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BMW warns it could lose money this year

BMW Group CEO Norbert Reithofer warned the company could lose money this year if the current global economic situation prevails.


While BMW declined to give any earning outlook for the full year, or even the first quarter, some experts have speculated global car sales could decline between a further 10 and 20 per cent.

"For 2009, the largest risk is the collapsing market. If revenues fall more than 20 percent, you lose money," Reithofer said at the company's annual earnings conference.

BMW group's January and February sales declined 24.3 per cent to 150,838 units, typically such a decline causes a company's revenues to decline by a similar percentage.

BMW reports sales volumes on a monthly basis, but revenues on a quarterly basis. The first-quarter results for 2009 to be announced on May 6th.

The company said that after an inevitable decline in vehicle sales this year, volumes would pick up again starting in 2010, thanks in part to the planned launches of highly profitable models.

"This year will be a transition year. That is why we have set clear priorities: liquidity, free cash flow and working capital, fixed costs and investments," Reithofer said. "Our goal is to maintain the BMW group's independence."

Interesting BMW has managed itself better than most rivals through these tough financial times with analysts noting the group has managed the rare feat of getting through the fourth quarter without having to drain its cash reserves to fund operations.

Unfortunately the wise accounting couldn't help maintain sales figures which saw their first annual volume drop since 1993.

At the meeting BMW also confirmed that it will buy electronic components and mechanical parts with Daimler AG, which is owner of Mercedes-Benz.

"We have identified a double-digit number of suitable components," BMW Chief Financial Officer Friedrich Eichiner said.

Eichiner said the parts were not components that are important to differentiate BMW and Mercedes cars. They also were not parts that customers would see and that combined purchasing would help the two manufacturers and also their suppliers.

On the topic of a possible purchase of Opel, Reithofer affirmed his stance that BMW is not considering buying a stake into General Motors Europe unit.

"We are not interested in Opel at the moment, nor were we in the past," he said.

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