Munich. The BMW Group’s operations remained well on
course during the second quarter, despite a challenging market
environment. In line with forecast, the Group achieved an improvement
in both earnings and profitability compared to the first quarter and
confirms its targets for the financial year 2019.
Against the prevailing market trend, in the first half of the year
the BMW Group delivered more vehicles to customers than ever before,
thereby gaining segment share in key markets. With its attractive,
rejuvenated range of models, the BMW brand finished with a clear lead
in the premium segment in June.
“At the six-month stage, we are on course to meet our targets for the
full year. We are inspiring customers with new products and once again
succeeded in increasing automobile deliveries to a new record level in
the first half of the year,” said Harald Krüger,
Chairman of the Board of Management of BMW AG, on Thursday in Munich.
“We deliver what we promise – even in fast-changing times. We
consistently leverage new technologies to successfully master the
enormous challenges facing our industry during this current phase of transformation.”
E-mobility continues to gather pace
As announced, the BMW Group is again significantly upping the pace
when it comes to electric mobility: The 25 electrified models
initially announced for 2025 will now be available in 2023, two years
earlier than originally planned. Over half of these 25 models will be
fully electric. The basis for these models are flexible vehicle
architectures for all-electric vehicles, plug-in hybrids and
conventional combustion-engine models as well as a highly flexible
production system that enables the company to respond swiftly to
fluctuating market requirements. By 2021, deliveries of electrified
vehicles are predicted to double compared to 2019. The BMW Group then
expects to see a steep growth curve up to 2025, with the volume of
electrified vehicles delivered forecast to grow on average by more
than 30% per year.
As a pioneer in the field of electric mobility, the BMW Group is
already a leading supplier of electrified vehicles. By the end of
2019, the company plans to have more than half a million vehicles with
either all-electric or plug-in hybrid drivetrains on the road. In two
years’ time, the BMW Group will be offering five all-electric series
production vehicles. In addition to the BMW i3 –
demand for which increased by more than 20% in the first six months of
2019 – production of the all-electric MINI* will commence at the
Oxford plant in November. When the vehicle was presented in July, more
than 40,000 customers expressed their keen interest in the
MINI ELECTRIC*. In 2020, production of the
all-electric BMW iX3 will begin in Shenyang, China,
followed in 2021 by the BMW iNEXT, which will be
manufactured at the BMW Group’s Dingolfing plant. In the same year,
the BMW i4 will go into series production at the
Munich plant.
BMW Group flexibly positioned in terms of drivetrain technologies
Regulatory and customer requirements can differ significantly from
one market to the next. Alternative drivetrain technologies are also
being introduced at varying speeds in different regions. Therefore the
BMW Group is focusing on the following: “We are consistently
expanding e-mobility with all-electric vehicles and plug-in hybrids
and continuing to optimise our already economical combustion engines.
Moreover, we are also investing in new technologies such as the fuel
cell,” commented Krüger.
On this road to the future of mobility, substantial upfront
expenditure was again necessary during the period under report and, as
expected, has again exceeded the high level seen in 2018.
Second-quarter research and development expenses
totalled € 1,400 million, 5.9% more than the previous year.
Investments in property, plant and equipment climbed
by more than one third to € 1,176 million (2018: € 846 million;
+39.0%), mainly due to the ongoing new model initiative and the
modernisation of our plant structures, making them more flexible. The
growing proportion of electrified vehicles is also contributing to
higher production costs. Unfavourable exchange rate factors and rising
prices for raw materials had a dampening impact on earnings between
April and June and competition also remained fierce on many markets.
Second-quarter Group revenues up slightly
In the second quarter 2019, the BMW Group set a new
record for vehicle sales, comprising 647,504 BMW,
MINI and Rolls-Royce premium vehicles (2018: 637,878 units; +1.5%)
delivered. This positive development was largely influenced by the
contribution of the BMW Brilliance Automotive joint venture in China.
Group revenues for the three-month period rose to
€ 25,715 million (2018: € 24,993; +2.9%). Affected by upfront
expenditure for future mobility, profit before financial
result (EBIT) amounting to € 2,201 million was lower than in
the previous year (2018: € 2,739 million; -19.6%). Group
profit before tax (EBT) amounted to € 2,053 million (2018:
€ 2,866 million; -28.4%). The second-quarter EBT
margin for the Group came in at 8.0% (2018: 11.5%).
Group net profit amounted to € 1,480 million (2018:
€ 2,076 million; -28.7%).
During the first six months of 2019, the BMW Group
delivered a total of 1,252,837 vehicles to customers (2018: 1,242,507
units; +0.8%). At € 48,177 million, Group revenues
were slightly up on the previous year (2018: € 47,658 million; +1.1%).
Earnings in the first half of the financial year 2019 were impacted by
a provision of approximately € 1.4 billion recognised in the first
quarter in connection with the Statement of Objections received from
the EU Commission relating to ongoing antitrust proceedings.
Accordingly, at € 2,790 million, profit before financial
result (EBIT) reported for the six-month period was
significantly lower than in the previous year (2018: € 5,446 million;
-48.8%). Group profit before tax (EBT) amounted to
€ 2,815 million (2018: € 6,005 million; -53.1%), corresponding to an
EBT margin of 5.8% (2018: 12.6%). The BMW Group
reports six-month Group net profit of € 2,068 million
(2018: € 4,358 million; -52.5%).
“In the second quarter, despite high upfront expenditure to
drive tomorrow’s mobility, we proved our operating efficiency by
achieving a very solid level of free cash flow,” pointed out
Nicolas Peter, Member of the Board of Management of
BMW AG, Finance. “The BMW Group sets itself ambitious targets,
even in challenging times: We want to grow sustainably and profitably
and shape the transformation of our industry, fully leveraging our own
underlying strength.”
In order to do so, the BMW Group is committed to implementing even
faster processes and leaner structures, resulting in greater
efficiency. The BMW Group thus intends to secure the financial
headroom needed to be able to decisively shape individual premium
mobility on a sustainable basis over the coming decade . Among other
advantages, the Performance NEXT initiative will
shorten development times for new vehicle models by up to one third.
On the product side, up to 50% of today’s drivetrain
variants will be eliminated from 2021 onwards, in the
transition to creating enhanced flexible vehicle architectures.
Moreover, the model portfolio is regularly assessed with a view to
finding additional potential ways of reducing
complexity. Potential for greater synergy and efficiency in
indirect purchasing as well as material and production costs is also
being leveraged throughout the Group. By the end of 2022, the Group
intends to save more than 12 billion euros through efficiency-boosting measures.
Second-quarter EBIT margin at 6.5 percent
Automotive segment revenues between April and June
totalled € 22,624 million and were therefore slightly higher than one
year earlier (2018: € 22,192 million; +1.9%). Against a backdrop of
high upfront expenditure, EBIT amounted to € 1,469
million (2018: € 1,919 million; -23.4%). The second-quarter
EBIT margin came in at 6.5% (2018: 8.6%).
Profit before tax amounted to € 1,483 million
(2018: € 2,062 million; -28.1%).
Segment revenues for the six-month
period totalled € 41,837 million, similar to the previous
year’s level (2018: € 41,518 million; +0.8%). As described above,
EBIT for the first half of the year was influenced by
the provision (approximately € 1.4 billion) recognised in the first
quarter due to the Statement of Objections received from the
EU Commission relating to ongoing antitrust proceedings and
accordingly amounted to € 1,159 million (2018: € 3,800 million;
-69.5%). An EBIT margin of 2.8% (2018: 9.2%) was
therefore recorded for the first half year. Profit before
tax amounted to € 1,456 million (2018: € 4,343 million; -66.5%).
Worldwide, the BMW brand delivered 1,075,959
vehicles (2018: 1,059,296 vehicles; +1.6%) to customers, its best-ever
result for an opening six-month period. The BMW X models were
particularly popular – above all the BMW X3, which has also been
produced locally in China since the summer of 2018. The number of
deliveries of this vehicle between January and June increased by more
90% compared to the previous year. On the back of this strong
performance, the BMW brand achieved a clear lead in the premium
segment in June.
In a highly competitive segment, and with the company maintaining its
focus on profitability, MINI brand sales in the first
half of the year decreased slightly. In total, 177,344 vehicles were
delivered between January and June (2018: 181,430 vehicles; -3.9%).
Strong sales growth continued at Rolls-Royce, with a
total of 2,534 Rolls-Royce motor cars delivered to customers across
the globe (+42.3%) in the first half of the year. Growth was seen in
every region worldwide, with sustained demand for all model families.
Exceptional customer demand for Cullinan continues, resulting in a
strong order book, already stretching into the first quarter of 2020.
The marque remains on track for a strong year in 2019.
BMW Group strives for evenly balanced delivery distribution worldwide
The BMW Group remains committed to its strategy of achieving an even
distribution of deliveries worldwide, including a well-balanced
relationship between production and delivery volumes by region. In
this endeavour, it leverages its highly flexible production and sales
structures to even out fluctuating demand between individual regions.
At 550,446 units, deliveries in Europe during the
six-month period were slightly down on the previous year (2018:
562,102 units; -2.1%). In Germany, the region’s largest single market,
the BMW Group recorded solid growth, with deliveries up to 161,308
units (2018: 149,718 units: +7.7%).
Deliveries of BMW, MINI and Rolls-Royce brand vehicles in
Asia during the first half of the year increased to
453,355 units (2018: 423,890 units; + 7.0%). China contributed
significantly to this performance, with deliveries of the Group’s
three brands up by 16.8% to a total of 350,592 units (2018: 300,153 units).
In the Americas region, deliveries fell slightly
between January and June to 222,272 units (2018: 226,061 units;
-1.7%). The figure for the USA stood at 174,779 units (2018: 176,570
units; -1.0%).
Motorcycles segment reports higher revenues and earnings
BMW Motorrad was able to increase
deliveries of its motorcycles and maxi-scooters in
the second quarter to 54,582 units (2018: 51,117
units; +6.8%), resulting in a corresponding increase in
revenues to € 727 million (2018: € 658 million;
+10.5%). EBIT also improved, rising to € 102 million
for the three-month period (2018: € 98 million; +4.1%). The
second-quarter EBIT margin for the segment came in at
14.0% (2018: 14.9%).
Six-month deliveries rose to 93,188 units (2018:
86,975; +7.1%). Segment revenues amounted to € 1,313
million (2018: € 1,182 million; +11.1%). EBIT
increased to € 191 million (2018: € 175 million; +9.1%), resulting in
an EBIT margin of 14.5% (2018: 14.8%).
Successful start to year for Financial Services segment
The contract portfolio under management within the
Financial Services segment increased by 1.7% to
5,806,248 contracts at the end of the reporting period (31 December
2018: 5,708,032 contracts). During the second quarter, 501,663 (2018:
480,303; +4.4%) new credit financing and lease
contracts were signed with retail customers.
Revenues grew by 4.8% to € 7,364 million (2018: €
7,027 million), generating profit before tax of € 573
million (2018: € 603 million; -5.0%).
In total, 971,287 new contracts were concluded with
customers during the six-month period under report
(2018: 932,211; +4.2%). Segment revenues increased to
€ 14,510 million (2018: € 13,588 million; +6.8%). Profit
before tax rose to € 1,200 million (2018: € 1,156 million; +3.8%).
Workforce at previous year’s level
The BMW Group’s workforce comprised 134,914
employees at 30 June 2019, on par with the level recorded at 31
December 2018 (134,682; +0.2%). The BMW Group continues to recruit
skilled workers and IT specialists on a selective basis to engage in
forward-looking projects such as digitalisation, autonomous driving
and electric mobility. Over 2019 as a whole, however, capitalising on
natural fluctuation trends, the aim is to maintain the workforce at
the previous year’s level.
BMW Group reaffirms targets for current financial year
The BMW Group sets itself ambitious targets, even in politically and
economically turbulent times. With its young product
portfolio, further rejuvenated by new models, the Group aims
to remain the world’s leading automotive manufacturer in the premium
segment. Driven by numerous model changes, volume growth is expected
to continue during the second half of the year.
The BMW Group will continue to invest substantial amounts in new
technologies and the mobility of the future in 2019. Costs are also
being driven up in other areas, including the significantly higher
cost of complying with stricter carbon emission legislation. Against
this background, rising manufacturing costs are
likely to have a dampening effect on earnings. Moreover, unfavourable
currency factors and higher raw materials prices are expected to have
a negative impact in the mid-three-digit million range. At the same
time, the ongoing issue of international trade conflicts remains a
source of uncertainty.
Taking all these factors into account, the BMW Group is confident of
its ability to achieve volume growth in the Automotive
segment, where it is targeting a slight increase in the
number of deliveries to customers in 2019. Within a stable business
environment, an EBIT margin in the range of 8 to 10%
remains the ambition for the BMW Group. However, its ability to
influence underlying conditions is limited. Without the effect of the
provision for the ongoing antitrust proceedings amounting to ca. € 1.4
billion, the target range for the EBIT margin of 6-8% has not changed.
However, since the provision has a negative impact on the EBIT margin,
the BMW Group is expecting a margin in the Automotive segment for 2019
between 4.5 and 6.5%.
With its rejuvenated model range, the Motorcycles
segment is forecast to achieve a solid increase in deliveries
to customers. As in 2018, the segment EBIT margin is
expected to be within the target range of 8 to 10%. In the
Financial Services Segment, the BMW Group expects
return on equity to be on par with last year and
above our target figure of 14%.
In addition to the various negative influences described above, the
fact that some positive valuation effects recorded in 2018 will not be
repeated in 2019 will result in a significant decline in the Group’s
financial result when compared with the previous year. Group
profit before tax is therefore also expected to be
significantly below the previous year’s level.
Forecasts made for the current year are based on the assumption that
worldwide economic and political conditions will not
change significantly. However, any deterioration in conditions could
have a negative impact on the outlook. The BMW Group will vigorously
continue to implement key measures for growth on the one hand and
improved performance and efficiency on the other, thereby creating
sufficient headroom to enable it to help shape the
future and secure its own competitiveness going forward. Its
operational and financial strength place the BMW Group in an excellent
position to play a key role in shaping the ongoing transformation of
the automotive sector and enhance its leading role in
the automotive industry.
* * *
The BMW Group – an overview
1st half year 2019
1st half year 2018
Change in %
Deliveries to customers
Automotive
units
1,252,837
1,242,507
0.8
Thereof: BMW
units
1,075,959
1,059,296
1.6
MINI
units
174,344
181,430
-3.9
Rolls-Royce
units
2,534
1,781
42.3
Motorcycles
units
93,188
86,975
7.1
Workforce
1 (compared to
31.12.2018)
134,914
134,682
0.2
Automotive
segment EBIT margin
%
2.8
9.2
-6.4 %points
Motorcycles
segment EBIT margin
%
14.5
14.8
-0.3 %points
EBT margin BMW Group
3
%
5.8
12.6
-6.8 %points
Revenues
3
€ million
48,177
47,658
1.1
Thereof: Automotive
€ million
41,837
41,518
0.8
Motorcycles
€ million
1,313
1,182
11.1
Financial
Services3
€ million
14,510
13,588
6.8
Other Entities
€ million
3
3
–
Eliminations3
€ million
-9,486
-8,633
-9.9
Profit before financial result (EBIT)
3
€ million
2,790
5,446
-48.8
Thereof: Automotive
€ million
1,159
3,800
-69.5
Motorcycles
€ million
191
175
9.1
Financial
Services3
€ million
1,254
1,166
7.5
Other Entities
€ million
6
16
-62.5
Eliminations3
€ million
180
289
-37.7
Profit before tax (EBT)
3
€ million
2,815
6,005
-53.1
Thereof: Automotive
€ million
1,456
4,343
-66.5
Motorcycles
€ million
187
174
7.5
Financial
Services3
€ million
1,200
1,156
3.8
Other Entities
€ million
-155
78
–
Eliminations3
€ million
127
254
-50.0
Income taxes
3
€ million
-791
-1,640
51.8
Net profit
3,4
€ million
2,068
4,358
-52.5
Earnings per share
2,3
€
3.06/3.07
6.56/6.57
-53.4/-53.3
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 Prior-year figures adjusted due to first-time application
of revised IAS 16, see note [4] to the Interim Group Financial Statement.
4 Value for 2018 includes a loss from discontinued
operations of € 7 million; value for 2019 includes a loss from
discontinued operations of € 44 million.
The BMW Group – an overview
2nd quarter
2019
2nd quarter 2018
Change in %
Deliveries to customers
Automotive
units
647,504
637,878
1.5
Thereof: BMW
units
556,652
541,849
2.7
MINI
units
89,524
95,055
-5.8
Rolls-Royce
units
1,328
974
36.3
Motorcycles
units
54,582
51,117
6.8
Workforce
1 (compared to
31.12.2018)
134,914
134,682
0.2
Automotive
segment EBIT margin
%
6.5
8.6
-2.1 %points
Motorcycles
segment EBIT margin
%
14.0
14.9
-0.9 %points
EBT margin BMW Group
3
%
8.0
11.5
-3.5 %points
Revenues
3
€ million
25,715
24,993
2.9
Thereof: Automotive
€ million
22,624
22,192
1.9
Motorcycles
€ million
727
658
10.5
Financial
Services3
€ million
7,364
7,027
4.8
Other Entities
€ million
2
1
100.0
Eliminations3
€ million
-5,002
-4,885
-2.4
Profit before financial result (EBIT)
3
€ million
2,201
2,739
-19.6
Thereof: Automotive
€ million
1,469
1,919
-23.4
Motorcycles
€ million
102
98
4.1
Financial
Services3
€ million
606
605
0.2
Other Entities
€ million
2
7
-71.4
Eliminations3
€ million
22
110
-80.0
Profit before tax (EBT)
3
€ million
2,053
2,866
-28.4
Thereof: Automotive
€ million
1,483
2,062
-28.1
Motorcycles
€ million
100
96
4.2
Financial
Services3
€ million
573
603
-5.0
Other Entities
€ million
-97
8
–
Eliminations3
€ million
-6
97
–
Income taxes
3
€ million
-573
-783
26.8
Net profit
3,4
€ million
1,480
2,076
-28.7
Earnings per share
2,3
€
2.21/2.22
3.12/3.13
-29.2/-29.1
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 Prior year figures adjusted due to first-time application
of revised IAS 16, see note [4] to the Interim Group Financial Statement.
4 Value for 2018 includes a loss from discontinued
operations of € 7 million
For queries, please contact:
Corporate Communications
Max-Morten Borgmann, Corporate Communications
Telephone: +49 89 382-24118, Max-Morten.Borgmann@bmwgroup.com
Mathias Schmidt, Head of Corporate and Culture Communications
Telephone: +49 89 382-24544, Mathias.M.Schmidt@bmw.de
Internet: www.press.bmwgroup.com
Email: 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 31 production and assembly
facilities in 15 countries; the company has a global sales network in
more than 140 countries.
In 2018, the BMW Group sold over 2,490,000 passenger vehicles and
more than 165,000 motorcycles worldwide. The profit before tax in the
financial year 2018 was € 9.815 billion on revenues amounting to
€ 97.480 billion. As of 31 December 2018, the BMW Group had a
workforce of 134,682 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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