Frankfurt: BMW, the world’s largest premium carmaker, had a disastrous fourth quarter that made its 2008 results miss market expectations, sending its shares down nearly 12%.
Group earnings before interest and tax fell 78% to €921 million ($1.18 billion), it said on Thursday, well below the average estimate of €1.54 billion in a Reuters poll of 20 analysts.
It proposed cutting its 2008 dividend on common stock to €0.30 from €1.06 after taking a writedown of €1.06 billion for the reduced value of cars coming off leases and for bad debts.
Its shares pared losses to trade down 8.3% at €21.04 by 1028 GMT while the DJ Stoxx European car sector index was off 3%.
Demand for BMW’s sporty models like the Z4 roadster withered in the last quarter of 2008, forcing the company to reveal a decline of 4.3% in group sales volumes last year -- its first annual drop since 1993.
Much like rival Mercedes-Benz, BMW has thrived from the debt-fuelled consumerism in markets like the United States where they aggressively pushed volumes for years with attractively priced leasing deals that cost the carmaker just over €1 billion euros through the end of September alone.
Analysts are now re-evaluating previous assumptions regarding the premium market’s true potential, after the worst excesses of easy credit have come to a screeching halt.
In addition, increasingly stringent emission requirements are putting a massive strain on R&D budgets for Mercedes and BMW and forcing the carmakers to replace heavier engines that earn fatter margins with downsized motors.