BMW is predicting that this will be its best year ever, with pre-tax profit rising by 22% to four billion euros, up from last year’s figure of nearly 3.3 billion.

However, at the annual results news conference, the company warned that it is a pretty tough target, given anticipated higher costs for raw materials, including steel, as well as currency exchange fluctuations.

Chief executive Helmut Panke said BMW aims to counter that by improving efficiency and productivity.

He said that worldwide sales in 2005, including the Mini and Rolls-Royce car brands, rose by 9.9%, beating its main rival Mercedes.

Expansion plans include adding production in India.

Part of the profit increase this year will come from the sale of much of its stake in the aircraft engine maker Rolls-Royce.

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