FRANKFURT (AP) -- German carmaker BMW AG said Thursday its net profit fell 90 percent in 2008 as the global economic crisis cut into demand for its sports and luxury cars.
In an unscheduled preliminary earnings release, the Munich-based company said its net profit for the full year dropped to euro330 million ($416 million) in 2008 from euro3.1 billion in 2007.
Total revenues fell 5 percent to euro53 billion from euro56 billion in 2007.
BMW said earnings before interest and taxes, a measure of operating profit, fell 78 percent to euro921 million, while the group's total car production dropped 6.6 percent to 1.44 million cars.
BMW said that in addition to the weak car markets in 2008, the company was affected by euro2.4 billion in costs to cover bad debts, one-time personnel costs and provisions to cover risks on used car markets.
The company, which is scheduled to release its full earnings report on March 18, did not provide fourth quarter 2008 figures.
It also didn't provide an outlook for the full year, though the management made an effort to reassure its investors.
"The BMW Group has been able to make improvements at an operating level in the midst of extremely difficult economic times," Norbert Reithofer, BMW's chief executive said in the release.
"Cost structures have been further optimized, and thanks to rigorous management of free cash flow, the BMW group is in a very solid financial position."
He said the company was maintaining its goal of saving more than euro4 billion in material costs by 2012.
BMW said that because of its swift response to bring production volumes in line with lower demand, it was able to increase its working capital. Its holdings of cash funds and marketable securities on capital markets increased by 86 percent to euro8.1 billion, while interest bearing assets increased to euro9 billion form euro7.3 billion in 2007.
In terms of divisions, the company said production of the BMW brand fell nearly 8 percent for the year to 1.2 million cars from 1.3 million in 2007.
The compact Mini brand saw production decline 1.1 percent to 235,019 cars, while the ultra-luxury Rolls Royce brand saw an increase in production of near 40 percent. Rolls Royce sold 1,212 cars in 2008, compared with 1,010 cars in 2007.
Meanwhile, motorcycle production was nearly flat in 2008, totaling 104,220 units built.
"We believed BMW would be best able to preserve capital in this crisis and so far, that has been proven correct," Bernstein Research analyst Max Warburton wrote in a note to clients.
"We continue to see BMW as the safest place in European autos. While we worry about long-term returns and limited peak earnings power, and worry about financial services losses, near-term it continues to look best positioned to remain very liquid."
Bernstein rates the shares at "Outperform" with a target price of euro30.
The shares of BMW were about 1 percent lower at euro22.93 in Frankfurt afternoon trading Thursday.