.9% in December and 23% since January 2008.
The German government is predicting 2.25% contraction in economy this year, the worst that the country is experiencing since World War II.
According to Jennifer McKeown, at Capital Economics, German economy may contract by 4%, which he apprehends might turn out to be too optimistic figure.
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