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Statement and Presentation by Dr. Nicolas Peter, Member of a Board of Management of BMW AG, Finance, Annual Accounts Press Conference 2017

Good morning Ladies and Gentlemen,

 

A comfortable acquire from me as well. Before we start, we would like to
quickly deliver myself: As we know, we took over a Finance
Division from Friedrich Eichiner on a 1st of January.

 

In my 26 years during a BMW Group, we have been conduct of Sales Strategy,
Group Controlling and a European sales region, as good as other
functions. During this time, we have actively worked on both Strategy
NUMBER ONE and Strategy NUMBER ONE NEXT. we resolutely trust that we
have selected a right path.

 

I am gay to be here now as a member of a Board of
Management obliged for Finance. we am assured we will be means to
continue a good and constructive team-work we have enjoyed in
new years.

 

But let’s pierce on now to a central part. we would now like to talk
in fact about pivotal developments in a financial year 2016 and take a
demeanour during a opportunities and hurdles for a year ahead.

 

Profitability, stability, sustainability. That is what a BMW Group
has stood for for many years. In a 2016 financial year, a company
once again delivered on a promises. Deliveries, revenues and Group
gain all reached new all-time highs – explanation indeed of our
coherence and opening capabilities.

 

In a centenary year, a BMW Group valid once some-more that innovation
and profitability go palm in hand. The association again met all of its
targets. For a seventh uninterrupted year, a EBIT domain in the
Automotive Segment was within a aim operation of 8-10%.

 

Ladies and Gentlemen,

 

Let me emphasize: Our meditative is geared towards a prolonged tenure – with
a transparent vital concentration on a future. This means investing in
choice expostulate trains, unconstrained driving, extended mobility
services and digitalisation.

 

Step by step we are implementing a skeleton laid out in Strategy
NUMBER ONE NEXT. New and innovative products like a BMW 5
Series denote a swell we have done in essential areas of
innovation. At a same time, we are progressing a despotic concentration on
profitability. In new years, we have shown that confidant innovations
and high profitability are not jointly exclusive. On a contrary:
Our financial strength now allows us to make a upfront investments
we need to secure a destiny success.

 

The BMW Group is behaving good in all of a business segments.
Here, we can see a EBT domain during Group spin over a past years.
Since 2011, it has consistently exceeded a 10% mark. The EBT margin
for a 2016 financial year stood during 10.3%.

 

In 2016, Group revenues totalled 94.16 billion euros. This is an
boost of 2.2% over a prior year – nonetheless this was impacted
rather by banking interpretation effects. Adjusted for these effects,
revenues rose by 4.3%. Group distinction before taxation reached a new rise of
9.67 billion euros. As forecast, this represents a slight boost of
4.8%. Compared to a prior year, a financial outcome primarily
benefitted from certain effects from a satisfactory marketplace gratefulness of
commodity derivatives.

 

Despite high upfront investments in a launch of a new engine
plant and new models, a Chinese corner try BMW Brilliance
Automotive contributed 507 million euros to earnings. This slight
diminution from a prior year is only due to banking translation
effects. The reduce taxation rate of 28.5% was partly due to transfer
pricing effects and revaluation of tax-related items. Consequently,
net distinction for 2016 also reached a new all-time high of some-more than 6.9
billion euros – an boost of 8.0% year-on-year.

 

Group revenues for a fourth entertain stood during roughly 25 billion
euros and were on standard with a prior year. As expected, we saw a
assuage quarterly diminution in Group distinction before tax, partly as a
outcome of upfront investments relating to doing of a new
devise in a fourth quarter. As is standard in a fourth quarter,
aloft IT and selling costs and increasing investigate and development
spending impacted gain – that totalled around 1.92 billion euros.
Despite these expenses, a BMW Group achieved an EBIT domain in the
fourth entertain of 8.3% in a Automotive Segment.

 

Ladies and Gentlemen,

 

The BMW Group is evenly investing in a future. We firmly
trust that strength in creation is a pivotal to long-term success
and profitability. The association invested a sum of 3.73 billion euros
in products and apparatus in 2016, not including capitalised
expansion costs. The categorical concentration was on pivotal high-volume model
launches and enhancing a competitiveness of a plants worldwide.

 

Our capex ratio of 4.0% was on standard with a prior year and below
5% of revenue, as planned. We design a ratio for 2017 to be somewhat
higher, though still in line with a aim of subsequent 5%.

 

On a product side, a categorical upfront investments final year were
associated to a launch of a new BMW 5 Series. Production started in
late 2016. We are also creation targeted investments to raise our
general prolongation network. In 2016, this enclosed construction
of new prolongation facilities, as good as enlargement and upgrading of
existent plants. We are ceaselessly investing in modernisation and
enhancing coherence during a prolongation sites.

 

Our Spartanburg plant in a US is now being stretched to meet
clever direct for a BMW X models worldwide. Capacity will be raised
from now 410.000 to 450.000 vehicles per year.

 

Construction of a San Luis Potosí plant in Mexico is proceeding
according to plan. The initial 3 Series models for tellurian trade will
hurl off a prolongation line in 2019. The new plant will also
recompense for a reallocation of prolongation ability during a plant in
South Africa, that will build a new BMW X3 going forward, instead
of a BMW 3 Series Sedan.

 

In China, a BBA corner try non-stop a new engine plant to supply
a internal automobile prolongation plants final year. The Dadong plant, which
builds a long-wheelbase chronicle of a 5 Series Sedan, is currently
undergoing expansion.

 

Let’s pierce on to a investigate and expansion activities. RD
output for 2016 totalled 5.16 billion euros and was therefore on
standard with a prior year. The ratio of capitalised expansion costs
was during 40.5%. Our RD ratio of 5.5% lies within a aim range
of 5-5.5%.

 

In 2016, a concentration was on preparations for a launch of new models.
We will continue to replenish a product choice over a subsequent few years.
As we continue to raise a required engines, we will also be
pushing expansion of a new era of electric motors and
conducting complete investigate into hydrogen fuel dungeon technology.

 

We are enlightening a behind and front-wheel expostulate architectures to make
them equally suitable for both required expostulate trains and
electrification. This will boost a flexibility. With the
additional motorist assistance systems in a new 5 Series, we are also
holding another critical step towards unconstrained driving. We are
bringing technological innovations into array production, though only
once they grasp a right spin of majority and safety.

 

We will continue to concentration on implementing a devise in 2017. To
safeguard a association is good prepared for a hurdles ahead, we are
investing in a expansion of new technologies and optimising
existent ones. Due to required upfront investments, a RD ratio
for a subsequent dual years is approaching to be somewhat above a aim range
of 5-5.5%.

 

Ladies and Gentlemen,

 

2016 was a BMW Group’s many successful financial year to date. The
association once again met a targets. Sharing this success with our
shareholders is an constituent partial of a Group culture. The Board of
Management and Supervisory Board will introduce a division of 3.50 euros
per share of common batch and 3.52 euros per share of elite stock
for 2016. The division will therefore be 30 cents aloft than the
prior year – a top a BMW Group has ever paid.

 

This adds adult to a sum division payout of 2.3 billion euros and
means that a third of a net distinction for a year will be paid out to
shareholders. The payout ratio stays therefore within a target
operation of 30-40%.

 

Now, let us take a demeanour during opening in a sold segments.
First, a Automotive Segment. Automotive deliveries rose by 5.3% in
2016 to roughly 2.37 million vehicles. This plain boost slightly
exceeded a superintendence from a start of a year.

 

Automotive Segment revenues reached 86.42 billion euros in 2016. This
represents a slight boost of 1.0% over a prior year, as
forecast. Adjusted for banking effects, revenues were adult 3.1%. EBIT
for a shred totalled 7.7 billion euros. This is somewhat below
final year’s all-time high. The EBIT domain of 8.9% remained within our
aim operation of 8-10%, as planned, notwithstanding endless upfront
investments in destiny projects.

 

Here we can see a 2016 EBIT overpass for a Automotive Segment.
Segment EBIT remained clever in 2016, notwithstanding severe conditions
and domestic volatility. Currency and commodity effects constructed a
tailwind of 200 million euros. Earnings also benefitted from higher
volume, brew and marketplace effects. We design a new BMW 5 Series to
yield serve movement this year.

 

In a rarely rival environment, we are constantly operative to
optimise a sales performance. This includes gearing a structure of
a choice even some-more towards patron needs in opposite regions of
a world. We will continue strengthening a marketplace position through
intelligent technical facilities and pricing measures.

 

Depreciation of 143 million euros had a disastrous outcome on EBIT. The
object “Other cost changes” represents a net change of efficiency
improvements, upfront investments and crew costs. This item
totalled disastrous 217 million euros. A high spin of output for
vital projects as good as an stretched workforce impacted the
result. The BMW Group is investing now in a destiny business
success. At a same time, we are progressing a long-term vital direction.

 

Let us spin now to a money upsurge statement. Free money upsurge in the
Automotive Segment totalled 5.79 billion euros in 2016. This is 388
million euros some-more than a figure for 2015. Higher net distinction and
sound government of operative capital, among other factors, contributed
to this healthy giveaway money flow. Free money upsurge for a stream year is
approaching to sojourn clever and we are targeting an volume of over 3
billion euros once again.

 

The BMW Group’s liquidity position remained plain in 2016. At a end
of a year, Group liquidity totalled 13.17 billion euros. This proves
once again that a association has a really plain financial footing.

 

In a flighty environment, a association possesses a high spin of
coherence and financial strength. The BMW Group maintains adequate
liquidity pot to safeguard a solvency during all times. This is also
recognized by a collateral markets and rating agencies. In January,
Moody’s upgraded a BMW Group’s long-term rating to A1. This is the
best rating of any European automobile OEM and a second-best of any car
manufacturer in a world.

 

Let’s continue with a Financial Services Segment. 2016 was another
successful business year for BMW Group Financial Services. A sum of
1.81 million new contracts were resolved with sell business – 9.4%
some-more than a prior year. Credit financing, in particular, reported
poignant expansion of 11.1%. The altogether volume of new business
climbed 9.3% to around 55.33 billion euros. The segment’s total
portfolio of 5.11 million contracts exceeded a 5 million symbol for
a initial time. The invasion rate for 2016 – a commission of new
BMW Group vehicles financed or leased by a shred – increasing to 49.6%.

 

The expansion in a financing and leasing business with retail
business also had a certain impact on a serviced contract
portfolio. The biggest gains once again came from a Asia/Pacific
region, that reported expansion of 18.0%. In this partial of a world,
business have traditionally elite loan products. The
Europe/Middle East/Africa and Americas regions posted plain expansion of
8.6% and 7.1%, respectively. The EU Bank, that comprises a BMW Bank
with a branches in Italy, Spain and Portugal and auxiliary in
France, also reported plain gains.

 

The certain business expansion in a Financial Services segment
is reflected in gain as well. Pre-tax gain exceeded 2 billion
euros for a initial time. Due to successful business expansion and
a enlightened risk situation, a segment’s lapse on equity was
somewhat aloft than anticipated, during 21.2%, and exceeded a minimum
aim of 18%, as forecast.

 

Despite mercantile and domestic volatility, a risk conditions for the
whole shred portfolio continued to improve. The net credit loss
ratio forsaken to an all-time low of 0.32% – another 5 basement points
subsequent a prior year’s figure.

 

Residual value waste increasing tolerably from a prior year, as
expected. This was partly due to aloft volumes of used vehicles and
clever foe in North America.

 

BMW Group Financial Services creates extensive supplies to cover
a categorical business risks. From today’s perspective, a shred is well
prepared for residual value and credit risks. We design a risk
sourroundings to sojourn mostly fast over a march of a year.

 

I would like to pierce on to a Motorcycles Segment. 2016 was a
successful year for BMW Motorrad. Deliveries climbed 5.9% to around
145,000 vehicles. In fact, sales expansion was somewhat aloft than
creatively foresee during a start of a year – due to clever product
movement and certain marketplace development. Revenues exceeded 2 billion
euros for a initial time, reflecting a segment’s clever sales
performance. EBIT reached a new all-time high of 187 million euros.
The EBIT domain for a shred reached 9.0%.

 

BMW Motorrad continued to evenly exercise a Fit-4-2
devise in 2016. This includes expanding a choice in new segments
and building new markets. BMW Motorrad will continue a product
descent in 2017. We are venturing into a shred subsequent 500 cc with
a G310 R and a sister model, a G310 GS. This will yield access
to new patron groups and lay a substructure for destiny growth. With
a movement from these critical new models, BMW Motorrad can look
brazen to a new mellow with confidence. We design 2017 to be
another successful financial year for a segment.

 

Let’s now take a demeanour during eliminations. This covers converging of
inter-segment exchange – essentially between a Automotive and
Financial Services segments. Pre-tax gain within Group
eliminations for 2016 amounted to disastrous 772 million euros. The
disastrous volume therefore increasing by 108 million euros year-on-year.
As in a prior year, eliminations of inter-segment profits
increasing in a fourth quarter, partly as a outcome of clever new
leasing business. The finish of a year traditionally sees a strongest
sales in markets with a high share of leasing.

 

Ladies and Gentlemen,

 

Even in a flighty environment, we have once again set ourselves
desirous goals for a stream year. Overall, we design a positive
business expansion to continue in 2017. We are targeting new record
highs for deliveries, revenues and earnings.

 

Provided mercantile and domestic conditions do not change
significantly, we design to grasp a slight boost in Group profit
before tax. We also foresee a slight boost in automotive
deliveries, presumption conditions sojourn stable.

 

We will reinvigorate a product choice significantly over a next
few years. We are in a good position for 2017, with a new BMW 5
Series Sedan and Touring, a new X3, a MINI Countryman and a number
of other appealing new models. We therefore design to news sales
expansion in all a categorical regions of a world.

 

After a energetic opening of new years, sales in a European
markets should boost somewhat in 2017. In China, a certain trend
should continue, interjection to appealing models like a long-wheelbase
versions of a new BMW 5 Series Sedan and a BMW X1. Local
prolongation of a new BMW 1 Series Sedan for a Chinese marketplace ramped
adult progressing this year and will yield additional procedure for growth.
We design a slight upswing in a Americas in 2017. The positive
expansion in deliveries is approaching to be reflected in Automotive
Segment revenues. We therefore foresee a slight boost in this area
for a stream year.

 

Despite a high spin of upfront investment in destiny projects, we
are progressing a desirous profitability targets and aim for an
EBIT domain of between 8 and 10% in a Automotive Segment.

 

We design to see a poignant boost in motorcycle deliveries this
year. Expanding a product portfolio will capacitate us to strech new
patron groups and daub expansion intensity in a vital motorcycle
markets. In approval of a segment’s flourishing vital importance,
a Motorcycles Segment will also news EBIT domain as a financial
opening indicator from 2017 on. As in a Automotive Segment, we
will be targeting an EBIT domain of between 8 and 10%.

 

The certain business expansion in a Financial Services Segment
should continue in 2017. Faced with flourishing equity capital
mandate and normalisation in a risk situation, lapse on equity
is approaching to diminution somewhat – nonetheless it will sojourn above our
aim spin of during slightest 18%.

 

Our superintendence assumes that mercantile and domestic conditions will not
mellow significantly.

 

Ladies and Gentlemen,

 

The BMW Group stays on march for growth. The association has delivered
an EBIT domain within or above a aim operation of 8-10% each year
given 2010. We have worked tough to acquire a trust of a stakeholders.
As new years have shown: We set ourselves transparent goals – and deliver
on a promises. we can guarantee you: In future, we will continue to
demeanour during how we magnitude adult to these goals – and know that we will be
totalled by them.

 

Future competitiveness will be dynamic by coherence – we firmly
trust that. What this means for us is constantly enlightening our
business processes and bettering to changing conditions. At a same
time, we will use a resources intelligently, with a transparent concentration on
what is essential. We intend to keep a heading position – both in
destiny technologies and in terms of profitability.

 

We are actively pushing a change in a attention and making
targeted investments in destiny technologies with a pivotal concentration on
e-mobility. This is to secure a destiny business success.
Profitability is resolutely secure in a company. we was also committed to
this idea in my prior roles.

 

The new BMW 7 Series outlines a start of a product descent in the
top segments. And with a X7, we will continue to raise our
portfolio and strengthen a participation in this segment.

 

We are clearly focused on a future. Our extended spectrum of premium
products and services provides a best probable substructure for our
success relocating forward.

 

I’ll now palm behind to Harald Krüger.

 

Thank you.