Munich. In the course of a challenging financial year
2018, the BMW Group made important strategic decisions set to secure
its long-term success. As part of the company’s Strategy
NUMBER ONE NEXT, the green light was given to launch a
new product offensive in the upper luxury class and the cornerstone
was laid for additional expansion of the company’s presence in China,
the world’s largest automobile market. With the BMW Vision
iNEXT, the Group also presented its new technology flagship,
which integrates the key future-oriented topics of
autonomous driving, connectivity, electrification and services
(ACES). The BMW Group continues to systematically
broaden its range of electrified models and is increasingly focusing
on co-operations in the fields of mobility services and autonomous
driving. At the same time, especially during the second half of the
year, business performance was impacted by significant challenges
relevant to the entire sector, and which are expected to accompany the
BMW Group beyond 2018.
“2018 was a challenging year for the automotive sector as a
whole. Nevertheless, we achieved the second-highest Group profit to
date,” said Harald Krüger, Chairman of the Board
of Management of BMW AG, in Munich on Friday. “The challenges
facing the entire sector are unlikely to diminish in the coming
months. Great efforts will therefore be needed across the entire Group
to help shape the sector’s transformation under such conditions.”
Alongside the challenges facing the entire industry over the past
year, from the BMW Group’s perspective, ongoing international trade
conflicts also contributed to a tightening market situation and
greater uncertainty. Moreover, the shift to the new WLTP test cycle
caused significant supply distortions on several European markets,
leading to unexpectedly intense competition. In the third quarter of
the financial year 2018, increased statutory and non-statutory
warranty measures resulted in significantly higher additions to
provisions in the Automotive segment.
“We expect strong headwinds to continue to effect the entire
sector in 2019. However, we are tackling these various challenges
systematically, in order to emerge from them even stronger than
before,” stated Nicolas Peter, Member of the
Board of Management of BMW AG, Finance. “This is why we launched
our Performance NEXT programme back in 2017 with the aim of
optimising performance, improving structural efficiency and reducing
complexity wherever possible. In view of current developments, we
intend to further broaden and significantly intensify these efforts.”
The BMW Group currently sees challenges in various areas, including
political uncertainty, a cooling global economy (partly due to
international trade conflicts), rising production costs to meet
regulatory requirements, exchange rate effects and rising raw
materials prices. To counteract these negative factors, measures
already in place to reduce product portfolio complexity are being
expanded and also applied to model derivatives. For example, despite a
good level of demand, no successor model will be developed for the
current generation of the BMW 3 Series Gran Turismo.
High upfront expenditures in a volatile environment
Despite the demanding conditions, the BMW Group continues to invest
substantial amounts in the mobility of the future. 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 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 of electric mobility systematically expanding 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. 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. In 2018, the BMW Group delivered more than 140,000
electrified vehicles to customers. By the end of this year, the
company expects to have an overall total of 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
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.
“With our Strategy NUMBER ONE NEXT, we are making
consistent advances in the various ACES fields and bringing the
mobility of the future onto the roads. Our path is clear: in areas
with a high degree of differentiation potential, such as electric
drivetrains, we will rely entirely on our own excellent development
expertise; where high scalability is more important than exclusivity,
we will seek to cooperate with dependable partners,” said Krüger.
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 fell to € 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 figure 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). “The
trust of our investors is very important to us,” said Nicolas
Peter. “This is especially true in times when
transformation and volatility are presenting the entire industry with
challenges on a completely new scale.”
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.
BMW Group forecasts continued volume growth in 2019
In view of the ongoing model offensive, the BMW Group anticipates
further volume growth in the current financial year 2019 and is
targeting a slight increase in the number of deliveries to customers.
New models such as the BMW X7 and the seventh generation of the BMW 3
Series are expected to provide fresh impetus. The BMW 3 Series model
change is likely to dampen growth during the first half of the year.
Supervisory Board
At the Annual General Meeting to be held on 16 May 2019, the
Supervisory Board will propose the re-election of Susanne Klatten,
entrepreneur, and Stefan Quandt, entrepreneur, to the Supervisory Board.
Furthermore, the Supervisory Board will propose Dr. Vishal Sikka,
founder and CEO of Vian Systems and former member of the Executive
Board of SAP SE, for election to the Supervisory Board. After 15 years
as a member of the Supervisory Board, the mandate of Franz Haniel,
entrepreneur, expires at the end of the upcoming Annual General
Meeting. The Supervisory Board wishes to thank Mr Haniel for his
valuable and trusted cooperation during his mandate.
* * *
Further information on the Group Financial Statements 2018 and the
outlook for the current year will be available at the BMW Group’s
Annual Accounts Press Conference to be held in Munich on 20 March 2019.
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.
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