Munich. The BMW Group remains firmly committed to
following its forward-looking strategy, despite the current
challenging conditions. In line with its Strategy NUMBER ONE
NEXT, the BMW Group continues to invest extensively in
tomorrow’s technologies and is maintaining its steady course, despite
highly volatile geopolitical and trade policy developments.
“Our forward-looking approach has absolute priority. Particularly in
these volatile times, we are maintaining our focus on the future and
taking the decisions that will lead to tomorrow’s success,” said
Harald Krüger, Chairman of the Board of Management
of BMW AG, in Munich on Wednesday. “We stand for trust and
continuity. The BMW Group has more than 100 years of experience in
dealing with transformation and volatility in a rapidly changing
world. This is why we see challenging conditions as an opportunity to
move forward and strengthen our position as market leader. We are
implementing our strategy rigorously and investing extensively in the
technologies of the future, despite today’s volatile
environment,” Krüger emphasised.
Research and development expenses during the first
nine months of 2018 exceeded last year’s corresponding figure by
around € 400 million and totalled € 3,881 million (+11.4%). As
previously reported, full-year RD expenses are likely to amount
to as much as seven per cent of Group revenues in 2018 (2017: 6.2%).
This level of expenditure was reached in the third
quarter, with an RD ratio of 6.9%. At € 2,889 million,
capital expenditure over the nine-month period from
January to September was also up on the previous year (2017: € 2,817
million). In addition to ramping up the roll-out of new models, the
focus is on expanding business in the fields of electric mobility and
autonomous driving. As the world’s leading provider of premium
mobility, the BMW Group puts the needs and desires of its customers
first and is continuing its ground-breaking work on the four
ACES topics (Autonomous,
Connected, Electrified and Services/Shared).
“We remain an ambitious company, setting ourselves challenging
targets. However, along with the rest of the industry, we are
increasingly confronted with adverse external factors, the negative
impact of which cannot be fully offset,” commented
Nicolas Peter, Member of the Board of Management of
BMW AG, Finance. “The BMW Group is extremely flexible and we are
countering these developments rigorously. We remain unconditionally
focused on the issues of crucial importance for the future, while at
the same time optimising our internal processes. The BMW Group’s
strong financial performance remains the basis for sustained success,
enabling our company to play a key role in shaping the transformation
currently taking place in our industry.” Despite the current very
challenging environment, the BMW Group’s Automotive segment generated
free cash flow of € 2,042 million (2017: € 2,703
million) in the first nine months of the current year.
Key strategic decisions to ensure future success
In recent months in particular, the BMW Group has taken numerous key
strategic decisions to underpin its future success on a sustainable
basis. The BMW Group is bolstering its global production network,
focusing keenly on Europe, China and
the USA. In September, the four-millionth
vehicle was produced at the Spartanburg
plant in the USA, the Group’s largest manufacturing facility
worldwide. The BMW Group is currently investing in its Spartanburg
plant on a substantial scale, preparing the plant for future
generations of BMW X models and enlarging the local workforce from a
current figure of around 10,000 employees to 11,000 employees by 2021.
In addition to the 1,400 BMW X3, X4, X5 and X6 vehicles currently
produced daily in Spartanburg, from December onwards the new
BMW X7 is set to become the fifth BMW model to be
manufactured at the South Carolina plant.
A few weeks ago, the BMW Group also announced its intention to
comprehensively expand its business in China. As the
first foreign automobile manufacturer to take this step in China, the
BMW Group has agreed with its local partner, Brilliance, to acquire a
majority stake in the BMW Brilliance Automotive joint venture. At the
same time, the contractual term of the joint venture is to be extended
until 2040. Investments of more than three billion
euros in local plant structures were announced in connection with this
ground-breaking agreement. These measures strengthen the company’s
position in China, a dynamic growth market.
Rigorous expansion of electric mobility
With the launch of the BMW i3, the BMW Group established itself early
as a pioneer in the field of electric mobility. Electrification is one
of the key pillars of the Group’s Strategy NUMBER ONE
NEXT. By 2021, the BMW Group will have five
all-electric models: the BMW i3, the MINI Electric, the BMW
iX3, the BMW i4 and the BMW iNEXT. By 2025, that number is set to grow
to at least twelve models. Including plug-in hybrids – whose
electrically powered range will increase significantly in the coming
year – the BMW Group’s electrified product portfolio will then
comprise at least 25 models.
This wide range is possible thanks to highly flexible vehicle
architectures and an equally flexible global production
system. Going forward, the BMW Group will be capable of manufacturing
models with all-electric (BEV), hybrid-electric (PHEV) and
conventional (ICE) drivetrains on a single production line. Its
ability to integrate e-mobility in the production network enables the
BMW Group to respond even more flexibly to the increasing demand for
electrified vehicles. The goal for the current year is to deliver
140,000 electrified vehicles to customers. By the end of 2019, the BMW
Group expects to have more than half a million electrified vehicles on
the roads.
The BMW Group is currently developing the fifth
generation of its electric drivetrain, in which the interplay
of electric motor, transmission, power electronics and battery will be
additionally optimised. Integrating the electric motor, transmission
and power electronics also cuts costs. Another advantage is that the
electric motor does not require rare earths, enabling
the BMW Group to reduce its dependence on their availability. The
fifth generation of the electric drivetrain will be installed for the
first time in the BMW iX3 in 2020.
At the beginning of the third quarter, the BMW Group signed a
long-term contract with the Chinese company Contemporary Amperex
Technology Co. Limited (CATL) to supply battery cells
with a value of four billion euros. The award of this contract was a
decisive factor in CATL’s decision to build the world’s most advanced
battery cell manufacturing facility in Germany. From 2021 onwards,
cells for the BMW iNEXT – which will be manufactured at the BMW Group
plant in Dingolfing – will be supplied by the new CATL plant in
Erfurt. The BMW Group has thereby anchored the entire e-mobility value
chain in Germany – from battery cell production through to the
finished vehicle.
One of the prerequisites for expanding e-mobility volumes on this
pioneering scale is the ability to efficiently manage the highly
sought-after raw materials needed to manufacture the
battery cells. In order to ensure security of supply, the BMW Group
will in future purchase specific raw materials such as cobalt itself,
and then make them available to battery cell suppliers – a strategy
that has already proven its worth for aluminium and other resources.
In addition, negotiations are being held with suppliers with the aim
of concluding long-term agreements for battery raw materials that meet
the BMW Group’s sustainability criteria.
Furthermore the BMW Group is establishing a joint technology
consortium together with Northvolt (a Swedish battery
manufacturer) and Umicore (a Belgium-based company engaged in
developing battery materials), thereby taking a further step to ensure
access to the cell technology so vital for electric mobility. The
collaboration will extend to the development of a complete,
sustainable value chain for battery cells in Europe, including
development, production and ultimately recycling. The recycling of
battery components will play a key role: given the sharp rise in
demand for battery cells, the consortium’s stated aim is to close the
life-cycle loop of raw materials to the greatest possible extent with
comprehensive recycling.
Challenging conditions in 2018 financial year
In terms of its core business, the BMW Group had
always expected 2018 to be a challenging year. Compared with 2017,
additional upfront expenditure of around one billion euros for the
mobility of the future and a high three-digit million euro negative
impact from exchange-rate and raw-materials-price developments had
been factored into expected earnings for the year.
As announced on 25 September 2018, several additional factors further
restricted business performance in the third quarter. Unlike many of
its competitors, the BMW Group implemented the requirements of the
WLTP regulations at an early stage. The industry-wide shift to the new
WLTP test cycle has resulted in significant supply distortions in
Europe and unexpectedly intense competition, given that numerous
competitor models without WLTP certification were registered before 1
September. As a result, within the framework of its flexible
production and sales strategy and given its focus on earnings quality,
the BMW Group decided to reduce its volume planning. At the same time,
increased goodwill and warranty measures resulted in significantly
higher additions to provisions in the Automotive segment. In addition,
the ongoing international trade conflicts had the effect of
aggravating the market situation and feeding consumer uncertainty.
These circumstances resulted in unexpectedly severe distortions in
demand and therefore pressure on pricing in several markets.
Deliveries of the BMW Group’s three premium
automobile brands during the first nine months of the
year edged up by 1.3% to 1,834,810 units (2017: 1,811,234
units). Group revenues amounted to € 72,460 million
(2017: € 73,324 million; -1.2%). Adjusted for exchange rate factors,
the increase was 1.5%. As a result of the various adverse factors
arising in the third quarter, combined with high levels of upfront
expenditure for research and development, profit before
financial result (EBIT) fell to € 7,224 million (2017:
€ 8,137 million; -11.2%). Profit before tax totalled
€ 7,883 million (2017: € 8,741 million; -9.8%) and, despite the
reduction, was the second-best nine-month figure in the company’s
history. The EBT margin for the Group came in at
10.9% (2017: 11.9%). Group net profit amounted to €
5,788 million (2017: € 6,337 million; -8.7%).
At 592,303 units, third-quarter
deliveries to customers remained at the previous
year’s level (2017: 590,415 units; +0.3%). Group
revenues grew by 4.7% to € 24,743 million (2017: € 23,633
million). Profit before financial result (EBIT) fell
to € 1,745 million (2017: € 2,384 million; -26.8%). Profit
before tax (EBT) amounted to € 1,845 million (2017: € 2,503
million; -26.3%). The EBT margin for the Group came
in at 7.5% (2017: 10.6%). Net profit amounted to €
1,405 million (2017: € 1,846 million; -23.9%).
Automotive segment exposed to volatile business conditions
At € 62,629 million, Automotive segment revenues for
the first nine months were at the previous year’s
level (2017: € 62,599 million). Due to the factors mentioned above and
the high level of upfront expenditure for research and development,
EBIT amounted to € 4,730 million (2017: € 5,879
million; ‑19.5%). Despite the large number of adverse factors, the
EBIT margin came in at 7.6% (2017: 9.4%).
Profit before tax fell to € 5,346 million
(2017: € 6,562 million; -18.5%).
Third-quarter revenues grew by 3.3% to € 21,111
million (2017: € 20,433 million). Due to the above adverse factors and
the high level of upfront expenditure for research and development,
EBIT for the three-month period fell to € 930 million
(2017: € 1,758 million; -47.1%). The Automotive segment’s EBIT
margin came in at 4.4% (2017: 8.6%). Profit
before tax amounted to € 1,003 million (2017: € 1,886
million; -46.8%).
In total, 1,566,216 (2017: 1,537,497 units; +1.9%)
BMW brand vehicles were delivered to customers
worldwide during the first nine months of the year. With double-digit
growth rates, the BMW 5 Series (+14.9%) and the new
BMW X3 (+15.3%) were the main growth drivers.
Deliveries of the BMW X3 rose by 62.5% in the third
quarter, thanks to full availability and expanded production capacity.
A total of 265,935 (2017: 271,394; -2.0%) MINI brand
vehicles were delivered to customers during the first nine months of
2018. The MINI Countryman recorded double-digit
growth (+24.9%) during this period.
Compared to the previous year, deliveries of Rolls-Royce
Motor Cars rose by 13.5% (2,659 units) in the first three
quarters of the year. Worldwide demand for all Rolls-Royce models,
including the Black Badge variants of the Dawn, Ghost and Wraith,
remains strong. Preparations are underway for the first deliveries of
the Rolls-Royce Cullinan to customers, which are scheduled for early
2019. This new all-terrain model is already enjoying strong customer
demand, with the order book filled well into the coming year.
Whereas deliveries of the BMW Group’s three automotive brands in
Europe remained virtually unchanged at the previous
year’s high level (816,037 units), the Americas
(336,258 units; +3.0%) and Asia (638,449 units;
+2.8%) regions recorded slight growth for the nine-month period. In
China, the pace of growth in the number of deliveries
to customers rose significantly in the third quarter (160,047 units;
+11.5%), thanks to the ramp-up of the local production of the new BMW X3.
Motorcycles segment revises model range
BMW Motorrad has revised its 2018 model range on a massive scale,
adding nine new models. Production adjustments necessary during the
ramp-up phase had a negative impact on deliveries during the first
six-month period. In the first nine months of the
year, a total of 126,793 BMW motorcycles and maxi-scooters were
delivered to customers (2017: 127,818 units; -0.8%).
Revenues totalled € 1,658 million (2017: € 1,827
million; -9.3%). Profit before financial result
decreased to € 208 million (2017: € 282 million; -26.2%), resulting in
an EBIT margin of 12.5% (2017: 15.4%). Profit
before tax for the nine-month period amounted to € 205
million (2017: € 281 million; -27.0%).
Third-quarter deliveries to customers totalled 39,818
units (2017: 39,429 units; +1.0%). Revenues fell to €
476 million (2017: € 512 million; ‑7.0%). Profit before
financial result amounted to € 33 million (2017: € 53
million; -37.7%), corresponding to an EBIT margin of
6.9% for the quarter (2017: 10.4%). Profit before tax
amounted to € 31 million (2017: € 53 million; ‑41.5%).
Financial Services segment remains on course
The Financial Services segment continued to perform
well in the period from January to September 2018. In
total, 1,422,558 (2017: 1,369,263; +3.9%) new
credit financing and lease
contracts were signed during the nine-month period.
The contract portfolio with retail customers
comprised 5,586,855 contracts at the end of the reporting period (31
December 2017: 5,380,785 contracts; +3.8%). Segment revenues
totalled € 21,148 million (2017: € 20,769 million; +1.8%).
Profit before tax for the nine-month period
amounted to € 1,714 million (2017: € 1,793 million; -4.4%).
During the third quarter, 490,347 (2017: 435,026
contracts: +12.7%) new credit financing and lease
contracts were signed with retail customers. Segment
revenues totalled € 7,333 million (2017: € 6,679 million;
+9.8%). Profit before tax amounted to € 548 million
(2017: € 609 million; -10.0%).
Increase in workforce size
The BMW Group’s workforce comprised 133,475
employees at 30 September 2018, 2.7% 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 confirms current outlook for 2018
The BMW Group confirms its current outlook for the financial year
2018. Automotive segment revenues are expected to be
slightly below the previous year’s figure. The EBIT
margin in the Automotive segment is expected
to be at least 7%. Group profit before tax is
expected to show a moderate decrease from the previous year. Possible
positive earnings effects from a regulatory approval and the closing
of the planned mobility services joint venture in 2018 are still not
reflected in the adjusted outlook. The factors triggering the outlook
revision on 25 September 2018 will also have a significant effect on
Group profit before tax and the EBIT margin in the Automotive segment
in the fourth quarter. The BMW Group continues to target slight
increases in deliveries to customers in the
Automotive segment in 2018.
Forecasts for the current year are based on the assumption that
worldwide economic and political conditions will not change
significantly. The BMW Group continues to benefit from its strong
brands and attractive product portfolio, whilst at the same time
having to deal with high levels of upfront expenditure for key new
technologies, intense competition and rising personnel costs. The
global political and economic environment is expected to remain volatile.
* * *
The BMW Group – an overview
Jan. – Sept.
2018
Jan. – Sept. 2017
Change in %
Deliveries to customers
Automotive
units
1,834,810
1,811,234
1.3
thereof: BMW
units
1,566,216
1,537,497
1.9
MINI
units
265,935
271,394
-2.0
Rolls-Royce
units
2,659
2,343
13.5
Motorcycles
units
126,793
127,818
-0.8
Workforce
1 (compared to 31 December
2017)
133,475
129,932
2.7
EBIT margin Automotive segment
3
%
7.6
9.4
-1.8 %points
EBIT margin Motorcycles segment
3
%
12.5
15.4
-2.9 %points
EBT margin BMW Group
3
%
10.9
11.9
-1.0 %points
Revenues
3
€ million
72,460
73,324
-1.2
thereof:
Automotive3
€ million
62,629
62,599
–
Motorcycles3
€ million
1,658
1,827
-9.3
Financial Services
€ million
21,148
20,769
1.8
Other Entities
€ million
4
4
–
Eliminations3
€ million
-12,979
-11,875
-9.3
Profit before financial result (EBIT)
3
€ million
7,224
8,137
-11.2
thereof:
Automotive3
€ million
4,730
5,879
-19.5
Motorcycles
€ million
208
282
-26.2
Financial Services
€ million
1,703
1,799
-5.3
Other Entities
€ million
22
0
–
Eliminations3
€ million
561
177
–
Profit before tax (EBT)
3
€ million
7,883
8,741
-9.8
thereof:
Automotive3
€ million
5,346
6,562
-18.5
Motorcycles
€ million
205
281
-27.0
Financial Services
€ million
1,714
1,793
-4.4
Other Entities
€ million
105
30
–
Eliminations3
€ million
513
75
–
Income taxes
3
€ million
-2,073
-2,404
13.8
Net profit for the period
3.4
€ million
5,788
6,337
-8.7
Earnings per share
2.3
€
8.69/8.70
9.55/9.56
-9.0/-9.0
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.
4 Value for 2018 (including a loss from discontinued
operations of € 22 million)
The BMW Group – an overview
3rd quarter
2018
3rd quarter 2017
Change in %
Deliveries to customers
Automotive
units
592,303
590,415
0.3
thereof: BMW
units
506,920
499,467
1.5
MINI
units
84,505
90,180
-6.3
Rolls-Royce
units
878
768
14.3
Motorcycles
units
39,818
39,429
1.0
Workforce
1 (compared to 31 December
2017)
133,475
129,932
2.7
EBIT margin Automotive segment
3
%
4.4
8.6
-4.2 %points
EBIT margin Motorcycles segment
3
%
6.9
10.4
-3.5 %points
EBT margin BMW Group
3
%
7.5
10.6
-3.1 %points
Revenues
3
€ million
24,743
23,633
4.7
thereof:
Automotive3
€ million
21,111
20,433
3.3
Motorcycles3
€ million
476
512
-7.0
Financial Services
€ million
7,333
6,679
9.8
Other Entities
€ million
1
1
–
Eliminations3
€ million
-4,178
-3,992
-4.7
Profit before financial result (EBIT)
3
€ million
1,745
2,384
-26.8
thereof:
Automotive3
€ million
930
1,758
-47.1
Motorcycles
€ million
33
53
-37.7
Financial Services
€ million
527
607
-13.2
Other Entities
€ million
6
-12
–
Eliminations3
€ million
249
-22
–
Profit before tax (EBT)
3
€ million
1,845
2,503
-26.3
thereof:
Automotive3
€ million
1,003
1,886
-46.8
Motorcycles
€ million
31
53
-41.5
Financial Services
€ million
548
609
-10.0
Other Entities
€ million
27
11
–
Eliminations3
€ million
236
-56
–
Income taxes
3
€ million
-425
-657
35.3
Net profit for the period
3.4
€ million
1,405
1,846
-23.9
Earnings per share
2.3
€
2.09/2.09
2.76/2.76
-24.3/-24.3
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.
4 Value for 2018 (including a loss from discontinued
operations of € 15 million)
For questions please contact:
Corporate Communications
Max-Morten Borgmann, Corporate Communications
Telephone: +49 89 382-24118, Fax: +49 89 382-24418
Max-Morten.Borgmann@bmwgroup.com
Mathias Schmidt, Head of Corporate and Culture Communications
Telephone: +49 89 382-24544, Fax: +49 89 382-24418
Mathias.M.Schmidt@bmw.de
Internet: www.press.bmwgroup.com
e-mail: presse@bmwgroup.com
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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