We ‘ve got two releases for you regarding this news. First (and most interesting to us) today ‘s statement by Dr. Norbert Reithofer, Chairman of the Board of Management of BMW AG. Dr. Reithofer is very clear as to why BMW is seeing success and expects more; products.
Dr. Norbert Reithofer, Chairman of the Board of Management of BMW AG
Good morning, Ladies and Gentlemen! Our cars and motorcycles are definitely trendsetters. Their design language and cutting-edge innovations are highly desired by our customers around the world. As a result, we raised our forecast for the business year 2011.
So, what are our new targets?
– Record sales of over 1.6 million cars.
– A record pre-tax result on the group level, which significantly exceeds last year’s result.
– An EBIT margin in the Automobile Segment of more than 10 percent.
– A considerable increase in the result before taxes of the Financial Services segment.
Despite these positive figures, the economic environment is – and we expect it will continue to be – extremely volatile.
Global risks continue to increase rather than decrease.
There are concerns about the sizeable national debt of many countries. Political unrest in certain regions is also having a negative effect on economic conditions worldwide. Concerted action of the international community is required to be able to maintain the economic and financial strength worldwide as well as the stability of global currencies.
Markets in general and automotive markets in particular are showing a heterogeneous development.
And there’s another aspect for the BMW Group: In the second half of the year, production changeover from the first generation BMW 1 Series to the second generation will have an effect on our sales growth.
Currently, we are benefitting from:
– our attractive, young model portfolio;
– our strong market position in many countries; and
– from a variety of efficiency measures consistently implemented throughout our company.
The first six months of 2011 were the best half-year ever in our company’s history.
Never before have we sold more cars and more BMW motorcycles in the first two quarters of a year. Never before had we achieved a better result during this time period.
Here are some key financials for the first half of 2011:
– A pre-tax result of 4.5 billion Euros.
– A net profit on Group level of 3 billion Euros.
– An EBIT margin in the Automobile segment of 13.3 per cent.
We managed to grow in almost all automotive markets during the first six months of 2011. This is the best proof of:
the quality of our cars, as well as
our innovative strength,
trendsetting design and
our highly efficient engines.
Let me offer some examples of our market strength:
– Global automotive markets are plus 6 per cent – BMW Group is plus 19.7 per cent.
– US car market plus 13 per cent – BMW Group plus 18 per cent.
– China plus 20 per cent – BMW Group plus 61 per cent.
– India plus 21 per cent – BMW Group plus 107 per cent.
– Brazil plus 7 per cent – BMW Group plus 69 per cent.
– UK minus 7 per cent – BMW Group plus 14 per cent.
– Japan minus 30 per cent – BMW Group plus 4 per cent.
All in all, the BMW Group delivered over 833,000 cars and over 64,000 motorcycles of the two brands BMW and Husqvarna in the first half of 2011.
This is due to our attractive product range:
– The new BMW 5 Series and the BMW X5 are market leaders in their respective segments.
– The BMW 7 Series, the BMW X3 and the BMW X1 also posted increases.
– The new BMW 6 Series Convertible has been available since spring.
– And the new 6 Series Coupe is coming this fall. The convertible has already enjoyed a very positive reception from the international media.
– The BMW 1 Series M Coupe was launched in May. And from fall on, we will also offer the BMW M5.
– Another launch scheduled for the fall is the new MINI Coupe.
– In the Motorcycles Segment, we extended our BMW product range with the K 1600 GT and GTL in March, which are the first models with six-cylinder engines. Husqvarna has launched three new models this year so far, with a fourth to follow.
In July, we presented the new BMW 1 Series in Berlin.
The media response to the second generation of this BMW model series has been incredibly positive.
Starting in the fall, customers will be able to purchase the new BMW 1 Series. Remember, 70 percent of the first generation 1 Series customers previously owned a different brand of car.
At our last conference call I said: It is our responsibility to ensure the BMW Group’s future success.
Last Friday, we set a new milestone:
The first two concept cars of our BMW i range celebrated their world media premiere in Frankfurt.
We remain confident that, in the future, e-mobility will be a choice for many customers. Our belief is strengthened by the experiences of our customers who are testing e-mobility in everyday use: today with the MINI E; and soon with the BMW ActiveE.
Our subbrand BMW i stands for:
– A new car architecture, designed from the ground up for e-mobility: Born Electric.
– For visionary mobility services.
– For inspiring design.
– And for a new approach to premium mobility that is defined, among other things, by a highly sustainable value chain.
For us, BMW i is part of our long-term strategic alignment in keeping with our Strategy Number ONE.
This also comprises a wide variety of innovative services. They will help attract young customers to our brands and grow the image of our brands by adding new benefits. These types of services are well received by customers – as “DriveNow”, our joint venture with Sixt, has shown. Only a few weeks after its introduction, over 4,500 customers in Munich have used our car sharing service. We are planning to add e-cars to the fleet in the future.
Financial Services is expanding its service offering as well. The acquisition of ING Car Lease has strengthened Alphabet’s fleet management at Financial Services.
BMW i demonstrates our ability to develop and implement new technologies by virtue of our own strength. At our Leipzig plant, we will be hiring the first 100 employees for the production of the BMW i3 and BMW i8 over the course of the next few months. And from 2013, we will be gradually taking new mobility concepts to market.
A major factor in these efforts will be our involvement in the Summer Olympic Games in London around this time next year. BMW is the official automobile partner for the 2012 Olympic and Paralympic Games – providing 4,000 vehicles.
Our fleet for London will be as diverse as the competition at the Games itself:
– There will be 200 e-drive MINI E and BMW Active E cars as well as hybrid models and motorcycles.
– The lion’s share of the fleet will consist of high-efficiency diesel cars.
– Our London fleet will emit less than 120 Grams CO2 per kilometer on average.
– We will also provide our Pedelecs and 400 BMW Streetcruiser bicycles.
The BMW Group was selected for the London Games because of our comprehensible and sustainable approach to mobility. After all, we are the only automaker among the members of the Sustainability Club for the London Games. This is all part of our premium claim.
Another aspect is: We listen. We want to understand what moves people. Together with our partners, we develop viable solutions for our future.
Today, we are opening the BMW Guggenheim Lab in New York City. This is our most comprehensive and most ambitious cultural cooperation to date.
Together with the renowned Solomon R. Guggenheim Foundation, we have created a platform for multi-disciplinary dialogue.
Experts from a variety of fields will come together to discuss creative and, most importantly, sustainable approaches for life in the world’s largest cities. We want to learn from them and implement specific solutions. The BMW Guggenheim Lab will be in Berlin starting spring 2012.
Ladies and Gentlemen –
Our business development in the first half of 2011 shows that there are both risks and many opportunities.
The crucial point is: We are taking advantage of these opportunities to shape the future of individual mobility in the premium segment.
Thanks to our business model, we are well prepared to do so.
We remain cautiously optimistic regarding the BMW Group’s continued development.
Thank you very much for your attention.
The BMW Group has again achieved sales volume, revenues and earnings records in the second quarter 2011. Group revenues rose by 16.5% to euro 17,888 million (2010: euro 15,348 million). The second-quarter profit before financial result (EBIT) jumped by 66.3% to euro 2,856 million (2010: euro 1,717 million) and the profit before tax (EBT) to euro 2,704 million (2010: euro 1,299 million). Group net profit for the quarter improved to euro 1,809 million (2010: euro 834 million). The number of cars sold during the three-month period from April to June 2011 increased by 18.5% to a new record figure of 450,608 units (2010: 380,412 units).
New sales volume, revenues and earnings records were also achieved for the six-month period. Group revenues were 22.1% higher at euro 33,925 million (2010: euro 27,791 million). EBIT for the first six months of the year was euro 4,758 million (2010: euro 2,166 million) and the profit before tax was euro 4,516 million (2010: euro 1,807 million). Profit after tax improved to euro 3,021 million (2010: euro 1,158 million). The total number of BMW, MINI and Rolls-Royce brand vehicles delivered to customers during the first six months of the year climbed by 19.7% to 833,366 units (2010: 696,026 units).
“The first half of 2011 has been the best six-month period in the BMW Group’s history. We have achieved new sales volume, revenues and earnings records both for the second quarter and the six-month period. Strong demand worldwide for BMW, MINI and Rolls-Royce brand cars, together with efficiency improvements in all areas of the company have contributed greatly to this outstanding performance”, stated Norbert Reithofer, Chairman of the Board of Management of BMW AG on Tuesday in Munich.
Sharp jump in second-quarter earnings for automotive segment
All of the Group’s three brands achieved new sales volume records for both the quarter and the six-month period. Second-quarter revenues rose by 22.0% to euro 16,674 million (2010: euro 13,669 million). Segment EBIT improved significantly (+82.8%) to euro 2,408 million (2010: euro 1,317 million). Included in this figure is a positive exceptional effect of euro 85 million resulting from the reduction of risk provision following the good recovery seen on used car markets. The second-quarter EBIT margin for the automotive segment was 14.4%. The segment profit before tax improved to euro 2,297 million (2010: euro 938 million).
Six-month revenues of the automotive segment rose by 27.6% to euro 31,047 million (2010: euro 24,341 million). EBIT surged to euro 4,116 million (2010: euro 1,608 million), giving an EBIT margin of 13.3% for the period. The segment profit before tax improved to euro 3,902 million (2010: euro 1,158 million). Free cash flow amounted to euro 2,573 million (2010: euro 1,199 million) for the six-month period and euro 949 million for the second quarter (2010: euro 1,505 million). Adjusted for the injection of equity (euro 625 million) in the Financial Services segment, free cash flow totalled euro 1,574 million and euro 3,198 million for the second quarter and six-month period respectively.
The number of BMW brand cars sold in the second quarter increased by 15.2% to 368,686 units (2010: 319,946 units). For the six-month period, the sales volume recorded for the core brand increased by 17.8% to 689,861 units (2010: 585,755 units).
The BMW X1 continued to register growth, increasing sales in the first half of the year by 34.2% to 62,698 units (2010: 46,705 units). The new BMW X3 continued to be popular with customers, with worldwide sales more than doubling to 53,522 units (2010: 24,841 units; +115.5%). The BMW X5 recorded a 4.9% increase in sales to 48,749 units (2010: 46.459 units) and therefore remains the world market leader in its segment.
The picture is a similar one for the new BMW 5 Series: in total, 170,708 units (2010: 94,699 units) of this model series were sold in the first six months of the year, an increase of 80.3% against the same period last year. The BMW 6 Series recorded a sales volume of 3,213 units, 4.1% up on the previous year (2010: 3,085 units). The new BMW 6 Series Convertible has been available on the markets since spring 2011 and will be followed by the new 6 Series Coupé in autumn. The BMW 7 Series continues to perform well, with six-month sales of the BMW flagship rising to 31,764 units (2010: 30,711 units; +3.4%).
Now approaching the end of its product life cycle, six-month sales of the BMW 1 Series, at 94,454 units, were – as expected – below the previous year’s figure of 103,819 units. The new BMW 1 Series will be launched mid-September. A total of 192,927 units of the BMW 3 Series was sold during the first half of the year (2010: 199,027 units).
The MINI brand also achieved a new sales volume record, with sales up in the second quarter by 35.6% to 81,053 units and by 29.8% to 141,913 units in the six-month period (2010: 109,301). The MINI brand continued to generate a very high-value product mix, with almost one half of customers (48.3%) opting for the MINI Cooper, 31.7% for the MINI Cooper S and 20.0% for the MINI One. The MINI Countryman remained highly popular and recorded a six-month sales volume of 40,171 units. The MINI Coupé will come onto the markets in autumn as the fifth model variant.
Rolls-Royce also continued to perform well and achieved new sales volume records during the period under report. 869 units (2010: 691 units; +25.8%) were handed over to customers during the second quarter. The sales volume for the six-month period rose by 64.1% to 1,592 units (2010: 970 units).
Six-month sales figures were increased in almost all regions. 437,658 BMW, MINI and Rolls-Royce brand cars were sold in Europe, 12.3% more than in the previous year. Within those figures, sales increased by 9.2% to 144,370 units in Germany and by 14.3% to 83,606 units in Great Britain. Germany was therefore the largest single market for the BMW Group during the period under report. Growth was also recorded in Italy (38,421 units: +12.7%) and France (35,619 units; +4.0%).
Sales in North America during the first six months of 2011 went up by 17.5% to 160,892 units, of which 143,974 units were handed over to customers in the USA (+18.1%).
The BMW Group also registered strong growth in Asia, where a total of 190,054 units was sold (+47.4%) during the first six months of the year. A total of 122,034 units (+61.2%) was sold in China.
Sales volume increase for Motorcycles segment in six-month period
Second-quarter Motorcycles segment revenues increased by 2.5% to euro 450 million (2010: euro 439 million). As a result of the realignment of the Husqvarna Group, EBIT slipped to euro 47 million (2010: euro 54 million), while profit before tax also dipped to euro 47 million (2010: euro 53 million). The segment EBIT margin for the quarter was 10.4%. Sales of BMW and Husqvarna brand motorcycles totalled 39,061 units (2010: 39,195 units) and therefore almost reached the previous year’s level. 37,471 BMW motorcycles (2010: 36,175) and 1,590 Husqvarna motorcycles (2010: 3,020) were sold during the quarter.
Segment revenues for the six-month period rose by 7.2% to euro 847 million (2010: euro 790 million). The Motorcycles segment reports an EBIT for the period of euro 78 million (2010: euro 86 million) and a profit before tax of euro 77 million (2010: euro 83 million). The number of motorcycles sold in the first six months of the year increased by 3.9% to 64,110 units (2010: 61,674 units), comprising 60,580 (2010: 57,015) BMW brand and 3,530 (2010: 4,659) Husqvarna brand motorcycles.
Good performance by Financial Services segment
The Financial Services segment continued to perform well in the second quarter 2011. Segment revenues totalled euro 4,181 million (2010: euro 4,198 million), thus remaining at a similar level to the previous year. Second-quarter profit before tax improved by 96.3% to euro 744 million (2010: euro 379 million), partly reflecting the fact that refinancing conditions remained favourable. The result for the quarter also includes exceptional income of euro 379 million reflecting the reduction in risk provision for residual value and bad debt risks. The credit loss ratio fell from 0.55% in the first quarter to 0.43% in the first six months.
Segment revenues for the six-month period increased by 2.0% to euro 8,364 million (2010: euro 8,202 million). Profit before tax jumped by 95.2% to euro 1,173 million (2010: euro 601 million).
The total number of lease and financing contracts under management increased by 5.1% to stand at 3,277,247 at 30 June 2011. The number of new financing and lease contracts signed (591,351) was 12.2% up on the previous year. Leasing business grew by 20.4%, credit financing by 8.9%.
Slight increase in workforce
The number of employees increased slightly during the first half of the current year. The BMW Group’s worldwide workforce increased by 1.5% to 96,943 employees at the end of the reporting period (30 June 2010: 95,502). Compared to the end of the financial year 2010, there was an increase of 1.6%.
BMW Group confident about full-year performance
In view of strong demand for the new BMW 5, 6 and 7 Series and for its successful X models (the BMW X1, X3, X5 and X6) and thanks to greatly improved cost efficiencies, the BMW Group now expects that its full-year performance will be significantly better than originally forecast. For this reason, the earnings and sales volume forecasts for the full year were raised in mid-July.
For the full year, the BMW Group now forecasts an EBIT margin of over 10% and a return on capital employed (RoCE) of over 26% for its automotive segment. Sales volume and earnings growth is, however, likely to be held down during the second half of the year by changes affecting some of the BMW Group’s high-volume models as well as by the market launch and production start-up of successor models.
As a result of attractive market conditions and a less acute risk situation, the Financial Services segment continues to aim to achieve a significant improvement in pre-tax profit and a return on equity of over 18% in 2011.
It is now forecast that group earnings and sales volumes for the full year 2011 will be significantly higher than in the previous year. Reithofer went on to say: “We are aiming to achieve a record-breaking profit before tax and to increase sales volume by over 10% to a new high of more than 1.6 million vehicles. We are well on track to remain the world’s leading manufacturer of premium cars.”
All of these targets are based on the assumption that economic and political conditions remain stable and that the global economy continues to grow.
The BMW Group is also adhering to its long-term profitability targets. Reithofer added: “We are striving to achieve an EBIT margin of between 8% and 10% in the automotive segment which can be sustained in the year 2012 and beyond, as well as a return on capital employed of over 26%. Depending on political and economic developments, however, actual margins may end up being above or below the targeted range.”