(August 1, 2012) FRANKFURT— Despite increased sales, BMW reported a fall in second-quarter profit compared with the same quarter last year as pricing pressure in Europe's weak market hit its margins. Group earnings before interest and taxes (Ebit) declined 19 percent from a record level last year to 2.27 billion euros ($2.79 billion) from 2.8 billion euros.

Sales climbed 7.3 percent to 19.2 billion euros, BMW reported.

Earnings in the quarter were burdened by higher personnel costs, increased spending on development and "intense market competition," the company said.

BMW faces unfavorable business conditions in some parts of Europe, in particular the region's southern countries, the automaker said in a statement.

Second-quarter Ebit at BMW's carmaking division declined 16 percent from a year earlier to 2.02 billion euros, with the margin at 11.6 percent of sales. That compares with margins of 11.6 percent at Volkswagen's Audi division, the world's second-largest luxury-car brand after BMW, and 8.6 percent at third-ranked Daimler's Mercedes-Benz.

"We are monitoring developments very closely in various markets," CEO Norbert Reithofer said in the statement. "The BMW group has a flexible production network and, as a premium manufacturer, is focused on maintaining profitable growth."

Sources: BMW, Automotive News