Munich. On its way towards the mobility of the
future, the BMW Group is taking strategic steps to enhance its
operating performance on a sustainable basis. As well as
systematically implementing its strategy NUMBER ONE
NEXT, the company is also focusing on faster processes,
leaner structures and therefore greater efficiency. In view of the
many challenges currently facing the automotive sector, the BMW Group
is ensuring it maintains its financial strength to influence and
decisively shape individual premium mobility moving into the next
decade, just as it has over the past ten years.
“After three years of Strategy NUMBER ONE NEXT, we remain
firmly on course, having established a strong position as one of the
world’s top providers of e-mobility. We lead the European market and
will soon go into series production of our fifth generation of
electric drivetrain systems. We’re significantly expanding our
presence in the upper luxury class. Our first highly automated vehicle
will become available in 2021 and we are already now paving the way
for the development of the next generation of groundbreaking
technology. In the field of mobility services, we are joining forces
with Daimler AG to create even greater momentum,” said
Harald Krüger, Chairman of the Board of Management
of BMW AG, in Munich on Wednesday. “We need to work
systematically on our operational excellence in order to leverage
these strategic advances and ensure our ability to use our own
underlying strength to help shape the sector’s transformation going
forward,” he added.
To compensate for the increasing volume of upfront expenditure needed
to drive the mobility of the future, the BMW Group is enhancing its
business performance by comprehensively rolling out
an array of new models. In the upper luxury class, for instance, the
new BMW 8 Series (both the Coupé and the Convertible) and the new BMW
X7 have already made their debut. The fully revamped BMW 7 Series is
on its way to dealerships and will be flanked by the launch of the BMW
8 Series Gran Coupé in the further course of this year. The Group’s
next step will be to significantly rejuvenate and expand its range in
the compact class. With this aim in mind, the next generation BMW
1 Series will be launched in autumn 2019 and the BMW 2 Series
Gran Coupé, a new and highly emotive model, will be added
to the compact segment in spring 2020 with a view to attracting new customers.
High potential for boosting efficiency with Performance NEXT
Since 2017, the BMW Group has also worked systematically with
Performance NEXT to improve structural
efficiency along the entire value chain. In this respect, numerous
decisions have either been taken or are already being implemented. In
view of the growing challenges and demands on resources, the Group
intends to expand and intensify these efforts. By the end of 2022, it
expects to leverage potential efficiencies totalling more than
12 billion euros. Many of the measures aimed at reducing product
complexity will then come to full fruition in the following years.
“Our industry is witnessing rapid transformation. In this
environment, a sustained high level of profitability is crucial if we
are to continue driving change,” said Nicolas
Peter, Member of the Board of Management of BMW AG, Finance.
“In view of the numerous additional factors negatively impacting
earnings, we began to introduce countermeasures at an early stage and
have taken a number of far-reaching decisions. Discipline and a clear
focus on rigorous implementation are essential as we aim to emerge
from these challenging times stronger than ever.”
Performance NEXT will also benefit from the fact that processes
can be significantly accelerated by the new opportunities
digitalisation offers. For instance, development
times for new vehicle models will be reduced by as much as
one third. Among other savings, digital simulations and virtual
validation could eliminate the need for some 2,500 expensive prototype
vehicles by the year 2024.
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.
Nevertheless, the target for 2019 is to keep the workforce at the
previous year’s level. Compared to earlier years, the scale of natural
attrition in the workforce has been exacerbated by demographic factors
(including the baby boomer phenomenon), a situation which means the
BMW Group can focus even more intensively on issues that will shape
the future and increase efficiency. In addition, with effect from 1
April 2019 the BMW, MINI and Rolls-Royce automotive brands will be
combined within a single sales division, clearly
signalling a move towards even leaner processes and more efficient
structures throughout the company.
On the product side, from 2021 onwards, up to 50 per cent of today’s
drivetrain variants will be eliminated in the
transition to more sophisticated and flexible vehicle architectures.
This approach will also enable the BMW Group to focus on the products
most in demand. At model level, no successor will be developed for the
current generation of the BMW 3 Series Gran Turismo. Moreover, the
model portfolio is regularly assessed with a view to identifying
additional potential to reduce complexity. Synergy
and efficiency opportunities in indirect purchasing as well as in
materials and production costs are also being leveraged.
Upfront expenditure set to remain high
The BMW Group intends to implement the measures outlined above to
offset the ongoing high level of upfront expenditure required to
embrace the mobility of the future. Substantial volumes of
future-oriented expenditure are again planned for 2019.
At € 5,029 million, capital expenditure in 2018 was
7.3% above the previous year’s high level (€ 4,688 million). The Capex
ratio rose to 5.2% (2017: 4.8%). Investments included work connected
with the introduction of new models in the Spartanburg, Dingolfing and
Munich plants and the building of the Group’s plant in Mexico. As
planned, research and development expenses in 2018
were significantly higher than in the previous year and totalled
€ 6,890 million (2017: € 6,108 million; +12.8%). RD expenditure
for the year was therefore equivalent to 7.1% of Group revenues (2017:
6.2%). In addition to ramping up the roll-out of new models, the focus
is also on future-oriented topics such as autonomous driving and the
systematic expansion of electric mobility.
Pioneer systematically expands e-mobility product range
With more than 350,000 units (over 130,000 fully
electric vehicles and more than 220,000 plug-in hybrids) delivered to
customers up to the end of 2018, the BMW Group is already a leading
supplier of electrified vehicles and expects to have more than
half a million units on the roads by the end of the
year. At the beginning of March, the new plug-in hybrid versions of
the BMW 3 Series, BMW 7 Series, BMW X5 and BMW X3, which now come with
extended electric range, were showcased at the
Geneva Motor Show. By the end of next year, the BMW Group will have
more than ten new or revised models equipped with
fourth-generation electric drivetrain technology (“Gen 4”)
on the roads.
By the end of 2019, these will include the all-electric MINI
Electric manufactured at the Oxford plant and, from 2020, the
BMW iX3, which will be produced for the world
market in Shenyang, China. Together with the pioneering BMW i3, the
BMW i4 and the BMW iNEXT, the
Group will have five all-electric models on the
market by 2021 and the number is scheduled to rise to at least twelve
models by 2025. Including the rapidly growing range of plug-in
hybrids, the BMW Group’s product portfolio will then comprise at least
25 electrified models.
This wide range of electrified models on offer will be made possible
by highly flexible vehicle architectures and an
equally agile 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 one
production line. The ability to integrate e-mobility in its production
network will enable the BMW Group to respond even more flexibly as
demand grows.
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
further optimised. Integrating the electric motor, the transmission
and power electronics also plays a role in cutting costs. Furthermore,
the electric motor does not require rare earths,
enabling the BMW Group to reduce its dependence on their availability.
The fifth generation of the Group’s electric drivetrain technology
will be installed for the first time in the BMW iX3 from 2020.
Cooperation for next generation of autonomous driving
The BMW Group believes long-term partnerships within a flexible,
scalable, non-exclusive platform are key to advancing the
industrialisation of autonomous driving. As early as
2016, the BMW Group established a non-exclusive platform with
technology specialists, suppliers and OEMs to take the technology to
series maturity and has now successfully consolidated work in this
area at the Autonomous Driving Campus in
Unterschleißheim, near Munich. The generation of technologies
currently under development will go into series production as Level 3
automation in the BMW iNEXT in 2021, this vehicle
will also be Level 4-enabled for pilot projects.
The BMW Group has joined forces with Daimler AG to advance the
development of the next generation of technologies
needed for autonomous driving. At the end of February, the two
companies signed a Memorandum of Understanding (MoU) to jointly
develop the technologies that are vital for future mobility.
Initially, the focus will be on advancing the development of
next-generation technologies for driver assistance systems, automated
driving on highways and parking features (in each case up to SAE Level 4).
The BMW Group and Daimler AG view their partnership as a long-term,
strategic cooperation and aim to make next-level
technologies widely available by the middle of the coming decade.
Combining the outstanding expertise of the two companies will boost
their joint innovative strength. Moreover, it will both accelerate and
streamline the development of future technology generations. The
development of current-generation technologies and the ongoing
collaborations both companies have in this field will remain
unaffected and continue as planned. Both parties will also explore
additional partnerships with other technology companies and automotive
manufacturers that could contribute to the success of the platform.
Major investments in joint venture for mobility services
The BMW Group and Daimler AG are also working together in the field
of mobility services, creating a new global player
that provides sustainable urban mobility for its customers. The two
companies are investing more than one billion euros to develop and
more closely intermesh their offerings for car-sharing, ride-hailing,
parking, charging and multimodal transport. The cooperation comprises
five joint ventures: REACH NOW (multimodal), CHARGE NOW (charging),
FREE NOW (ride-hailing), PARK NOW (parking) and SHARE NOW (car-sharing).
The common vision is clear: the five services will
increasingly merge to form a single mobility service portfolio with an
all-electric, self-driving fleet of vehicles that charge and park
autonomously and also interconnect with other modes of transport. This
service portfolio will be a key cornerstone in the BMW Group’s
strategy as a mobility provider going forward. The cooperation
represents the ideal approach for maximising opportunities in a
growing market, while jointly shouldering the unavoidable cost of investment.
Challenging conditions in the financial year 2018
In terms of its core business, the BMW Group had
always expected 2018 to be a challenging year. Compared with 2017,
alongside additional upfront expenditure for the mobility of the
future, 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 dampened business performance in the
third quarter. Unlike many of our competitors, the BMW Group
implemented the requirements of the WLTP regulations
early. The industry-wide shift to the new WLTP test cycle resulted in
considerable supply distortions in Europe and unexpectedly intense
competition, given that numerous competitor models which had not yet
gained WLTP certification were registered before the 1 September
deadline. Within the framework of its flexible production and sales
strategy, the BMW Group responded to the situation by reducing its
volume planning to focus on earnings quality. At the
same time, increased statutory and non-statutory warranty measures
resulted in significantly higher additions to provisions in the
Automotive segment. Ongoing international trade conflicts also served
to exacerbate the market situation and feed uncertainty. These
circumstances resulted in greater-than-expected distortions in demand
and unexpected pressure on pricing in several markets.
Nevertheless, deliveries of the BMW Group’s three
premium automotive brands (BMW, MINI and Rolls-Royce) grew by 1.1% to
a new record figure of 2,490,664 units in 2018 (2017: 2,463,526
units). At € 97,480 million, Group revenues were at
the previous year’s level (2017: € 98,282 million: -0.8%). Adjusted
for currency factors, they increased by 1.2%. Due to the various
adverse aspects arising in the third quarter, combined with high
levels of upfront expenditure for research and development,
profit before financial result was € 9,121 million
(2017: € 9,899 million; -7.9%). At € 9,815 million, Group
profit before tax in 2018 was moderately down on the
previous year, but nevertheless the second-best result ever recorded
in the company’s history (2017: € 10,675 million; -8.1%). At 10.1%
(2017: 10.9%), the return on sales before tax (EBT
margin) exceeded the target value of ten percent.
Group net profit amounted to € 7,207 million (2017:
€ 8,675 million; -16.9%). In the previous year, net profit was
exceptionally high due to valuation effects of around € 1 billion
arising in connection with the US tax reform. Despite very challenging
conditions, the Automotive segment generated free cash
flow of € 2,713 million in 2018 (2017: € 4,459 million).
Based on the annual financial statement, the Board of Management and
the Supervisory Board will propose payment of a
dividend of € 3.50 per share of common stock and
€ 3.52 per share of preferred stock at the Annual General Meeting on
16 May 2019. This is the second highest payout in the company’s
history. The total dividend payment will amount to € 2.3 billion, or
32.0% of net profit (previous year: 30.3%3).
Automotive segment exposed to volatile business conditions
At € 85,846 million, Automotive segment revenues
were at a similar level to the previous year (2017: € 85,742 million;
+0.1%). Influenced by the factors referred to above and combined with
high levels of upfront expenditure for research and development,
EBIT was € 6,182 million (2017: € 7,888 million;
‑21.6%). Due to various adverse factors, the EBIT
margin came in at 7.2% (2017: 9.2%). Profit before
tax amounted to € 6,977 million (2017: € 8,717 million; ‑20.0%).
A total of 2,125,026 BMW brand vehicles were
delivered to customers worldwide (2017: 2,088,283 units; +1.8%). As
well as the BMW 5 Series (382,753 units; +10.2%), the BMW X family in
particular benefited from strong demand during 2018, with worldwide
deliveries up significantly on the previous year to 792,605 units
(+12.1%). The BMW X3 made an important contribution to this
performance, with deliveries up by more than one third to 201,637
units (+37.7%).
Worldwide deliveries of MINI brand vehicles during
the twelve-month period totalled 361,531 units (2017: 371,388 units;
-2.8%). The MINI Countryman recorded double-digit
growth with 99,750 units (+17.5%). Almost every seventh MINI
Countryman was a plug-in hybrid (13.3%).
In 2018, Rolls-Royce Motor Cars achieved its best
sales result in over 100 years of corporate history with 4,107
deliveries worldwide (2017: 3,362 units; +22.2%). The Rolls-Royce
Phantom contributed substantially to this performance.
While deliveries of the BMW Group’s three automotive brands in
Europe remained at the previous year’s high level
(1,098,523; -0.3%), the Americas (457,715 units;
+1.5%) and Asia (876,614 units; +3.3%) regions
recorded slight growth. In China, volumes grew
significantly as local production of the new BMW X3 was ramped up in
the second half of the year. A total of 640,803 BMW Group vehicles
were delivered to customers in the course of 2018 (+7.7%).
Motorcycles segment revises model range
BMW Motorrad revised its 2018 product 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 half of the year. Over the full year, 165,566 BMW
motorcycles and maxi-scooters were delivered to customers (2017:
164,153 units; +0.9%).
Revenues totalled € 2,173 million (2017: € 2,272
million; -4.4%). Profit before financial result came
in at € 175 million (2017: € 207 million; -15.5%), corresponding to a
segment EBIT margin of 8.1% (2017: 9.1%).
Profit before tax amounted to € 169 million (2017:
€ 205 million; -17.6%).
Financial Services segment records contract portfolio growth
The Financial Services segment continued to perform
well in 2018. In total, 1,908,640 new contracts were
signed with retail customers in 2018 (2017: 1,828,604; +4.4%). The
contract portfolio with retail customers comprised
5,708,032 contracts at 31 December 2018 (31 December 2017: 5,380,785
contracts; +6.1%). Segment revenues totalled € 28,165
million (2017: € 27,567 million; +2.2%). Profit before
tax amounted to € 2,161 million (2017: € 2,207 million; -2.1%).
Slight increase in workforce
The BMW Group’s workforce comprised 134,682
employees at 31 December 2018, 3.7% more than at the end of 2017. The
Group continues to recruit skilled staff and IT specialists in
future-oriented areas such as digitalisation, autonomous driving and
electric mobility.
Business development in 2019 influenced by challenging
environment
The BMW Group sets itself ambitious targets, even in politically and
economically turbulent times. With its young product
portfolio, further rejuvenated by new models such as the BMW
X7 and the seventh generation of the BMW 3 Series, the Group aims to
remain the world’s leading manufacturer in the premium segment,
underpinned by growth in all major sales regions. In view of the
various model changes currently in progress, business is expected to
develop more strongly in the second half of the year.
In 2019, the BMW Group will continue to invest substantial amounts in
new technologies and the mobility of the future. However, costs are
also being driven up in other areas, including the significantly
higher cost of complying with stricter CO2 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 medium
to high three-digit million negative impact. At the same time, the
ongoing issue of international trade conflicts remains a source of uncertainty.
Taking all these factors into consideration, 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. Based on the prevailing
conditions described above, an EBIT margin of 6 to 8% is forecast for
the Automotive segment in 2019.
The Motorcycles segment is forecast to achieve a
solid increase in deliveries to customers thanks to its rejuvenated
model range. As in 2018, the EBIT margin is expected to be within the
target range of 8 to 10%. For its Financial Services
segment, the BMW Group forecasts a return on equity at the previous
year’s level, and therefore above the underlying target 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. Group profit before tax is
therefore also expected to be well below the previous year’s level.
Forecasts for the current year are based on the assumption that
worldwide economic and political conditions will not
change significantly. Any deterioration in conditions could have a
negative impact on the outlook.
The BMW Group will vigorously continue to implement measures
necessary to promote growth, improved performance and efficiency,
thereby creating the freedom to enable it to shape the
future and secure its own competitiveness going forward.
Thanks to its operational and financial strength, the BMW Group is in
an excellent position to shape the current transformation of the
automotive sector and further develop its leading
role in the industry.
The BMW Group – an Overview
2018
2017
Change in %
Deliveries to customers
Automotive
units
2,490,664
2,463,526
1.1
thereof: BMW
units
2,125,026
2,088,283
1.8
MINI
units
361,531
371,881
-2.8
Rolls-Royce
units
4,107
3,362
22.2
Motorcycles
units
165,566
164,153
0.9
Workforce
1 (compared to
31.12.2017)
134,682
129,932
3.7
EBIT margin Automotive segment
3
%
7.2
9.2
-2.0 % pts
EBIT margin Motorcycles segment
3
%
8.1
9.1
-1.0 % pts
EBT margin BMW Group
3
%
10.1
10.9
-0.8 % pts
Revenues
3
€ million
97,480
98,282
-0.8
thereof:
Automotive3
€ million
85,846
85,742
0.1
Motorcycles3
€ million
2,173
2,272
-4.4
Financial Services
€ million
28,165
27,567
2.2
Other Entities
€ million
6
7
-14.3
Eliminations3
€ million
-18,710
-17,306
-8.1
Profit before financial result (EBIT)
3
€ million
9,121
9,899
-7.9
thereof:
Automotive3
€ million
6,182
7,888
-21.6
Motorcycles
€ million
175
207
-15.5
Financial Services
€ million
2,190
2,194
-0.2
Other Entities
€ million
-27
14
–
Eliminations3
€ million
601
-404
–
Profit before tax (EBT)
3
€ million
9,815
10,675
-8.1
thereof:
Automotive3
€ million
6,977
8,717
-20.0
Motorcycles
€ million
169
205
-17.6
Financial Services
€ million
2,161
2,207
-2.1
Other Entities
€ million
-45
80
–
Eliminations3
€ million
553
-534
–
Income taxes
3
€ million
-2,575
-2,000
-28.8
Net profit for the year
3.4
€ million
7,207
8,675
-16.9
Earnings per share
2.3
€
10.82/10.84
13.07/13.09
-17.2/-17.2
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 15, see note [6] to the Group Financial Statements
4 Value for 2018 (including a loss from discontinued
operations of € 33 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
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 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.
Facebook: http://www.facebook.com/BMWGroup
Twitter: http://twitter.com/BMWGroup
YouTube: http://www.youtube.com/BMWGroupView
Instagram: https://www.instagram.com/bmwgroup
LinkedIn: https://www.linkedin.com/company/bmw