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BMW bitten by Rover slide
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January 31, 2000: 9:42 a.m. ET
German automaker says 1999 earnings flat; stands by U.K. unit.
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LONDON (CNNfn) - German luxury automaker BMW said Monday its 1999 earnings were little changed from the previous year amid persistent troubles at its U.K. unit Rover. The report sent BMW shares sharply down in Frankfurt.
In its annual letter to shareholders, the company said 1999 sales climbed 6.6 percent to 34.4 billion euros ($33.7 billion), but warned earnings would be no better than in line with the 903 million marks ($452 million) posted in 1998. The company said earlier this month that Rover - which it acquired in 1994 - would lose more than the 1.87 million-mark deficit it posted in 1998.
BMW (FBMW) shares fell 4.8 percent to 23.62 euros.
The German company reiterated its commitment to Rover, which has suffered from an aging product line and the effect of a strong pound on exports. As the pound strengthens, U.K. exporters either raise the price of their goods in overseas markets, or earn ever narrower profit margins while keeping prices on hold.
Restructuring at Rover led to a 5 percent drop in BMW's total output last year, with Rover sales down 25 percent. Sales of BMW-badged vehicles rose 7.4 percent, boosted by record sales of its Series 3 range, while those of its Land Rover arm surged 16 percent.
BMW said last year that it would invest 10 billion marks in Rover over five years.
"We think that the worst is over at Rover and we see it as a turnaround story," HypoVereinsbank analyst Georg Stuerzer told Reuters. Analysts noted that the unit's sales rose 11 percent in the final quarter of 1999 from the same period a year earlier.
BMW publishes its detailed 1999 earnings report March 28. 
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