BMW proposes 12% increase in dividend despite profit slump

Bayerische Motoren Werke AG (BMW) said full year net profit fell by 3.6% to €1.947bn as costs for new products resulted in a 4.2% fall in earnings in the company's core automotive division.

BMW said pre-tax profit - or profit from ordinary operations - fell by 2.8% to €3.205bn, this was still within the range of market forecasts (€3.175bn - €3.320bn).

Net profit was down from €2.02bn a year earlier and came in at the lower end of the €1.94bn - €2.044bn forecast range.

Despite the slight fall in earnings, BMW is proposing a 12% increase in its dividend for the year to €0.58 per share.

Helmut Panke, BMW chairman, said he expects unit sales and earnings for 2004 to be higher than 2003.

BMW said the automotive division posted a pretax profit of €2.761bn, down 4.2% due to spending on expanding the car maker's product range and marketing new models.

The company said it has made a provision of €110m to cover changes in pension law and €50m for new regulations on corporation tax.

It said pretax profit at its motorcycle division dropped by 16.7% to €50m but financial services posted another record pretax profit of €452m, up 7.1%.