BMW yesterday shocked investors by posting a 15% decline in second-quarter pre-tax earnings despite strong growth in global sales.

Shares in the German carmaker, which owns Mini and Rolls-Royce, fell 4%. It blamed rising raw material costs, exchange rate pressures and a price squeeze for the profits fall.

Pre-tax earnings fell 15.5% to €916m (£630m) from €1.08bn a year earlier with the cars division recording a near 17% decline to €808m, despite a 3.4% rise in turnover to €11.9bn and a 10.4% increase in sales to 354,324 vehicles.

First-half pre-tax profits fell 10.7% to €1.73bn, with a 12% drop at the cars division to €1.5bn and margins squeezed to 6.8% from 8.4%.

Earnings from motorcycles, however, rose 17% to €84m and in financial services by 16% to €311m. Helmut Panke, chief executive, said: "We remain on course for the full year 2005 and confirm our aim of achieving approximately the high earnings level of the previous year."