Good morning, Ladies and Gentlemen,
The BMW Group performed well in the third quarter of 2016 and
continued the positive business development from the first half of the
year. EBIT margin in the Automotive Segment remains within our target
range, at 9.1%, for the first nine months. Sales, revenues and Group
pre-tax earnings all reached new all-time highs for the year to the
end of September. We are also maintaining our ambitious guidance for
the full year. In the first nine months of the year, the BMW Group
delivered almost 1.75 million vehicles to customers – 6.2% more than
the previous year.
In China, BMW Group deliveries exceeded our expectations. More than
379,000 cars were sold by the end of September – an increase of 10.7%.
Both locally produced and imported models did well. The
long-wheelbase version of the new BMW X1 and our other X models are
proving especially popular with customers in China. Despite lifecycle
factors, sales of the BMW 3 Series and the BMW 5 Series continued to
perform well here. Sales development in Europe continued to be
dynamic, with double-digit growth. The main sales drivers were our
compact vehicles and X models. The new BMW 7 Series also continues to
make significant gains. The US auto market remains highly competitive
with the BMW Group focusing on the correct balance between volume and
profitability. The company continues to benefit from its policy of
globally balanced sales.
During the course of fine-tuning its strategy, the BMW Group made
some key decisions to guide the company into the future. The company
is working hard to implement these measures through targeted
investments in tomorrow’s mobility. In the first nine months of this
year, we forged ahead with many different projects, including
electrification of our product line-up and topics related to digitalisation.
Third-quarter Group revenues climbed 4.6% to € 23.36 billion, but
were dampened somewhat by currency headwinds. Adjusted for currency
translation effects, revenues rose in line with sales, by 6.6%. At the
end of the first nine months, revenues reached € 69.23 billion.
Pre-tax earnings climbed 13.8% between July and September to € 2.58
billion. As well as positive operating business development at Group
level, an improvement in the financial result also contributed to this
significant increase. This was mainly due to the positive effect of
the fair market valuation of commodity derivatives.
The BMW Group’s pre-tax earnings for the first nine months totalled €
7.74 billion, an increase of 8.8%. At Group level, the EBT margin for
the year to the end of September was 11.2%. As it implements its
strategy, the BMW Group is making targeted investments to expand its
model line-up and develop new business segments. The company invested
a total of € 1.97 billion in products and equipment in the year to the
end of September. This figure is lower than last year because there
were fewer product launches.
The capex ratio was 2.8% for the first nine months, and 4.0% for the
quarter. In the fourth quarter, capital expenditure is likely to be
higher as a result of the usual seasonal factors. We expect the capex
ratio for the full year to be on a par with last year, as planned.
Research and development spending for the first nine months totalled €
3.33 billion and was therefore moderately lower than in 2015. The
previous year’s figure included high development costs for the launch
of the BMW 7 Series, the X1 and the 2 Series Gran Tourer, among other effects.
Third-quarter RD activities mainly concentrated on preparations
for new high-volume models. Additional focus areas included increasing
vehicle connectivity and further development of driver assistance systems.
The RD ratio for the first nine months was 4.8%. The
fourth-quarter figure will be higher, mainly due to the ramp-up of the
new BMW 5 Series. For the full year, as planned, we expect it to be on
par with last year’s level.
BMW Group liquidity stood at € 11.46 billion at the end of September,
confirming the company’s financial strength.
Let’s take a look at the earnings performance in the individual segments.
In the Automotive Segment, the company sold a total
of 1.75 million vehicles in the year to the end of September. This
represents an increase of 6.2% and a new all-time high: Over 100,000
more vehicles were delivered to customers than in the same period last
year. Third-quarter sales reached just under 584,000 vehicles – an
increase of 7.1% year-on-year. In the first nine months, revenues rose
by 2.8% to € 63.25 billion. The increase in revenues was dampened
slightly by currency headwinds. Adjusted for this effect, revenues for
the year to the end of September climbed 4.4%. Third-quarter revenues
totalled € 21.56 billion. This also represents an increase of 2.8%.
Automotive EBIT for the year to the end of September reached € 5.78
billion. This is a slight increase of 4.6% compared to the same period
of last year. EBIT for the third quarter decreased slightly to € 1.84
billion. We are currently working hard to implement Strategy Number
ONE NEXT. This, and the renewal of key high-volume models, once
again required upfront investments in the third quarter. We are also
investing into the further development of electro-mobility and
projects related to digitalisation. The company has continued to
recruit qualified specialists for these important future projects.
Workforce growth and higher personnel costs from the collectively
bargained pay increase in Germany as of the 1st of July impacted
earnings in the third quarter.
Due to model change-overs and ramp-ups, production will be lower in
the second half of the year than in the first six months, as planned.
The resulting effects of inventory valuations will impact earnings in
the second half of the year. Competition remains intense in a number
of automotive markets. Although prices have largely stabilised in
Europe and China, pricing remains a challenge in North America, in particular.
As already mentioned, our operating EBIT margin stood at 9.1% after
the first nine months of the year. The EBIT margin for the third
quarter also remained within our ambitious target range of 8-10%, at 8.5%.
The financial result for the Automotive Segment improved
significantly in the third quarter – increasing by € 260 million as
compared to the third quarter 2015. As already mentioned, this growth
mainly stems from the positive fair market valuation effects of
commodity derivatives. The third-quarter at-equity result, which
primarily includes the earnings contribution from the Chinese joint
venture BBA and expenses in connection with the stake acquired in the
mapping service HERE, totalled € 162 million. As usual, we anticipate
higher costs in the fourth quarter. This will dampen earnings development.
The financial position in the Automotive Segment continued its
positive trend. Free cash flow stood at € 3.42 billion at the end of
September. We expect free cash flow in the Automotive Segment to
remain strong and to exceed our target of € 3 billion over the full
year. At the end of the third quarter, net financial assets amounted
to € 16.72 billion.
The Financial Services Segment continued its growth trend in the
third quarter. A total of nearly 468,000 new contracts were concluded
with customers between July and September. This represents a
significant increase of 11.2%. Business in the Chinese market was
particularly successful.
Over 1.34 million contracts were concluded with retail customers in
the first nine months, 9.8% more than the previous year. The overall
volume of new business climbed around 9.0% to € 40.63 billion.
In the third quarter, credit financing, in particular, saw
significant growth of 14.8%. The percentage of leasing contracts
remained stable at around one third of total new business. The dynamic
growth in new business is also reflected in the total number of
contracts. As of the 30th of September 2016, the Financial Services
Segment maintained 4.60 million contracts with retail customers
worldwide. This represents an increase of 8.8% over the previous year.
The Asia/Pacific region once again reported double-digit growth of
18.7%, while the Europe/Middle East/Africa region posted a solid
increase of 8.5%. The Americas and the EU Bank also contributed to
this successful development.
The penetration rate – the percentage of new vehicles financed or
leased by Financial Services – has increased to 49.0% at the end of
the third quarter. This is 2.9 percentage points higher than for the
same period of last year, mainly due to the significant growth in
credit financing.
BMW Group Financial Services continues its strong performance. The
positive development in new business is reflected in revenues and
earnings. Segment revenues for the year to the end of September rose
by 6.2% to € 18.94 billion. Earnings before tax climbed roughly 8.2%
over the same period to € 1.64 billion. Pricing on the international
used-car markets remained relatively stable from the previous year. We
are constantly monitoring residual value trends as part of our
comprehensive risk management activities. The credit loss ratio of
0.30% remains very low.
Overall, the risk situation in the segment remains stable, with
strong demand for financial services products. We expect this positive
business performance to continue in the fourth quarter of 2016.
The Motorcycles Segment also posted a strong third quarter. More than
116,000 BMW motorcycles were delivered to customers in the first nine
months – an increase of 3.2%. Revenues for the first nine months
reached € 1.65 billion and were therefore on a par with 2015. Segment
EBIT for the same period stood at € 224 million, which was lower than
the previous year.
BMW Motorrad is focusing its efforts on implementing its strategy and
expanding its model portfolio. This requires significant upfront
investments this year, which are reflected in segment earnings. The
strategic model offensive continues. In October, the Bagger K 1600 B –
a bike specially designed for the American market – celebrated its
world premiere in Los Angeles. BMW Motorrad is also expanding its
successful Heritage family with the R NineT Pure and R NineT Racer
also presented last month. The BMW G 310 R is a genuine BMW in the
segment below 500 cc that will open up completely new market potential
worldwide. Based on this strong product momentum, we expect sales for
the full year 2016 to reach a new all-time high.
Let’s move on to the outlook for the fourth quarter.
Costs generally rise towards the end of the year, so we expect this
to have a dampening effect on earnings. Capital expenditure will also
be higher in the last three months of the year, mainly due to the
start of production and ramp-up of the new BMW 5 Series. The BMW Group
is focusing on its ambitious targets for the year. Assuming conditions
remain stable, we can confirm our guidance from the beginning of the year.
- The BMW Group expects to see a slight increase in pre-tax earnings
for the full year. - The Automotive Segment is targeting slight increases in both
revenues and deliveries. - We intend to keep the EBIT margin for the Automotive Segment
within our target range of 8-10%. - For BMW Motorrad, we forecast a solid increase and a new all-time
high in retail sales for the full year 2016. - In the Financial Services Segment, we expect return on equity to
remain at last year’s level – and therefore above our target of at
least 18%.
Depending on the political and economic situation, actual business
performance could, however, differ from current expectations.
The profitability corridor of 8-10% for our automotive business will
remain our target, also in the coming years. In 2007, we geared our
company towards profitability. Recent years have shown that
forward-looking management using key performance indicators also makes
the company more robust in times of crisis. Strategy Number ONE
NEXT is the logical extension of this idea. The BMW Group has a strong
core business. It gives us the financial leverage to make targeted
investments in future projects, such as further development of
electro-mobility, autonomous driving and digitalisation.
As we move forward, the BMW Group will continue to actively shape the
mobility of the future – focusing on sustainable business management
and stable profitability at a high level.
Thank you.