German carmaker BMW reported a 10.9 per cent rise in headline 2004 pretax profit today and proposed buying back up to 10 per cent of its share capital.
Earnings before tax climbed to €3.5 billion in 2004 from €3.2 billion in the previous year, in line with market forecasts.
The company proposed raising its dividend for common shares to 62 cents from last year's 58 cents.
Shares jumped on the news, trading up 4.5 per cent at €34.58 by 1pm, compared with a 0.7 per cent gain in the DJ Stoxx European autos sector.
Analysts welcomed the share buyback, saying the company was finally willing to surrender some of its cash in the name of shareholder value. "The big bombshell is the share buyback programme," said HVB analyst Georg Stuerzer.
Adam Collins of Commerzbank said: "BMW has been criticised for some time for lacking investor friendliness and this is a sign that it has been listening to the request of shareholders who have been concerned that (BMW) are sitting on too much cash."
The BMW brand also stands a good chance of supplanting Mercedes-Benz as the most popular luxury marque in the world, thanks to its new volume models like the sporty 1-Series compact hatchback and the revamped 3-Series best-seller.
But expectations of stronger profits this year following a turnaround at Mercedes meant investors were paying a premium on shares of parent DaimlerChrysler over BMW.