Statement by Dr Nicolas Peter, Member of a Board of Management of BMW AG, Finance, Conference Call Interim Report to 31 Mar 2019

Posted on 07. May, 2019 by in BMW Canada

Ladies and Gentlemen,

Good morning!

 

On a operational side, a BMW Group started a year as expected,
in a business sourroundings that stays severe and volatile.

 

Our first-quarter financials were heavily impacted by a provision
of around 1.4 billion euros we done in tie with antitrust
allegations by a European Commission. The Statement of Objections
leads us to trust that it is illusive that a Commission will issue
a fine. This led us to recognize a sustenance in a initial entertain in
line with a International Financial Reporting Standards.

 

Ladies and Gentlemen,

 

We are resolutely assured and would like to underline that the
allegations done by a EU Commission are unwarranted!

 

We courtesy these record as an try to proportion a permissible
coordination of courtesy positions per a regulatory framework
with wrong conglomeration agreements. The BMW Group will competition a EU
Commission’s allegations with all a authorised means during a ordering if necessary.

 

The EU elect also clearly settled that a ongoing investigation
is not associated to a use of bootleg better devices.

Regarding a diesel discussions, that are totally separate, I
would like to emphasize again: a counsel and systematic illegal
plan of empty emissions is, for us, not acceptable.

 

The sustenance in tie with a antitrust allegations alone
reduced a EBIT domain in a Automotive Segment for a duration under
examination by around 7 commission points to -1.6%. As previously
announced, we have practiced a superintendence for a year to simulate this effect.

 

Before we demeanour during a entertain in some-more detail, there is one new
expansion we would like to pull your courtesy to. Changes in the
authorised horizon concede for a precipitated quarterly stating for the
initial and third entertain of a financial year. Starting with Q1 of
2019, we will utilize this option. As a result, a destiny reporting
for those durations will be some-more concise, but significantly reducing
a information content.

 

But, now, let’s demeanour during a sum for a initial 3 months.

 

We continue implementing a plan and investing in a future.

 

Our immature product portfolio, that we strengthened again final year,
is doing really well, both in analogous tests and with a customers.
In a initial quarter, discordant to a marketplace trend we gained segment
share, notwithstanding several indication changeovers. The pivotal regions grown as follows:

 

The postulated marketplace turmoil in Europe ensuing from the
transition to WLTP, as good as doubt over Brexit and how the
economy will serve develop, continue to have a dampening effect. We
are saying clever expansion in a United States – interjection in partial to
a new SAV models. We design a new X5 and a new X7, that have
been good perceived by dealers and customers, to yield further
procedure over a march of a year.

 

China continues to rise definitely for us. The reward shred –
and a BMW Group, in sold –outperformed a weaker Chinese car
marketplace in a initial quarter. The locally-built X3 is now fully
accessible and proof generally popular.

 

Ladies and Gentlemen,

 

Let’s take a demeanour during a financial sum for a Group.

 

Group revenues for a initial entertain totalled 22.46 billion euros and
were therefore on standard with a prior year. The financial result
decreased to 173 million euros. This was partly due to changes in
seductiveness rates that had a disastrous outcome on marketplace gratefulness of
associated derivatives. Pre-tax gain amounted to 762 million euros.
The categorical cause here was a sustenance we already mentioned.

The EBT domain for a initial entertain stood during 3.4%. Without the
provision, a figure was 9.6%, and therefore stays during a high level.

 

As formerly announced, due to indication changeovers for some of our
vital indication series, we design a initial half-year to be slightly
weaker overall.

 

Ladies and Gentlemen,

 

Long-term, essential business expansion stays a tip priority.
The upfront investments we are creation now to serve develop
electromobility and unconstrained pushing are a substructure for our
destiny business success. By a finish of a year, for example, we will
have 10 plug-in hybrid models on a roads.

 

As planned, first-quarter investigate and expansion output was
around 100 million euros aloft than a same duration of final year. The
RD ratio was during 6.0% and is approaching to stay between 6 and 6.5% for
a full year.

 

In a flighty environment, coherence is some-more critical than ever.
This element is reflected in a investment strategy. All a larger
plants will shortly be means to build all forms of vehicles within the
same prolongation structure – from explosion engine, plug-in hybrid to
battery-electric vehicles. Electrified models are already integrated
into prolongation during scarcely all a locations.

 

In a initial quarter, we invested a sum of roughly one billion euros.

That is over a third some-more than in a same duration of final year –
generally for modernisation and increasing coherence in a plant
structures and for construction of a new trickery in Mexico. Upfront
investments were also indispensable for prolongation ramp-up and marketplace launch
of a 3 Series and a new 1 Series.

 

The capex ratio reached 4.4%. We design a ratio for a full year
to be usually somewhat aloft than in 2018, notwithstanding a introduction of
IFRS 16.

 

Let’s pierce on to a sold segments.

 

In a Automotive Segment, deliveries to business remained fast in
a disappearing altogether market, as expected. Due to a indication changeovers
we mentioned and a rarely rival sourroundings quite in
Europe, shred revenues remained on standard with final year during 19.21
billion euros. The segment’s handling gain of -310 million euros
were impacted by a sustenance of scarcely 1.4 billion euros that I
have already mentioned. The EBIT domain was -1.6%. Without the
provision, a figure was 5.6%, as planned.

First-quarter sales were mostly driven by clever expansion in China.
But given a business in China is usually partly enclosed in our
handling income, this certain outcome is not entirely reflected in the
EBIT margin.

 

As formerly announced, aloft prolongation costs – generally for
achievement of regulatory mandate – impacted earnings.

The pricing conditions remained challenging, generally in Europe. We
faced headwinds from banking and commodity prices, as expected. In
further to other factors, a common agreement compensate boost in
Apr 2018 also contributed to aloft crew costs. The financial
outcome decreased to 283 million euros, generally due to positive
gratefulness effects in a prior year´s quarter.

 

I would like to contend a few difference about a segment’s giveaway money flow:
On a one hand, as is common during this time of a year, we have built
adult register – in particular, for arriving indication launches. On the
other hand, both a reduce net distinction and aloft collateral expenditure
are reflected here. As a result, giveaway money upsurge for a initial quarter
totalled -559 million euros.

 

Based on stream assessments, we are aiming for a identical giveaway cash
upsurge for 2019 as final year. A probable destiny remuneration associated to the
antitrust allegations has not been factored into this assessment.

 

Ladies and Gentlemen,

 

Let’s pierce on to a Financial Services Segment, that is off to a
good start this year. The sum portfolio grew to scarcely 5.74 million
contracts. In a year to a finish of March, roughly 470,000 new
contracts were resolved with sell business – an boost of 3.9%
over a prior year. Segment gain increasing significantly to
627 million euros. In further to portfolio growth, a Financial
Services shred also benefited from a generally fast risk
situation, that was reflected in reduce risk provisioning losses for
residual values in a series of markets.

 

Let’s demeanour subsequent during a Motorcycles Segment.

After a severe 2018, BMW Motorrad done a good start to 2019.
Deliveries to business increasing to around 38,600 motorcycles. This
certain business expansion was also reflected in a operating
outcome – which, during 87 million euros, climbed 11.5% from a previous
year. The EBIT domain of 15.2% was also aloft than for a same
entertain of final year. With appealing new models, we are looking
brazen to energetic expansion for BMW Motorrad over a subsequent few months.

 

Ladies and Gentlemen,

 

The BMW Group is in a really clever position in these severe times.

Our financial strength enables us to continue investing in the
future, even in a formidable outmost business environment. As prolonged as
conditions do not mellow significantly, we design that a full
financial year 2019 will rise in line with a guidance.

 

In a Automotive Segment, we design a slight boost in deliveries.

 

Barring a outcome of a sustenance for a antitrust allegations,
a aim operation for a EBIT domain of between 6 and 8 percent
stays unchanged. We are still on march to strech this goal. Since
a sustenance however has a disastrous impact of 1.5 commission points
on a EBIT margin, we are awaiting a domain in a Automotive
shred for 2019 between 4.5 and 6.5 percent. Our transparent strategic
aim in a fast business sourroundings stays in a operation of 8-10%.

 

In a Motorcycles Segment, we are formulation for a plain boost in
deliveries. The EBIT domain should sojourn within a aim operation of 8-10%.

 

In a Financial Services Segment, we design lapse on equity to be
on standard with final year and above a aim figure of 14%.

 

Group gain before taxation will be significantly reduce than the
prior year, also as a outcome of a announced diminution in the
financial result. Our superintendence assumes that domestic and economic
conditions will not change significantly. We design a second
half-year to advantage from a clever product movement generated by the
many new and updated models now ramping adult and prepared for launch.

 

However, conditions will sojourn volatile. For one thing, there is
slow doubt over a destiny march of trade process and the
UK’s withdrawal from a European Union. We will also continue to
guard mercantile developments worldwide really closely. Weaker
expansion in southern Europe, in particular, could impact our
business in a entrance months. 

 

Thanks to a high grade of flexibility, we are able of
responding fast to new developments and can drive prolongation as
needed. We will continue to work on all factors we can actively
influence. This includes shortening complexity, improving potency and
stability to optimise processes and structures. Through Performance
NEXT, we are regulating pivotal levers to evenly realign a company.

 

Ladies and Gentlemen,

 

The BMW Group has a plain substructure to build on: Sustainable,
essential expansion stays a goal.

 

Innovation care and profitability are pivotal to progressing our
position during a forefront of a industry. Every singular BMW Group
worker is committed to this objective. This joining is what
distinguishes us as a company.

 

I resolutely trust that, with a transparent plan and a systematic
doing by all of a associates, we can continue to lead the
BMW Group into a successful future.

Thank you.

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