BMW Group makes good start to 2018

Munich. The BMW Group has started the financial year
2018 with a strong first quarter. Despite volatile conditions and
unfavourable exchange rate effects, new best ever figures were
recorded for sales volume and net profit. Despite high upfront
expenditure for tomorrow’s mobility, the Automotive segment also set a
new record for its result from operations (EBIT).

 

“Our industry is currently going through a phase of unprecedented
technological change and must master the highly challenging
conditions. The first quarter highlights some important points: we
think in terms of opportunities and are pursuing a well-defined
strategy; we are combining tomorrow’s mobility with sustainable
profitability – underlined by the fact that we are capable of
generating a high pre-tax margin on group level, even in volatile
times,” said Harald Krüger, Chairman of the Board of
Management of BMW AG, in Munich on Friday. “The BMW Group was the
world’s most profitable car company in 2017 and is stepping up the
pace again in 2018. In the opening quarter of the new year, we
achieved new best-ever figures for sales volume and net profit and
implemented some crucial strategic decisions.” The BMW Group continues
to play an active role in transforming the mobility sector with its
future-oriented ACES programme:
Automated, Connected,
Electrified and Services.

 

Despite the major changes impacting the mobility sector, the one
constant factor driving the BMW Group’s strategic decisions is the
customer. That is why the BMW Group offers a unique
range of products, from the BMW i3 through to the Rolls-Royce Phantom,
alongside services ranging from customised financing through to
intelligent mobility services, which contribute towards making
customers’ lives easier and more convenient. With this user-oriented
strategy, the BMW Group is developing into a customer-focused mobility
and tech company, with the goal to have 100 million active customers
by 2025.

 

Since the beginning of the year, the BMW Group has taken major steps
to implement significant parts of its Strategy NUMBER ONE
NEXT
. In February, the BMW Group and the Chinese manufacturer
Great Wall signed a letter of intent to establish a
joint venture for the local production of all-electric
MINI
vehicles in China. This step is a further clear
commitment to the electrified future of the MINI brand and highlights
the importance of the Chinese market for the BMW Group.

 

One month later, the BMW Group and Daimler AG signed an agreement to
merge their mobility services business units. The aim
is to merge and strategically expand the range of on-demand mobility
services provided in the areas of CarSharing, Ride-Hailing, Parking,
Charging and Multimodality.

 

On 11 April, the BMW Group opened its campus for autonomous
driving
just outside Munich, where together with partners, it
will develop the technologies required for both highly and fully
automated driving. Across 23,000 square metres of office space, new,
state-of-the-art working environments now provide space for 1,800
employees. The project is creating many jobs and in 2017 alone, the
BMW Group recruited around 1,000 people to develop the technologies of
the future. IT specialists and software developers in the fields of
artificial intelligence, machine learning and data analysis are
particularly sought after.

 

Last week at the Auto China 2018 in Beijing, the BMW Group previewed
its BMW Concept iX3 vehicle, giving an idea of the
first all-electric BMW X3, which will be manufactured
in China. Production is scheduled to commence in 2020. The vehicle
will be the first to be equipped with the fifth generation of electric
drivetrains and will also feature enhanced battery technology. With a
net capacity of more than 70 kWh, the vehicle will have a range of
over 400 kilometres in the WLTP cycle.

 

At the beginning of March, the BMW Group announced that the BMW i
Vision Dynamics will be launched as an all-electric
BMW i4 and manufactured in the Munich
plant. The BMW Group already produces electrified
models at ten of its plants worldwide. Furthermore, the Oxford plant
will begin producing the all-electric MINI in 2019. The BMW i4 is just
one of the 25 electrified models that the BMW Group
intends to bring to market by 2025. Half of these models will be fully electric.

 

The BMW Group is also stepping up the pace when it
comes to its portfolio of conventionally powered vehicles. Through
2018, the largest product offensive in the history of
the Group will be continued – powered by an additional twenty new and
revised models. The BMW X2 was successfully launched in March, the new
BMW X3 will be manufactured at three different locations from the
second quarter on and the new generation of the BMW X4 is in the
starting blocks. 2018 is clearly the “Year of
X”
for the world’s largest manufacturer of premium
vehicles and the new vehicles are expected to provide additional sales
volume momentum, particularly in the second half of the year.

 

New first-quarter highs for sales volume and net profit

 

First-quarter deliveries of BMW, MINI and
Rolls-Royce brand vehicles rose by 3.0% to 604,629 units (2017:
587,237). All three major sales regions contributed to the increase.
Due to currency effects, Group revenues for the
three-month period fell by 5.1% to € 22,694 million (2017: € 23,926
million). Adjusted for currency effects, revenues were at a similar
level to the previous year (-0.7%). Profit before financial
result
(EBIT) was also influenced by currency factors and
came in at € 2,733 million (2017: € 2,821 million / -3.1%).
Group profit before tax (EBT), which is relevant
for the BMW Group financial guidance, amounted to € 3,165 million
(2017: € 3,180 million / -0.5%) and reached the previous year’s high
level despite rising costs and upfront expenditure for RD
activities. This performance was partly due to the financial result,
which improved despite the impact of items working in the opposite
direction. The previous year’s first-quarter financial result
benefited from a positive valuation effect of € 183 million arising in
conjunction with the participation of new investors in the HERE
mapping service. Improvements in other financial result totalling
€ 122 million had also impacted the previous year’s figure. In the
current year, the financial result for the period from January to
March includes the valuation effect arising in connection with the
acquisition of the 50% stake in the DriveNow joint venture from Sixt
SE amounting to € 209 million.

 

Another strong free Cashflow expected for 2018

 

Overall, the EBT margin for the Group came in at
13.9% (2017: 13.3%), the highest quarterly figure since 2011.
First-quarter Group net profit amounted to € 2,301
million (2017: € 2,274 million) and was therefore slightly up (+1.2%)
on the record figure reported for the previous year.

 

“The first quarter underlines how we can perform well even under
volatile conditions. So now we continue to focus on what needs to be
done in order to ensure 2018 is another record year,“ commented
Nicolas Peter, member of the Board of Management
for BMW AG responsible for Finance. “We remain on track to secure the
sustainable success of the company. The basis for future achievements
is our financial strength, which we want to underline in 2018 with
another free cashflow of more than € 3 billion.“

 

Automotive segment: EBIT margin within target range

 

First-quarter Automotive segment revenues were also
impacted by currency effects and finished the quarter slightly down
(-3.4%) at € 19,326 million (2017: € 20,001 million). By contrast,
EBIT of € 1,881 million (2017: € 1,877 million)
remained at the previous year’s record level (+0.2%), despite the high
level of upfront expenditure for RD. The EBIT
margin
improved accordingly to 9.7% (2017: 9.4%) and was thus
at the upper end of the target range of 8 to 10%. At € 2,281 million
(2017: € 2,285 million), profit before tax was also
at a similarly high level to the previous year (-0.2%).

 

BMW Group vehicles with electrified drivetrains were
particularly popular, with sales of the BMW i3 and i8 models, together
with BMW iPerformance and MINI Electric plug-in hybrids, up by 38% to
just under 27,000 units. “We are therefore well on course to
delivering more than 140,000 electrified vehicles in the current
year,” Harald Krüger stated. Electrified vehicles
accounted for more than four percent of total BMW Group vehicle
deliveries to customers in the first quarter (Q1 2017: 3.3%). With its
three automotive premium brands, the BMW Group is confident it will
remain the world’s leading manufacturer of premium vehicles in 2018.

 

Overall, the BMW brand delivered 517,447 units
(2017: 503,445 units) to customers, its best result to date for a
first quarter (+2.8%). Sales-volume growth was driven especially by
the new generation of the BMW 5 Series and the BMW X1. These vehicles
were introduced in spring 2017 and both have recorded double-digit growth.

 

The MINI brand also performed well during the first
quarter, recording its best sales volume result to date for a first
quarter, with 86,375 units delivered to customers (2017: 83,059 units;
+4,0%) The market launch of the updated MINI and the MINI Convertible
in March is expected to create growing momentum over the remainder of
the year.

 

First-quarter sales of Rolls-Royce Motor Cars rose
by 10.1% year-on-year to 807 units (2017: 733 units). Customer demand
for Rolls-Royce models remains strong worldwide with the exception of
the Middle East, where the market remains volatile. The new Phantom,
the brand’s flagship, has been on sale since January, with order
intake set to remain high through to the year-end. Preparations are
well underway for the market launch of the Rolls-Royce Cullinan.

 

The BMW Group remains committed to its strategy of achieving a
well-balanced distribution of sales worldwide, using its highly
flexible production, sales and marketing structures to even out
fluctuating demand between individual regions. All three of the
Group’s major sales regions contributed to volume
growth during the first quarter, driven in particular by strong
performances on the Chinese mainland and in the USA.

 

Sales figures for Europe edged up by 1.0% to 270,725
units (2017: 267,996 units). First-quarter deliveries to customers in
France were slightly up on the previous year (+3.1%). Business in the
UK, however, contracted (-2.7%) in the wake of the continuing
uncertainty regarding the progress of Brexit negotiations.

 

Sales of BMW, MINI and Rolls-Royce brand vehicles in
Asia in the first quarter 2018 grew by a solid 6.3%
to 212,693 units (2017: 200,140 units). China again accounted for the
lion’s share of the increase, with deliveries of the Group’s three
automotive brands up 7.1% compared to one year earlier.

 

In the Americas region, the BMW Group recorded
volume growth of 4.0% to 106,348 units (2017: 102,238 units). The
figure includes 84,630 units sold in the USA, also slightly up
year-on-year (+3.0%).

 

Motorcycles segment sales volume at previous year’s level

 

BMW Motorrad sales volume in the first quarter was
at the same high level as the previous year. Worldwide deliveries to
customers edged up 0.6% to 35,858 units (2017: 35,636 units), setting
a new first-quarter sales volume record for the seventh year in
succession. At the same time, segment performance was held down by the
impact of the current model change and by currency effects.
Revenues fell by 15.5% to € 524 million (2017:
€ 620 million). EBIT was also adversely affected by
the same factors and finished at € 77 million (2017: € 125 million;
-38.4%). Pre-tax profit for the three-month period amounted to € 78
million (2017: € 125 million; -37.6%). The first-quarter EBIT
margin
for the Motorcycles segment came in at 14.7% (2017:
20.2%). In the light of slightly slower production ramp-up of new
models, retail sales for 2018 are now expected to grow slightly.

 

Financial Services segment remains on course

 

The contract portfolio under management within the
Financial Services segment grew by 1.0% during the
three-month period under report and stood at 5,434,664 contracts at 31
March 2018 (31 December 2017: 5,380,785 contracts). During the first
quarter, 451,908 (2017: 465,634) new leasing and credit
financing contracts
were signed with retail customers
(-2.9%). Segment revenues and earnings were influenced by currency
factors: First-quarter revenues fell by 5.3% to
€ 6,674 million (2017: € 7,046 million) and profit before
tax
by 5.7% to € 561 million (2017: € 595 million). The BMW
Group continues to record adequate levels of provision with respect to
residual value and credit risk exposures in the leasing and financing
lines of business.

 

Increase in workforce size

 

The BMW Group’s workforce comprised 131,181 employees at the end of
the first quarter, 1.0% more than at 31 December 2017. Skilled workers
and IT specialists in future-oriented areas, such as digitalisation,
autonomous driving and electric mobility continue to be recruited.

 

BMW Group reaffirms targets for the financial year 2018

 

The BMW Group is confident of achieving its projected targets for the
current financial year – largely thanks to its strong brands, its
attractive product portfolio and the expectation that international
automobile markets will continue their generally upward trend. These
favourable factors are offset by extremely high levels of upfront
expenditure for new technologies, fierce competition and rising
personnel expenses. The global political and economic environment is
expected to remain volatile.

 

The BMW Group reaffirms its targets for the full year. “We are
targeting new record figures in the Automotive
segment
for sales volume and
revenues in 2018,” stated Harald
Krüger
. “Group profit before tax is expected
to be at least at the previous financial year’s level.” The BMW Group
continues to forecast an EBIT margin in the target
range of 8 to 10% for the Automotive segment.

 

In connection with the planned bundling of mobility services, the BMW
Group has announced that – if approved by the competition authorities
in the current year – the foundation of the joint venture will have a
one-off valuation and earnings effect and will result in an adjustment
to the outlook. Under these circumstances, the Group profit
before tax
for 2018 would be slightly higher than one year
earlier. The effect described above has no impact on the EBIT margin
of the Automotive segment.

 

Forecasts for the current year are based on the assumption that
worldwide economic and political conditions will not change significantly.

* * *

The BMW Group – an overview

1st quarter
 2018

1st quarter
 2017

Change in %

Deliveries to customers

    

Automotive

units

604,629

587,237

3.0

Thereof:  BMW

units

517,447

503,445

2.8

 MINI

units

86,375

83,059

4.0

 Rolls-Royce

units

807

733

10.1

Motorcycles

units

35,858

35,636

0.6

 

 

 

 

 

Workforce
1                            (compared to
31.12.2017)

131,181

129,932

1.0

 

 

 

 

 

Automotive
segment EBIT margin3

%

9.7

9.4

+0.3 %Points

Motorcycles
segment EBIT margin3

%

14.7

20.2

-5.5 % Points

EBT margin BMW Group
3

%

13.9

13.3

+0.6 %Points

 

 

 

 

 

Revenues
3

€ million

22,694

23,926

-5.1

Thereof:
Automotive3

€ million

19,326

20,001

-3.4

Motorcycles3

€ million

524

620

-15.5

Financial Services

€ million

6,674

7,046

-5.3

Other Entities

€ million

2

2

Eliminations3

€ million

-3,832

-3,743

-2.4

 

 

 

 

 

Profit before financial result (EBIT)
3

€ million

2,733

2,821

-3.1

Thereof:
Automotive3

€ million

1,881

1,877

0.2

Motorcycles3

€ million

77

125

-38.4

Financial Services

€ million

569

604

-5.8

Other Entities

€ million

9

4

Eliminations3

€ million

197

211

-6.6

 

 

 

 

 

Profit before tax (EBT)
3

€ million

3,165

3,180

-0.5

Thereof:
Automotive3

€ million

2,281

2,285

-0.2

Motorcycles3

€ million

78

125

-37.6

Financial Services

€ million

561

595

-5.7

Other Entities

€ million

70

-4

Eliminations3

€ million

175

179

-2.2

 

 

 

 

 

Income taxes
3

€ million

-864

-906

4.6

Net profit
3

€ million

2,301

2,274

1.2

Earnings per share
2,3

 €

3.47/3.47

3.45/3.45

0.6/0.6

1 Excluding dormant employment contracts, employees in the
work and non-work phases of pre-retirement part-time working
arrangements and low wage earners.

2 Earnings per share of common stock/preferred stock

3 2017 figures were adjusted according to IFRS 15 – see
note [5] in quarterly report.

 

For questions please contact:

 

Corporate Communications

 

Max-Morten Borgmann, Business and Finance Communications

Telephone: +49 89 382-24118, Telefax: +49 89 382-24418

Max-Morten.Borgmann@bmwgroup.com

 

Glenn Schmidt, Head of Business and Finance Communications

Telephone: +49 89 382-24544, Telefax: +49 89 382-24418

glenn.schmidt@bmwgroup.com

 

Internet: www.press.bmwgroup.com

e-mail: presse@bmw.de

 

 

The BMW Group

 

With its four brands BMW, MINI, Rolls-Royce and BMW Motorrad, the BMW
Group is the world’s leading premium manufacturer of automobiles and
motorcycles and also provides premium financial and mobility services.
The BMW Group production network comprises 30 production and assembly
facilities in 14 countries; the company has a global sales network in
more than 140 countries.

 

In 2017, the BMW Group sold over 2,463,500 passenger vehicles and
more than 164,000 motorcycles worldwide. The profit before tax in the
financial year 2017 was € 10.655 billion on revenues amounting to
€ 98.678 billion. As of 31 December 2017, the BMW Group had a
workforce of 129,932 employees.

 

The success of the BMW Group has always been based on long-term
thinking and responsible action. The company has therefore established
ecological and social sustainability throughout the value chain,
comprehensive product responsibility and a clear commitment to
conserving resources as an integral part of its strategy.

 

 

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