BMW profit slips as drivers shun limousines for SUVs

By Edward Taylor FRANKFURT (Reuters) - BMW missed forecasts with lower quarterly operating profit, hit by adverse currency moves and pressure on the prices of limousines as drivers in the United States in particular switch to sport-utility vehicles (SUVs). Traditional car models have fallen out of favour in the United States, with sustained low gasoline prices encouraging a shift towards pickup trucks and offroaders. That has forced makers of sedans and hatchbacks to step up buying incentives. "The shift from limousines to SUVs put prices under pressure," BMW Chief Financial Officer Friedrich Eichiner told journalists on a call to discuss results on Tuesday. The return on sales at the German company's automotive arm dipped to 9.4 percent in the first quarter from 9.5 percent a year earlier, though it was within a 8-10 percent target range. BMW shares were down 3.2 percent at 78.54 euros, compared with a 1.7 percent drop in Germany's DAX index. The company stuck to its full-year forecast, saying it would increase the proportion of SUVs sold in the United States to 40 percent from 30 percent at present. First-quarter earnings before interest and taxes (EBIT) slid 2.5 percent to 2.46 billion euros (1.93 billion pound), just below analysts' average forecast of 2.48 billion euros in a Reuters poll and hit by changes in value of the British pound and Chinese renminbi against the euro. The profit decline was largely due to the absence of a currency and commodities hedging gain seen in the year-earlier quarter. For the full year, BMW expects a triple digit million euros gain from currency and commodity price tailwinds. The BMW Group reaffirmed its full-year forecast of achieving slight increases in sales volume in the Automotive business and group profit before tax in 2016. It warned of high levels of upfront spending on new technologies, intense price competition and rising labour costs. Sales of BMW and Mini cars rose 5.9 percent to a new record in the first quarter, but fell in the United States, denting profitability. BMW has also seen sales growth slow in China, the world's biggest car market, as it prepares to launch new models such as the long-wheelbase version of the X1 offroader. In the first quarter, BMW's car sales there rose 11.2 percent compared with a 36.4 percent leap at rival Mercedes . (Editing by Georgina Prodhan and Mark Potter)