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Statements and Presentation by Harald Krüger, Chairman of a Board of Management of BMW AG, and Dr Nicolas Peter, Member of a Board of Management of BMW AG, Finance, Annual Accounts Press Conference 2018

Harald Krüger

Chairman of a Board of Management of BMW AG (part I)

 

Ladies and Gentlemen,

Good morning and welcome! I’d like to start by articulate about how I
perspective a BMW Group’s stream position. we have been with this company
for 26 years. During this time, we have gifted many challenges
and trends, and undergone several transformations.

At a BMW Group, we have always managed to reinvent a business.
The same relates to a financial year 2017: We achieved all of our
targets. We delivered some-more than 2.4 million automobiles and over
164,000 motorcycles final year – a new all-time high.

The BMW Group is a transparent array one in a reward shred – and
has been for a past 14 years. We aim to make 2018 a ninth record
year. For deliveries and revenues in a Automotive shred we are
again essay for new all-time-highs. we am certain: The BMW Group has
a earnest future. This association will really be instrumental in
moulding destiny mobility.

There are 4 good reasons for this:

First: The success of
a BMW Group is formed on a 4 clever brands: BMW, MINI,
Rolls-Royce and BMW Motorrad. They all mount for reward and luxury.
Customers all over a universe value a products and services. This is
reflected in Fortune’s stream ranking of a “World’s Most Admired
Companies”: The BMW Group is in a Top 20. We are not usually a best
automobile company, though also a best European association in this obvious ranking.

Almost 90 percent of a vehicles are sole outward Germany. The
biggest indication descent in a story is now in full swing. We
are now in proviso two. We will be releasing another 20 new and revised
models this year.

In other words, a vital offensive. You can see a new BMW design
denunciation in highly-emotional products like a 8 Series models, a Z4
and a i8 Roadster.

Customers can also select from a far-reaching operation of opposite drive
trains: From fully-electric and plug-in hybrid to highly-efficient
explosion engines.

Second: We will get
to know a business even improved and enthuse them even more. We will
continue to put a patron during a heart of all we do. Our approach
is consistently customer-centric.

Third: The BMW Group
will lead a technological change. We will be sourroundings new strategic
directions for this in 2018. Soon, we will be opening a campus for
unconstrained pulling outward Munich. Over a march of a year, we
will benefaction a array of pure-electric judgment vehicles that will all
go into array production, like: The initial all-electric BMW – a iX3.
Our new record flagship, a BMW iNEXT, a enthralling BMW i
Vision Dynamics, that we usually announced in Geneva as a BMW i4. We
will furnish both a iNEXT and a BMW i4 in Germany. These models
are explanation of a innovative strength. Last year alone, we invested
roughly a billion euros some-more than in 2016. At a same time, we spent
scarcely a billion euros some-more on investigate and development.

Fourth: The BMW Group
is handling during a totally opposite spin of opening and global
participation than it did usually a few years ago. Thanks to a financial
strength, we have a resources to conduct a mutation towards
tolerable and digital mobility. To grasp this, we are enabling our
worldwide team. We have invested some-more than 2.5 billion euros in
vocational and veteran training for a associates given 2009.
BMW Group associates all share a suggestion to succeed. Every kind of
foe spurs us on.

 

Our destiny is really electric. With a electric vehicles and
plug-in hybrid models, we are already a transparent array one in Europe.
Efficient Dynamics and a complicated diesels will also play a purpose on the
highway to tolerable mobility. Last year we sole fewer diesels in
Germany and a UK.

As we know, they furnish reduction CO2 than petrol vehicles.
Despite this, we were still means to reduce a CO2 emissions
in Europe to 122 grams per kilometre.

For us, tolerable mobility also includes prolongation and a supply
chain: More than 80 percent of a electricity we squeeze worldwide,
already comes from renewable energies. In Europe, we achieved
totally CO2-free prolongation for a initial time in 2017.
By 2020, we also devise this for a locations worldwide. BMW i shows
that: Our shortcoming goes distant over a car. We demeanour during the
whole value chain.

Ladies and Gentlemen,

Experience has shown that in flighty times, leadership, financial
strength and a transparent concentration are some-more critical than ever. Profitability
stays tip priority. Strategy NUMBER ONE NEXT is a roadmap for
destiny goals – including: Customer satisfaction. Innovative strength
for destiny mobility. And being an appealing association for young
talents. A ideal instance of this is seen in China, where we were
voted a tip employer opposite all industries.

Thank you!

 

 

Dr Nicolas Peter

Member of a Board of Management of BMW AG, Finance

 

Good morning, Ladies and Gentlemen, and a comfortable welcome.

 

Despite a flighty environment, a BMW Group achieved another record
year in 2017. We might not be participating in a space race, though once
again we broach on a practical targets. For a eighth
uninterrupted year, a EBIT domain for a core business was within our
aim operation of 8-10%, during 8.9%. We achieved this notwithstanding spending
significantly some-more income on investigate and expansion in 2017 than ever
before. A association that delivers such a consistently high spin of
opening like a BMW Group can continue to grasp many great
things in a future. Especially in these flighty times, innovation
is key. For this, it is essential to sojourn profitable, be steadfast
and have a unchanging vital direction.

 

Now let’s take a demeanour during a business sum for final year. The
Group EBT domain for 2017 was 10.8%. This also underlines our
continuity: In any of a past 7 years, we have consistently met
– or exceeded – a aim of 10%. Group revenues climbed to 98.68
billion euros. This boost of 4.8% over a prior year largely
stems from aloft volumes. Revenue expansion was dampened by
banking effects, however, especially due to a weaker US dollar and
British pound.

 

Pre-tax gain surfaced a 10-billion-euro symbol for a initial time –
reaching scarcely 10.7 billion euros. This also reflects a strong
handling opening during Group level. This 10.2% boost is slightly
aloft than we foresee during a start of a year, due also to high
certain effects in a financial result.

 

Most notably: The clever opening of a Chinese corner venture,
BMW Brilliance: Its gain grant augmenting by 124 million
euros to 631 million euros, driven by new models such as a BMW 5
Series and a X1. A tailwind of 183 million euros from new investors
appropriation a interest in a mapping use HERE. The reduce taxation rate of
18.3% was especially due to remeasurement of deferred taxes as a outcome of
a US taxation reform. Without this effect, a effective taxation rate would
have been around a same spin as final year. As a result, net profit
for a financial year 2017 reached over 8.7 billion euros. For the
entrance years we continue to pattern a taxation rate of around 30%.

 

The BMW Group posted a really clever fourth quarter, notwithstanding a
poignant boost in costs for future-oriented projects. Group
revenues rose by 4.3% to around 26 billion euros. Group earnings
before taxation augmenting significantly to 2.17 billion euros. This
boost resulted from a certain expansion in a operating
business, plain gain of a Chinese corner venture, and negative
gratefulness effects in a prior year in a other financial result.
Despite high upfront investments, a EBIT domain for a fourth
entertain was somewhat above final year´s level, during 8.4%.

 

Ladies and Gentlemen,

If we wish to be during a forefront of destiny developments, we need to
deposit today. There is no station still for us. On a contrary: We
are intentionally progressing a really high spin of investment. At 4.69
billion euros, Group collateral output for 2017 was roughly a billion
euros aloft than a prior year. We are expanding and modernising
a prolongation network, be it in Germany, Mexico, a US, South Africa
or China. At a same time, we are investing heavily in a expansion
of a expansion locations worldwide.

 

Flexible architectures and a formation of electrified vehicles
into a existent prolongation network will capacitate us to respond quickly
to changes in patron demand.

 

We have set adult a possess expansion campus for unconstrained pulling just
outward Munich, where we are operative closely with clever partners from
a IT and retailer industries and other OEMs. And we are also
strengthening a imagination in battery-cell research, with investments
in a three-digit million-euro-range over a entrance years.

 

The capex ratio for 2017 augmenting to 4.8%, reflecting a high
upfront investments. In 2018, we will continue to make major
investments to secure a destiny competitiveness of a locations
worldwide. We are therefore presumption a capex ratio of adult to 5% for
this year. Research and expansion output also rose
significantly in 2017, to 6.11 billion euros. This is roughly a billion
euros aloft than a prior year. The RD costs recognized in
a income matter augmenting by 626 million euros year-on-year. In
serve to upfront investments in a expansion of stretchable vehicle
architectures, this volume also includes preparations for new models
like a BMW X3 and M models.

 

The latest era of a infotainment, communication and driver
assistance systems will be expelled onto a marketplace in 2018. And of
course, we will continue to concentration a efforts on serve development
of a electric expostulate trains and unconstrained driving.

 

The RD ratio for 2017 rose to 6.2% and, as formerly announced,
was therefore above a aim operation of 5 to 5.5%. Due to a high
upfront investments required for a second half of a model
descent and new technologies, we pattern a ratio for 2018 to be
between 6.5 and 7%.

In a following dual years, it is approaching to sojourn above a target
range, though reduce than in 2018.

 

Despite these significantly aloft upfront investments for future
technologies, a BMW Group met or exceeded all of a targets for the
financial year 2017.

 

Our shareholders will also advantage from these clever results. The
Board of Management and Supervisory Board will therefore introduce a
division of 4.00 euros per share of common batch and 4.02 euros per
share of elite batch for 2017. This will be a tip dividend
a BMW Group has ever paid in a history, with a sum dividend
pay-out of 2.63 billion euros. As a result, 30.2% of a net profit
for a year will be paid out to shareholders.

 

Let’s now spin to a sole segments, starting with the
Automotive Segment. Our core business continued on a successful
march in 2017. Segment revenues augmenting somewhat in 2017, as
forecast, to 88.58 billion euros. Adjusted for disastrous currency
interpretation effects, revenues rose by 3.9%, in line with deliveries.
The shred EBIT reflects a handling strength: In 2017, EBIT for
a shred reached a new all-time high of some-more than 7.86 billion
euros. The EBIT domain of 8.9% remained on a customary with final year and
within a aim range, as designed – notwithstanding a endless upfront
investments for destiny projects. Unlike other manufacturers, our
domain encompasses usually a apportionment of a really essential operating
business in China.

 

In a handling income bridge, we can see a categorical effects that
contributed to a certain EBIT expansion for a year. Our new
models have been good perceived by customers. Volume and brew effects –
including a launch of a new 5 Series – had a certain impact.
Other handling income and waste reduced gain by 373 million euros.

This object especially covers additions to supplies for authorised disputes
and other lawsuit risks, that are not associated to a conglomeration allegations.

 

Our forward-looking hedging devise for currencies and commodities
is profitable off. As expected, these effects constructed a tailwind in the
low three-digit-million-euro operation compared to 2016.

 

Other cost changes resulted in a disastrous outcome of 370 million euros
– especially due to a high investigate and expansion costs already
referred to and aloft crew costs. Significant improvements from
ongoing potency measures are partly compensating this. These
measures embody constantly enlightening and streamlining a core
processes. We are also simplifying a structure of a product and
use offering. In this way, we were means to recompense altogether for
a high spin of spending on future-oriented projects in 2017.

 

Let us spin to a money upsurge statement. Free money upsurge in the
Automotive Segment remained clever in 2017, during 4.46 billion euros,
notwithstanding significantly aloft investment. The spin of investment will
boost again in 2018. However, due to a certain business outlook,
we pattern to contend a healthy giveaway money upsurge of some-more than three
billion euros for a stream year.

 

Financial strength and coherence are a hallmarks of a BMW
Group. These are a success factors that capacitate us to keep
exclusively charting a possess course. The BMW Group’s liquidity
position stays really solid. At a finish of a year, Group liquidity
totalled 14.5 billion euros. As a result, we are good prepared for
sensitivity in a financial markets, as good as domestic and economic
challenges. With postulated high profitability and plain finances, we
once again warranted a investors’ trust in 2017. We continue to have
a second-highest rating of any automobile association worldwide.

 

That brings me to a Financial Services Segment, that relies on
carrying enlightened entrance to a collateral markets. Our Financial
Services business achieved good in a rarely rival environment
in 2017.

 

The sum array of new contracts with sell business increased
somewhat to 1.83 million contracts – with slight gains in credit
financing and a slight diminution in new leasing contracts. Leasing
accounts for about a third of a sum new Financial Services business.

 

The sum portfolio of financing and leasing contracts with retail
business grew by 4.7% to around 4.93 million contracts. The
invasion rate of 46.8% was reduce than a prior year – largely
due to regulatory boundary on financing volumes in China. Pre-tax
gain posted a slight year-on-year boost to 2.21 billion euros,
partly as a outcome of aloft business volumes.

 

The risk conditions for a whole shred portfolio remained stable
altogether in 2017. The net credit detriment ratio of 0.34% is still really low.
Residual value waste augmenting final year, as expected. This also
reflects a conditions in a used-car markets in North America and
tools of Europe. As usual, we practiced a residual value expectations
accordingly. These residual value risks are therefore entirely covered
by a risk provisions.

 

Let’s pierce on to a Motorcycles segment, that achieved really well
in 2017. The vast array of new models augmenting growth. For a first
time, deliveries augmenting to 164,000 motorcycles. The EBIT domain of
9.1% was within a aim operation of 8-10%. Pre-tax shred earnings
climbed above 200 million euros for a initial time – a significant
boost of 10.8% over a prior year.

 

Intersegment eliminations, especially of inter-segment boost between
a Automotive and Financial Services segments, reduced Group profit
by 528 million euros. This alleviation over a prior year is
partly due to a reduce volume of new leasing business in 2017.

 

In 2018, we pattern a certain business expansion to continue in
all segments. The introduction of a new IFRS 15 accounting standard,
that is stream from 1 Jan 2018, will need a slight adjustment
of a analogous sum for a prior year for a array of our
KPIs. Our opinion for 2018 is therefore formed on a practiced figures
for 2017.

 

Let’s take a demeanour during a pivotal opening indicators in detail:

 

In 2018, we will set a march for continued growth. Despite
estimable upfront investments in destiny technologies and high
certain gratefulness effects in 2017, we are targeting Group earnings
before taxation during slightest on customary with a high spin of a prior year.

 

In a Automotive Segment, we pattern to grasp new all-time highs in
2018. As prolonged as conditions sojourn stable, we should see a slight
boost in deliveries – from expansion in China and a US, in
particular. Automotive Segment revenues should also boost slightly
in line with sales volume development. Despite clever headwinds, we
sojourn committed to gripping a EBIT domain within a aim operation of
8-10% in a Automotive Segment. This shows that we can mix a
transparent concentration on a destiny while carrying a high spin of profitability.

 

In a Motorcycles Segment, interjection to a recently updated model
line-up, we pattern a plain boost in deliveries in 2018. Here,
we also continue to aim an EBIT domain of between 8 and 10%.

 

We pattern another clever opening from a Financial Services
Segment this year. With flourishing collateral mandate worldwide, return
on equity is approaching to diminution somewhat in 2018. Due to regulatory
requirements, we contingency continue to enhance a equity bottom over a next
few years. We will therefore be targeting a lapse on equity of at
slightest 14% going forward. Our superintendence assumes that mercantile and
domestic conditions will not mellow significantly.

 

The sum for 2017 endorse once again: The BMW Group has a right
foundation. Achieving this high spin of profitability for 8 years
in a quarrel is no coincidence. It is a outcome of a despotic orientation
towards opening and a transparent vital focus.

 

We are investing a boost in a destiny – and promulgation a clear
summary to a customers. Our postulated high margins, financial
strength and coherence are also a vigilance for a stream and future
investors. The BMW Group continues to follow a possess path: focused,
dynamic and with a transparent strategy. Thank you.

 

 

Harald Krüger

Chairman of a Board of Management of BMW AG (part II)

 

Ladies and Gentlemen,

Our superintendence for 2018 clearly shows that: We are progressing our
successful performance. It is a idea to emanate solutions and
innovations that enthuse a customers. Strategy NUMBER ONE NEXT
is a trail to a BMW Group’s success over a long-term. It provides
a roadmap for a mutation towards tolerable and digital mobility.

 

On a one hand, we are focusing on operational value in our
core business and improving it.

On a other, we are origination targeted investments in new technologies
and services. Everything we do, we wish to do many faster. That is
really critical to me and my colleagues on a Board. We are making
good swell with a strategy. You can see this in a decisions we
have made:

 

1.      On a marketplace side.

2.      In a products, and

3.      In a services.

 

Let’s take a demeanour during a first point:

 

The BMW Group has a wilful advantage in an ever some-more connected
world: We are a tellurian association by and by – and extremely
flexible. We have 30 prolongation sites in 14 countries. We are already
producing electrified models during 10 locations worldwide. Next year we
will also start producing a all-electric MINI during Oxford. Also in
2019, a plant in Mexico will start production. Mexico has one of the
many open trade policies in a universe – and has benefitted from this.
Our new plant will furnish for a tellurian market.

 

We wish to sojourn in a clever position to take advantage of
opportunities in sole markets. To grasp this, we are
augmenting a footprint in all vital marketplace regions.

 

Here’s a brief demeanour during a many critical markets:

 

In a US, we
delivered some-more than 350,000 vehicles to business final year. In 2018,
we pattern to see slight growth. Spartanburg is a biggest plant. We
have invested roughly 9 billion euros in a site so far, with
another 600 million euros to follow between 2018 and 2021. Over 70
percent of a vehicles constructed in Spartanburg final year were
exported. Most of those to China followed by Germany. According to the
US Department of Commerce, BMW Plant Spartanburg is a heading US
automotive exporter by value. We are unapproachable to be obliged for
around 70,000 jobs in a US – including play network and suppliers.
The US is a second-largest purchasing market, with a volume of 4.7
billion euros. None of this would be probable but giveaway trade.

 

China stays our
largest singular marketplace with some-more than 595,000 vehicles sole final year.
In China, we work dual automobile prolongation plants and one engine plant.
In 2018, we are targeting plain expansion there. Here are dual examples of
how we are positioning ourselves in China: We are stepping adult our
partnership with Brilliance as partial of a corner try and have
motionless to build a new X3 in China, starting in mid-2018. This
high-volume automobile will be a sixth localised model. The popular
long-wheelbase chronicle of a new BMW 5 Series is now also available
as a plug-in hybrid. Chinese business therefore have 6 different
electrified models to select from. This gives us an excellent
substructure for a years ahead. We recently sealed a “Letter of
Intent” for a serve corner venture, with Chinese manufacturer Great
Wall Motor. In a future, we also devise to furnish pristine electric MINI
vehicles in China.

 

Now let’s pierce on to Europe: We sell more
vehicles in Europe than anywhere else: The sum array for 2017 was
over 1.1 million. This year, we pattern another slight boost in
sales. We invested some-more than 6 billion euros in a German locations
between 2012 and 2016. The UK will sojourn an critical production
plcae for us – even after it leaves a European Union.

 

As we can see: All over a world, wherever a BMW Group does
business, we emanate jobs. We are partial of internal value origination and make
a transparent grant to a multitude during large.

 

And now to my second topic: Products.

 

The BMW Group leads a reward shred worldwide. We are essay to
lead in all segments, where we are present. In proviso dual of a model
offensive, we will be origination a outrageous push, focusing on dual aspects:
Luxury and X.

Over a subsequent 18 months alone, we will be rising 8 new models
in a highly-profitable oppulance segment. This summer, a new BMW 8
Series Coupé outlines a start of a totally new indication series: With
a 8 Series Coupé, Convertible and Gran Coupé, as good as a three
analogous M models. The new BMW X7 is intensely atmospheric and has a
pretentious presence. Customers in a US, Asia and Russia have been
watchful for a automobile like this. We will start producing a X7 in
late 2018. Rolls-Royce is a apex of oppulance and elegance. The
same relates to a new Phantom and a Cullinan, a first
ultra-luxury SUV.

 

2018 will also be a X YEAR. Customers adore a new X3. This year,
we will start building it in South Africa and China, in serve to
Spartanburg. The cool-looking X2 has been scoring tip outlines in the
fast-growing compress category given March. The new X4 is jaunty from
tip to bottom. It will be accessible in summer.

 

Our indication descent is also a expostulate sight offensive. We are using
scalable modular kits for electrification. From 2020, we will be able
to fit all indication array with any form of expostulate train. And there is
some-more to come: In 2020, BMW will launch a iX3. More on that shortly at
a automobile uncover in Beijing. 2019 will see a initial pristine electric MINI.
The initial MINI plug-in hybrid – a Countryman – is already proving
really popular. As an civic brand, MINI is most done for e-mobility.

 

The new BMW i8 Roadster and BMW i8 Coupé will be accessible starting
in May of this year. Both models come with fourth-generation BMW
eDrive technology. This will boost a electric operation of these plug-in
variety by some-more than 40 percent. With a fifth era of eDrive,
a vehicles will be means to expostulate 550 to 700 kilometres on electric
power, depending on a model. We will grasp this in a BMW i4 and
a iNEXT.

 

The BMW iNEXT is distant some-more than usually a car. By that, we meant it is a
future-proof, scalable modular system. It will capacitate a entire
association and all a brands in terms of technology, pattern and new
approaches. The iNEXT combines Autonomous Driving, Connectivity,
Electrification and Services.

 

I have set transparent goals for tolerable mobility: More than 140,000
electrified vehicles sole this year. A sum of half a million
electric vehicles and plug-in variety on a roads by a finish of 2019.
25 electrified models, 12 of them pristine electric, by 2025.

 

Now we would like to contend a few difference about diesel: Our diesels are
among a best in a world. That has been reliable by independent
tests worldwide. Diesel is critical for assembly CO2
targets. We trust banning diesel vehicles is a wrong approach. We
mount by a commitments from a Diesel Summit. We have betrothed our
leasing business in Germany that we will take behind a BMW diesels if
bans are introduced. Through this, we wish to strengthen people’s
trust in a diesels. It would also be useful if a contention about
nitrogen oxides and particulate matter were formed some-more on existence and facts.

 

Sustainable mobility and unconstrained pulling go palm in palm for us.
We will be rising unconstrained pulling in a iNEXT in 2021. That
means: We will technically master Levels 3 to 5. The complement will be
entirely integrated and safe. Our exam swift for Levels 4 and 5 will take
to a roads during a same time as a iNEXT. When it comes to
unconstrained driving, reserve is a comprehensive priority. This year, we
will double a distance of a unconstrained exam fleet, to around 80 vehicles.

 

And now, to my third point: Mobility services.

 

At a start of a year, we took full tenure of DriveNow. We also
acquired Parkmobile LLC – origination a BMW Group a largest
general provider of digital parking solutions. We now have all
a options we need for continued vital expansion of our
mobility services. We wish to be customers’ initial stop for individual
mobility. We will build a patron bottom of 100 million active
business by 2025. Our idea is to emanate a complete, all-inclusive
ecosystem for customers. The intensity is outrageous – both for customers
and for a business success.

 

Despite a hurdles and headwinds: We sojourn optimistic,
dynamic and entirely focussed. We intend to make 2018 a ninth record
year. And as we know: We always broach on a promises. In all areas
of a business, we are pulling brazen during top-speed. Our destiny is
electric and connected. And a patron will always be during a heart
of all we do.

 

Thank you.