Luxury car maker BMW said Thursday its first-quarter profit dropped 38% as it spent more money on launching new models and because last year's figure included a one-time gain.
The company earned 587 million euros ($797.6 million) in the three months through March 31, compared with 948 million euros a year ago, when it had booked a 375 million euro gain from an exchangeable bond in Rolls-Royce Group. The results were better than the 568 million euros ($771.8 million) analysts polled by Dow Jones Newswires had expected.
Sales rose 2.9% to 11.95 billion euros ($16.24 billion), slightly better than the 11.61 billion euros ($15.78 billion) analysts had predicted.
The Munich-based company's pretax profit dropped 34% to 852 million euros ($1.15 billion), lower than the 861 million euros forecast.
BMW said it was optimistic about the coming year, with sales expected to improve as consumers buy its new 3-series convertible, the redesigned X5 and its 5-series models.
"We expect business to increase noticeably in the coming months," Chief Executive Norbert Reithofer said. "We are right on course to achieve our targets for the full year.
In addition to increasing sales volume in the "high single-digit percentage range" to over 1.4 million vehicles, BMW expects to post a pretax profit above the record level it reported in the previous year.
Reithofer said the rising euro and higher prices for raw materials like steel and rubber would nevertheless weigh somewhat on earnings.
Last year, BMW's pretax profit was 4.12 billion euros ($5.6 billion), up 26% from 2005.
BMW shares fell more than 2.9% to 44.61 euros ($60.62) in Frankfurt.