BMW Profit Drops 28% Despite Record Sales

BMW AG's net profit fell to €1.3 billion ($1.6 billion) in the April-June quarter this year from a record €1.8 billion ($2.2 billion) in the same period of 2011, even though revenue rose 7% to a second-quarter record of €19.2 billion ($23.4 billion).

Group sales climbed 5% to a 475,000 vehicles, also a record for the period.

BMW says earnings were lower because of a 5% staff increase, intense competition and higher spending on new technologies. Net income also suffered by comparison to year-earlier results that were boosted by large one-time gain.

Earnings before interest and taxes declined 19% to €2.3 billion ($2.8 billion).

Sales in Europe slipped 1% to 236,300 vehicles in the second quarter, including a 2% drop to 79,100 units in Germany. Volume in Asia jumped 20% to 119,900 vehicles, including a 25% gain to 79,100 vehicles in China. North American demand rose 5% to 92,400 units.

In the first half of this year, the company boosted sales of the BMW brand 8% to 747,100 vehicles, thus remaining the world's top-selling luxury marque.

The company reaffirms its full-year outlook to surpass the €7.4 billion ($9 billion) in pretax earnings and record 1.67 million vehicle sales it achieved in 2011.