BMW Group stepping up the pace

Munich. The BMW Group is stepping up the pace in its
drive to shape tomorrow’s mobility. Two years after the launch of
Strategy NUMBER ONE  NEXT, the BMW Group intends
to increase upfront expenditure on research and development to an
all-time high in 2018, while at the same time remaining steadily on
course for a ninth record-breaking year in succession through
profitable, sustainable growth.

 

“Our industry is currently experiencing a phase of unprecedented
technological change. At the same time, however, it needs to cope with
the challenge of present-day volatilities. At the BMW Group, we think
in terms of opportunities and follow a clear strategy. Because the
future of mobility is created today. We are stepping up the pace in
2018 and targeting our ninth successive record year,” stated
Harald Krüger, Chairman of the Board of Management
of BMW AG in Munich on Wednesday.

Despite major changes impacting the mobility sector, the one
constant factor influencing the company’s strategic
decisions is fulfilling the needs of its customers.
“Their passion and excitement is at the core of our growth strategy,”
emphasised Krüger. “That is why the BMW Group offers
a unique range of products (from the BMW i3 to the Rolls-Royce
Phantom) and services (from customised financing to intelligent
mobility services), all of which contribute towards making our
customers’ lives easier. With this point in mind, we are on our way to
becoming a customer-focused mobility and high-tech company.”

 

In 2018, the broadest product initiative ever
undertaken by the BMW Group continues: With the market launch of the
BMW X2 in March, the ramping up of the BMW X3 at three production
sites and the new generation of the BMW X4, 2018 is sure to go down as
the “Year of X” for the world’s largest manufacturer
of premium vehicles. “We are bringing out completely new models and
introducing a new design language for the whole product range. This is
our recipe to ensure that the BMW brand regains pole position in the
premium segment by 2020,” Krüger stated. “We gave the
public a taste of these developments with the unveiling of the
BMW Concept M8 Gran Coupé at the Geneva Motor Show
and the series version will be presented in 2019.”

 

Strategic decisions will begin to bear fruit in 2018

 

Numerous strategic decisions, for which the BMW Group did the
groundwork at an early stage in conjunction with its Strategy
NUMBER ONE NEXT, will begin to bear fruit in
2018. For instance, the acquisition of Parkmobile LLC
was announced in January, making the BMW Group the leading provider of
digital parking solutions. The acquisition of the car sharing joint
venture DriveNow closed in March. These two
transactions give the BMW Group control over a wide range of strategic
options for enhancing its range of mobility services in a field set to
make a crucial contribution to sustainable urban mobility going
forward. The BMW Group is aiming to have 100 million active
customers
by 2025.

 

In February, the BMW Group and the Chinese manufacturer Great
Wall
signed a letter of intent to establish a joint venture
for the local production of fully electric MINI
vehicles in China. This step is a further clear commitment to the
electrified future of the MINI brand and highlights the
importance of the Chinese market for the BMW Group.

 

At the Geneva Motor Show in early March, the BMW Group announced that
the BMW i Vision Dynamics, unveiled at the Frankfurt Motor Show in
2017, will be launched as the all-electric BMW i4 and
manufactured at the Munich plant. Today, the BMW Group already
manufactures electrified vehicles at ten production facilities. In
2019, Plant Oxford will join this list with the start of production of
the fully-electric MINI. The BMW i4 is just one of the
25 electrified models that the BMW Group intends to
bring to market by 2025. Half of these models will be
fully electric. Powered by the fifth generation of battery and
drivetrain technology, from 2021 the BMW Group will be capable of
offering all-electric vehicles with a range of up to 700 kilometres
and plug-in hybrids with an electrical range of up to 100 kilometres.

 

Upfront expenditure for tomorrow’s mobility at record level

 

Continuing progress in the field of electric mobility is a key reason
behind the BMW Group’s plan to allocate an increasing amount to
research and development in the current year. After a spend of € 6,108
million in 2017, upfront expenditure for tomorrow’s mobility will
increase significantly in the financial year 2018. Investment will
rise by a further high three-digit million-euro amount year-on-year,
primarily for the ongoing new model initiative as well as continued
work on e-mobility and autonomous driving. In absolute terms, the
amount could reach the 7 billion euro mark. The major scale of
investment reflects the BMW Group’s determination to play a leading
role in transforming the mobility sector with its future-oriented ACES
programme: Automated, Connected,
Electrified and Services.

 

Despite the cost of these wide-ranging activities, the BMW Group
expects Group profit before tax to be at least in
line with the record level reported for 2017. “We will need to remain
steadfast in 2018 in order to achieve our target of reporting another
year of record pre-tax earnings,” stated Nicolas
Peter
, Member of the Board of Management of BMW AG, Finance.
“But we are an ambitious company, constantly striving to improve the
efficiency of our business processes. We are reducing the complexity
of our range of products and services, rigorously bringing it into
line with the requirements of our customers. This provides us with the
necessary resources for future investments. As ever, our strategy is
driven by the desire to achieve long-term sustainable profitability.”

 

As part of its Strategy NUMBER ONE NEXT, the
BMW Group is systematically expanding into market segments with high
rates of return in order to finance the similarly high levels of
upfront expenditure necessary to drive tomorrow’s mobility from a
position of underlying strength. Accordingly, the Group continues to
target an EBIT margin within a range of 8 to 10 per
cent for its Automotive and Motorcycles segments. Deliveries
to customers
are expected to rise slightly in the financial
year 2018, resulting in a corresponding slight increase in Automotive
segment revenues. The Motorcycles segment expects to
see solid growth in volume terms.

 

In 2017, the BMW Group delivered more than 100,000
electrified vehicles
to customers for the first time in a
single year, mainly driven by the performance of the all-electric BMW
i3, sales of which have risen every year since its market launch in
2013. Last year, the BMW Group accounted for more newly registered
electrified vehicles (all-electric + plug-in hybrid) than any other
manufacturer in Europe, with a share of 21 percent. The BMW Group
intends to grow sales of its electrified vehicles to at least
140,000 units
globally in 2018 and is targeting
more than half a million units on the world’s roads
by the end of 2019. “Our electric mobility strategy is having a
positive impact: the broad range of electrified models we now offer
enabled us to cut CO2 emissions across our EU fleet yet again in
2017,” CEO Harald Krüger pointed out.

 

This year, the BMW Group will also broaden its base for adding value
worldwide. Further investments are planned in the key regions of
China, the USA and Europe. Maintaining a strong local
presence
, particularly in the USA and China, is and remains
an essential prerequisite for being part of future growth in these regions.

 

New sales volume, revenues and earnings records in 2017

 

Automotive sales volume increased by 4.1% to a new
record level of 2,463,526 units in 2017 (2016: 2,367,603 units). With
its three premium automotive brands, BMW, MINI and Rolls-Royce, the
BMW Group asserted its position as the world’s leading manufacturer of
premium vehicles. Deliveries of electrified vehicles
jumped by 65.6% to 103,080 units, driven by the all-electric BMW i3
sales which have risen every year since the model’s market launch in
2013. The BMW Group intends to increase the sales volume of
electrified vehicles to at least 140,000 units in 2018 and bring more
than half a million electrified vehicles onto the roads by the end of 2019.

 

Group revenues rose to a new record level of € 98,678
million in 2017 (2016: € 94,163 million; +4.8%), with currency effects
slightly restraining growth. Profit before financial
result
(EBIT) rose by 5.3% to € 9,880 million (2016: € 9,386
million). Group profit before tax (EBT) went up
significantly year-on-year, partly helped by favourable valuation
effects, and – thanks to a 10.2% rise to € 10,655 million (2016:
€ 9,665 million) – finished the year for the first time above the
ten-billion-euro mark. As in the previous year, all three operating
segments – Automotive, Motorcycles and Financial Services – reported
record pre-tax earnings, each making a contribution to earnings growth
in 2017. The pre-tax return on sales (EBT margin) for
the Group improved to 10.8% (2016: 10.3%), ensuring that the BMW Group
remains one of the automotive industry’s leaders when it comes to profitability.

 

Income tax expense amounted to € 1,949 million in the
year under report (2016: € 2,755 million). The significantly lower tax
expense in 2017 was mainly due to the reduction in the US federal
corporate income tax rate from 35% to 21% with effect from 1 January
2018, which was taken into account in the measurement of deferred
taxes at 31 December 2017. The revaluation gave rise to a positive
impact of € 977 million on deferred taxes recognised through the
income statement. Group net profit benefitted
accordingly and rose to € 8,706 million (2016: € 6,910 million; +26.0%).

 

Free cash flow generated by the Automotive segment in
2017 again exceeded the target of € 3 billion despite an increase in
the cash outflow from investing activities by € 1.1 billion. During
the twelve-month period, free cash flow amounted to € 4,459 million
(2016: € 5,792 million).

 

Dividend of € 4.00 per share of common stock proposed

 

“A company is only as good as its workforce. With their exemplary
dedication, our employees are the driving force behind our success
story,” stated Krüger. “That is why, we pay our
permanent staff in Germany the highest profit share in the sector.” At
the Annual General Meeting on 17 May 2018, the Board of Management and
the Supervisory Board will propose to shareholders that the
dividend be increased to a new high of € 4.00
(2016: € 3.50) per share of common stock and € 4.02 (2016: € 3.52) per
share of preferred stock. The distribution rate of
30.2% (2016: 33.3%) will be within the BMW Group’s target range of
between 30 and 40%. “The proposal to raise the dividend by a
significant amount is a clear sign of the BMW Group’s confidence that
it is ideally placed to perform well in the future on a sustainable
basis,” said Krüger.

 

Consistently high profitability in Automotive segment

 

Automotive segment
revenues grew by 2.5% to € 88,581 million
(2016: € 86,424 million) on the back of positive sales volume figures.
EBIT improved slightly by 2.2% to € 7,863 million
(2016: € 7,695 million). The EBIT margin came in at
8.9%, unchanged from the previous year, thus finishing within the
target range of between 8 and 10% or higher for the eighth financial
year in a row since 2010. Segment profit before tax
increased by 9.8% to set a new record of € 8,691 million (2016:
€ 7,916 million).

 

In 2017, the Group again delivered over two million
BMW
brand vehicles to customers. Sales volume rose by 4.2% to
2,088,283 units year-on-year (2016: 2,003,359 units). The BMW
X family
remained a significant growth driver, with 9.6%
more vehicles delivered to customers – an excellent performance
considering the BMW X3 model change has been in
progress since the second half of the year. Following the completion
of the BMW 5 Series Sedan model change, December
sales of the world’s leading premium business sedan were more than 55%
up on the previous year, while sales volume for the year as a whole
grew by 6.3% to 291,856 units. Other models contributing to growth in
2017 included the BMW 1 Series (201,968 units;
+14.7%) and the brand’s flagship BMW 7 Series (64,311
units; +4.5%).

 

The MINI brand set a new sales volume record in 2017
with 371,881 deliveries worldwide and 3.2% year-on-year growth. Sales
of the new MINI Countryman jumped by 30.0% (84,441
units). The MINI Convertible also made an important
contribution to the brand’s successful performance, recording sales
volume growth of 12.0% (33,317 units).

 

Rolls-Royce Motor Cars delivered 3,362 units (-16.2%)
to customers in almost 50 countries around the globe. The figure was
achieved despite volatility in key Middle East markets and the Phantom
being unavailable throughout the year due to model change. The new
Phantom was unveiled to the acclaim of an international public in
London in July and has already received a large number of pre-orders.
First customer deliveries commenced at the beginning of this year.

 

The BMW Group remains committed to its strategy of achieving a
balanced distribution of sales worldwide.

 

The BMW Group again recorded high growth in Asia,
where a total of 848,826 BMW, MINI and Rolls-Royce brand vehicles were
sold, representing double-digit growth of 13.6% (2016: 747,291 units).
The Chinese market made a key contribution to this performance with
595,020 units delivered to customers (2016: 516,785 units; +15.1%).

 

In Europe, the BMW Group sold a total of 1,101,760
units across its three brands, thus remaining at the previous year’s
high level (2016: 1,092,155 units; +0.9%). The sales volume figure of
241,674 units for Great Britain was down on the previous year (2016:
252,205 units; -4.2%). Deliveries to customers in France increased to
89,957 units (2016: 84,305 / +6.7%). The sales volume also increased
in Italy with 86,663 deliveries (2016: 83,765 / +3.5%).

 

The Americas region saw a slight decrease in the
number of deliveries over the year as a whole (451,136 units; -2.0%),
with the limited availability of BMW X models having an impact on
volumes. In a highly competitive market environment, deliveries in the
USA dipped slightly to 353,819 units (2016: 366,493 units; -3.5%). In
the fourth quarter of 2017, however, a turnaround was perceptible in
both the USA (98,137 units; 2016: 96,609 units; +1.6%) and in the
Americas as a whole (124,547 units; 2016: 122,393 units; +1.8%).

 

Motorcycles segment deliveries surpass 150,000 units for the
first time

 

2017 was also a record-breaking year for the Motorcycles
segment
. Motorcycle and maxi-scooter deliveries rose by 13.2%
to 164,153 units (2016: 145,032 units), making it the seventh
consecutive record-breaking year and the first in which more than
150,000 units were sold. Segment revenues also rose
significantly to € 2,283 million (2016: € 2,069 million; +10.3%).
Similarly, EBIT improved to € 207 million (2016:
€ 187 million; +10.7%). As in the Automotive segment, the BMW Group is
also targeting an EBIT margin within a range of 8 to
10% in the Motorcycles segment. In the financial year 2017, the margin
came in at 9.1% (2016: 9.0%). Profit before tax
increased by 10.8% to € 205 million (2016: € 185 million).

 

Financial Services segment continues to break records

 

The Financial Services segment also continued to perform well in
2017. The number of new contracts concluded with
retail customers rose slightly to 1,828,604 contracts (2016: 1,811,157
contracts; +1.0%) during the twelve-month period. At 31 December 2017,
the contract portfolio comprised 5,380,785 contracts,
thus growing by 5.2% year-on-year (2016: 5,114,906 contracts).
Segment revenues were 7.3% higher at € 27,567
million (2016: € 25,681 million). Profit before tax
increased slightly to € 2,207 million (2016: € 2,166 million; +1.9%).

 

Increase in workforce and number of apprentices

 

The size of the workforce grew by 4.2% in 2017. At
31 December, the BMW Group employed 129,932 people worldwide (2016:
124,729 employees). Projects relating to vehicle electrification and
autonomous driving, as well as the continued expansion of the
international production network, played a major role in the
additional recruitment. Growth in automotive and motorcycle business
on the one hand and the expansion of financial and mobility services
on the other also contributed to the rise. The BMW Group continues to
place great emphasis on its trainee programme and has again invested
some € 350 million in basic and further training. Overall, more than
4,750 young people worldwide were employed in vocational
training
and training programmes for young talent at 31
December 2017.

 

Supervisory Board

 

At the Annual General Meeting to be held on 17 May 2018, the
Supervisory Board will propose that Prof. Dr. Reinhard Hüttl, Chairman
of the Executive Board of Helmholtz-Centre Potsdam – GFZ German
Research Centre for Geosciences, Dr. Karl-Ludwig Kley, Chairman of the
Supervisory Board of E.ON SE and Deutsche Lufthansa AG and Prof. Dr.
Renate Köcher, Director of Institut für Demoskopie Allensbach
Gesellschaft zum Studium der öffentlichen Meinung mbH, be re-elected
to the BMW AG Supervisory Board.

 

Furthermore, the Supervisory Board will propose to the shareholders
that Dr. Kurt Bock, Chairman of the Board of Executive Directors of
BASF SE, be elected to the Supervisory Board of BMW AG. In agreement
with the Supervisory Board, Dr. h.c. Robert Lane will resign effective
the end of the Annual General Meeting. The Supervisory Board would
like to thank Dr. h.c. Lane for several years of invaluable and
trusted cooperation.

 

 

The BMW Group – an Overview

2017

2016

Change in %

Deliveries to customers

    

Automotive

units

2,463,526

2,367,603

4.1

thereof: BMW

units

2,088,283

2,003,359

4.2

 MINI

units

371,881

360,233

3.2

 Rolls-Royce

units

3,362

4,011

-16.2

Motorcycles

units

164,153

145,032

13.2

 

 

 

 

 

Workforce
1

 

129,932

124,729

4.2

 

 

 

 

 

Automotive
segment EBIT margin

%

8.9

8.9

Motorcycles
segment EBIT margin

%

9.1

9.0

+0.1 % points

EBT margin BMW Group

%

10.8

10.3

+0.5 % points

Free cash flow Automotive segment

€ million

4,459

5,792

-23.0

 

 

 

 

 

Revenues

€ million

98,678

94,163

4.8

thereof: Automotive

€ million

88,581

86,424

2.5

Motorcycles

€ million

2,283

2,069

10.3

Financial Services

€ million

27,567

25,681

7.3

Other Entities

€ million

7

6

16.7

Eliminations

€ million

-19,760

-20,017

1.3

 

 

 

 

 

Profit before financial result
(EBIT)

€ million

9,880

9,386

5.3

thereof: Automotive

€ million

7,863

7,695

2.2

Motorcycles

€ million

207

187

10.7

Financial Services

€ million

2,194

2,184

0.5

Other Entities

€ million

14

-17

Eliminations

€ million

-398

-663

40.0

 

 

 

 

 

Profit before tax (EBT)

€ million

10,655

9,665

10.2

thereof: Automotive

€ million

8,691

7,916

9.8

Motorcycles

€ million

205

185

10.8

Financial Services

€ million

2,207

2,166

1.9

Other Entities

€ million

80

170

-52.9

Eliminations

€ million

-528

-772

31.6

 

 

 

 

 

Income taxes

€ million

-1,949

-2,755

29.3

Net profit

€ million

8,706

6,910

26.0

Earnings per share
2

 €

13.12/13.14

10.45/10.47

25.6/25.5

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

 

 

For questions please contact:

 

Corporate Communications

 

Max-Morten Borgmann, Business and Finance Communications

Telephone: +49 89 382-24118, fax: +49 89 382-24418

Max-Morten.Borgmann@bmwgroup.com

 

Glenn Schmidt, Head of Business and Finance Communications

Telephone: +49 89 382-24544, fax: +49 89 382-24418

glenn.schmidt@bmwgroup.com

 

Internet: www.press.bmwgroup.com

E-mail: presse@bmw.de

 

 

 

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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