BMW, the world's biggest premium carmaker, forecast a hefty rise in 2010 pretax profit with better results across its entire business, boosted by new car models like its popular BMW 5 Series.

Analysts expect economic growth to spur corporate fleet sales at premium carmakers while rivals in terms of volume, such as Fiat, suffer from an end to the scrapping incentives that inflated sales of cheap minis and subcompacts in 2009.

We want to see visible progress in 2010 toward achieving our profitability targets for 2012, Chief Executive Norbert Reithofer said Wednesday during a news conference on its annual results.

A Reuters poll of 10 analysts published before last week's results showed the market expects pretax profit to rise to 1.45 billion euros this year from just 413 million in 2009.

With investors already expecting a sharp improvement, BMW shares failed to get a boost from the comments. At 1152 GMT, the stock was trading 0.6 percent lower compared with a 0.2 percent fall in the Stoxx European car sector index .SXAP.

However, Morgan Stanley analysts called the 2010 outlook and fourth-quarter earnings a relief and said market expectations were well underpinned.

BMW said group vehicle sales would rise at a solid single-digit rate to more than 1.3 million vehicles thanks in part to the release this month of the new 5 Series saloon and the September debut of the Mini Countryman SUV.

If the economy keeps improving in 2011, volumes should continue to grow next year, with a corresponding increase in earnings, the company said.

BMW said its core Automobiles segment would post an operating margin in the low-single-digit percentage range this year while maintaining roughly the 1.46 billion euros in adjusted free cash flow it generated in 2009.

The segment swung to a loss before interest and tax last year mainly due to a sharp drop in sales but 194 million euros from foreign exchange effects added to the pain, mainly from a weaker pound.

BAD DEBT RISK CASTS SHADOW

BMW expects earnings in its motorcycle and financial services segments to improve this year as well, but it would not rule out more losses from bad debts after the ratio of non-performing loans in its portfolio jumped 25 basis points to an unusually high 0.84 percent.

Given the slow pace of economic recovery in most main markets, the bad debt risk situation is unlikely to ease significantly in the field of retail customer and dealer financing, the company said.

A ten-fold rise in taxes reduced net profit last year by 36 percent to 210 million euros, BMW's worst result since its ill-fated acquisition of Britain's Rover brand led to a 2.5 billion euro loss in 1999.

Porsche SE said its first-half profit slumped 84 percent after accounting rules forced the group to revalue its stake in Volkswagen ordinaries as part of deconsolidating the Wolfsburg carmaker from its books.

Rival Bavarian premium carmaker Audi reported a operating profit last year of 1.6 billion euros even though its sold fewer cars than BMW, making it the most profitable motoring brand in the industry.

We expect the premium small car segment to grow by 4-6 percent annually until 2020, BMW CEO Reithofer said, adding the group would cut its CO2 fleet emissions by at least 25 percent by 2020 versus 2008 levels, when they were 156 grams per km.

(Editing by Karen Foster)