BMW Warns Profits to Stagnate in 2005

German luxury car maker BMW said on Wednesday that it expected profits this year to stagnate in the face of high raw materials prices and the weak dollar. "We will strive in 2005 to achieve about the same high level of earnings as in 2004," chief financial officer Stefan Krause told the carmaker's annual earnings news conference Munich. Chairman Helmut Panke described the group's target for flat earnings this year as an "optimistic" goal. BMW, which owns the BMW, Mini and Rolls-Royce brands, is vulnerable to exchange-rate risks because it sells one out of every five cars in the United States. It traditionally protects itself against currency fluctuations and had already hedged about half of its currency exposure this year. However, it had done so at less favorable rates than last year, meaning that the impact on earnings "will be far more negative than in 2004," CFO Krause said. Last year, the weak dollar knocked "hundreds of millions of euros" off profits, he estimated. BMW was nevertheless forecasting sales of growth of between six and nine percent this year, after the launch of new models boosted sales in the first three months.