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BMW Rises on Report of Plans to Cut Costs by $5.4 Billion

June 18 (Bloomberg) -- Bayerische Motoren Werke AG, the world’s biggest maker of luxury autos, gained after Manager Magazin reported the company plans a cost-cut drive of as much as 4 billion euros ($5.4 billion).

BMW rose as much as 1.5 percent to 92.13 euros and was trading up 1.3 percent at 3:14 p.m. in Frankfurt. The stock has increased 7.8 percent this year, valuing the carmaker at 59.1 billion euros.

The manufacturer of BMW, Mini and Rolls-Royce cars plans to maintain profitability with a program intended to reduce spending by 3 billion euros to 4 billion euros annually, the magazine said today in its online edition, citing unidentified people in the company. Munich-based BMW hired McKinsey & Co. as a consultant on the project, which runs until 2020 and stems from disappointment with earnings from the BMW 1-Series and Mini small cars, Manager Magazin said.

“We work constantly on the topic of cost management in order to maintain and further strengthen the competitiveness of the company,” spokesman Nikolai Glies said in an e-mailed statement. He declined to comment on the report’s details.

BMW Chief Financial Officer Friedrich Eichiner reiterated last month that the carmaker plans to rein in expenditures this year and move research and development spending as a proportion of sales “closer in line” with a target range of 5 percent and 5.5 percent from the 6.3 percent posted in 2013.

The company has forecast a “significant gain” in pretax profit this year, helped by new and refreshed models such as the 4-Series Gran Coupe and the X4 mid-size sport-utility vehicle. The company targets keeping profit from automaking in a range of 8 percent to 10 percent on an ongoing basis.

To contact the reporter on this story: Elisabeth Behrmann in Munich at ebehrmann1@bloomberg.net

To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net Tom Lavell

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