BMW Group is seemingly going from strength to strength launching new cars and continually recording record profits. The 2rd quarter of 2011 is no exception with total revenues rising to over 16.5 million Euros.
But before we dish out the standard press release, we thought we ‘d give you a transcript of Dr. Norbert Reithofer ‘s speech at yesterday ‘s conference call to investors. Dr. Reithofer, Chairman of the Board of Management of BMW AG, tends to put things much more succinctly than a dry press release so not only is it a much better read but it ‘s also easier to read between the lines.
Dr. Norbert Reithofer ‘s Speech on BMW ‘s 3rd Quater
Good morning, Ladies and Gentlemen!
The BMW Group is on track for success.
Our strategy is paying off and is our guideline for successful and profitable development within a volatile business environment.
In 2011, we are on the right path toward reaching our targets.
– New record sales of more than 1.6 million cars.
– A new Group pre-tax record significantly above last year’s level.
– An EBIT margin in the Automotive Segment of over 10 per cent.
Back in 2007, when we launched our strategy, we put forward specific profitability targets for 2012.
The business year 2011 is the last benchmark on our way towards achieving these targets.
In 2012, we want to achieve an EBIT margin of 8 to 10 per cent in the Automotive Segment.
Following this milestone, we want to remain on a high profitability level over the long term.
This highlights our sustainable approach in both our plans and actions.
This is true:
– in an economic and strategic sense as well as concerning ecological and social issues.
Regarding strategy, we are facing two major challenges:
We are presently facing various risks in the global economic cycle.
Obviously, we have re-evaluated our strategic assumptions this year, given the current situation. Our long-term planning considers various scenarios for economic development. This approach allows us to react quickly and flexibly. Thanks to our lean structures and low cost base, we are well-prepared for potential volatility. What’s more, we are focusing on achieving balanced growth across different markets. We are also strategically expanding our global production network.
We have to master evolution and revolution at the same time.
We are further expanding our range of combustion engine cars with cutting-edge technologies through our Efficient Dynamics program. Without a doubt, Efficient Dynamics is the most advanced technology available. While some of our competitors are advertising lower CO2 emissions, they forget to mention they are cutting power from their engines at the same time. This certainly is not our approach. The BMW Group fleet average is around 152 grams of CO2 per kilometer with an average output of over 137 kilowatts. That’s 186 horsepower – more than any core competitor! We will always stand by our promise of Sheer Driving Pleasure. Dynamics and efficiency — that is BMW.
At the same time, we are offering our customers new drive technologies, highly innovative car concepts and attractive mobility services, which we will lead to market success. A good example here is our car sharing project DriveNow. In Munich and Berlin, within a very short period, around 8,000 members have already registered. We expect one million users worldwide for our services by 2020.
So, what have we achieved in the first nine months of the business year 2011?
– A pre-tax result of 6.16 billion Euros.
– A Group net profit of 4.1 billion Euros.
– An EBIT margin in the Automotive Segment of 12.8 per cent.
These are all new record highs for the BMW Group for the first nine months of a year. The same is true of our sales figures from January to September:
– Over 1.23 million cars from the BMW, MINI and Rolls-Royce brands.
– Almost 93,000 motorcycles from the BMW and Husqvarna brands.
Customers worldwide are enthusiastic about our models. In Europe, North America and Asia, we managed to increase sales in the two-digit percentage range between January to September.
This growth is based on our attractive product line-up – the youngest amongst our competitors.
– Following the Convertible, the new BMW 6 Series is now also available as a Coupe.
– The BMW M5 will arrive in December.
– The MINI Coupe arrived at dealerships on October 1st.
– The new BMW 1 Series has been available since September 17. This car brings a variety of innovations to the compact class. Thanks to Connected Drive, the BMW 1 Series is the best-connected car in its segment.
– In mid-October, we presented the sixth generation of the new 3 Series Sedan in Munich. “World star from Munich” wrote Munich-based tz. “The pride of the Bavarians” was the headline in Frankfurter Allgemeine Sonntagszeitung.
– The new 3 Series will be on the market from February 11, 2012. The three lines “Sport”, “Modern” and “Luxury” will provide customers with further options to customize their car.
Our portfolio will become increasingly versatile – including drivetrains.
– Today, our BMW 7 Series and BMW X6 customers can choose between highly efficient combustion engines and a hybrid drive.
– From spring 2012, we will be offering the BMW 5 Series Sedan as a hybrid as well.
– And the BMW ActiveHybrid 3, the world’s first full hybrid in the premium segment of compact sports sedans, will follow in fall. This is our hybrid offering to the customers in our best-selling series, the BMW 3 Series.
From 2013 on, we are complementing our product portfolio with an electric-drive.
At the Frankfurt Motor Show, we presented electric-cars for all three brands, which we developed to gain experiences in this field:
– the MINI E,
– the BMW ActiveE
and the Experimental Car, the Rolls-Royce 102EX.
– We also showed the first two concept cars in the BMW i range – the BMW i3 and BMW i8.
But let’s move on to my second point:
ecological and social responsibility.
With BMW i, we are breaking completely new ground when it comes to eco-friendly and resource-efficient production.
For the first time, we have determined mandatory sustainability targets along the entire value chain – from the first steps of development to recycling.
In late October, we celebrated what we call a “Richtfest” or roofing ceremony for the BMW i production site at our Leipzig Plant.
The assembly of the BMW i3 and i8 will be completely CO2 neutral. The energy is derived entirely from regenerative sources. This is an absolute first in our industry.
We plan to build a wind farm at our Leipzig site. And now that we have the first set of permits, we look forward to beginning construction soon. The generated eco-power will be fed directly into the plant.
I’m convinced that truly sustainable mobility can only arise from a holistic approach.
This is an inherent part of our premium claim.
And this will keep us in the forefront as the leading premium car company in our industry.
The BMW Group has been in leading positions in all relevant sustainability rankings for years. Two examples:
In the Dow Jones Sustainability Index, we have been listed as the segment leader for the seventh year in a row.
In the Carbon Disclosure Project (CDP), we have achieved our best result so far – 96 of 100 possible points. As the number one among automakers, we are also in the top ten of all companies worldwide participating in the CDP Global 500 Ranking.
These first-rate positions have to be earned again and again. To this effect, we also believe in having an open dialogue with our stakeholders.
Our most recent sustainability report was certified by independent auditors for the first time.
And at our Stakeholder Roundtable in New York City in early October, we discussed the possible design of future urban mobility with a variety of social groups.
Our future tasks will be both complex and challenging. For that we need to have the best and most qualified people on board.
In the areas of electro-mobility and CFK technology we are hiring engineers and other experts – a total of 3,500 people this year.
Up to the end of September, our company employed 100,389 people – 4.7 per cent up from the reference period 2010.
This figure includes the 1,220 employees which we added by acquiring ING Car Lease for our Financial Services division.
Just like every year, over 1,600 young people started their apprenticeship with our company in September – more than 1,000 of them in Germany alone.
Ladies and Gentlemen –
Even though business environment might be volatile, we continue to follow our own path – The BMW Way and this has brought us success.
We are further striving to reach our targets for the business year 2011.
This will position us now to achieve our profitability targets for 2012.
– We are building a sound base – in technological and market strategy terms.
– We are acting responsibly and sustainably.
– We are shaping the future of individual mobility in the premium segment.
Thank you very much for your attention
Official Release: The BMW Group remains on its successful course. “We have recorded the best third quarter in the company’s history. During this period, we achieved new records for sales volume, revenues and earnings. The main reasons for this excellent performance have been strong demand worldwide for our vehicles and considerable efficiency improvements”, stated Norbert Reithofer, the Chairman of the Board of Management of BMW AG on Thursday in Munich.
Revenues rose by 3.8% to euro 16,547 million (2010: euro 15,940 million). The third-quarter profit before financial result (EBIT) climbed by 44.0% to euro 1,716 million (2010: euro 1,192 million) and the profit before tax (EBT) went up by 21.0% to euro 1,644 million (2010: euro 1,359 million). Group net profit improved by 23.8% to euro 1,082 million (2010: euro 874 million). The number of vehicles sold during the three-month period from July to September increased by 9.0% to a new record of 399,218 units (2010: 366,190 units).
New sales volume, revenues and earnings records were also achieved for the nine-month period. Revenues were 15.4% higher at euro 50,472 million (2010: euro 43,731 million). EBIT surged by 92.8% to euro 6,474 million (2010: euro 3,358 million), while the profit before tax rose to euro 6,160 million (2010: euro 3,166 million). This corresponds to an improvement of 94.6%. The nine-month profit after tax doubled to euro 4,103 million (2010: euro 2,032 million). The total number of BMW, MINI and Rolls-Royce brand vehicles delivered to customers up to the end of September increased by 16.0% to 1,232,584 units (2010: 1,062,216 units).
EBIT margin of 12.8% for automotive segment over nine-month period
Sales volumes of all three group brands were at record levels in the third quarter and for the nine-month period. This is reflected in the revenues and earnings performance for the relevant periods. Automotive segment revenues in the third quarter went up by 8.0% to euro 15,344 million (2010: euro 14,210 million). EBIT climbed by 57.9% to euro 1,819 million (2010: euro 1,152 million), yielding an EBIT margin for the Automotive segment of 11.9%. The segment profit before tax improved to euro 1,745 million (2010: euro 1,285 million; +35.8%).
Nine-month segment revenues increased by 20.3% to euro 46,391 million (2010: euro 38,551 million). EBIT rose sharply to euro 5,935 million (2010: euro 2,760 million), resulting in an EBIT margin for the period of 12.8%. The segment profit before tax improved to euro 5,647 million (2010: euro 2,443 million).
Free cash flow for the nine-month period totalled euro 3,035 million. Adjusted for the injection of equity to one entity in the Financial Services segment and the acquisition of ING Car Lease, free cash flow totalled approximately
euro 3.9 billion. The equivalent figure for the third quarter was euro 462 million. The acquisition of ING Car Lease, seasonally higher capital expenditure and a rise in working capital, mainly in conjunction with the BMW 1 Series and 3 Series model changes, were some of the factors holding down free cash flow. Adjusted for ING Car Lease, free cash flow in the period from July to September was euro 711 million.
The number of BMW brand cars sold in the third quarter increased by 8.2% to 332,066 units (2010: 306,982 units). Between January and September, sales of the core brand rose by 14.5% to 1,021,927 units (2010: 892,737 units); this is the first time that the BMW brand has exceeded the one million mark in the first nine months of a year.
The various models of the X Series continued to perform exceedingly well during the period from January to September. Sales of the BMW X1 increased sharply again and were up by 30.4% to 94,294 units (2010: 72,294 units). The new BMW X3 continued to be popular with customers, with worldwide sales more than doubling to 83,754 units (2010: 35,252 units). The BMW X5 remains market leader worldwide in its segment with a total of 75,055 units (2010: 74,655 units) sold during the nine-month period.
The picture is a similar one for the BMW 5 Series. In total, 250,566 units (2010: 155,648 units) were sold in the first nine months of the year, an increase of 61.0% against the corresponding period last year. The BMW 6 Series recorded a sales volume of 5,314 units, 3.2% up on the previous year (2010: 5,149 units). The 6 Series Coupé became available in September 2011 and is set to generate additional demand during the final quarter of the year. The BMW 7 Series continues to perform well, with nine-month sales of the BMW flagship rising to 48,842 units (2010: 47,349 units; +3.2%).
The sales volume of the BMW 1 Series – which is now approaching the end of its product life-cycle – totalled 129,041 units between January and September (2010: 151,681 units). The second generation of the BMW 1 Series was launched in mid-September and will spur demand in the last three months of the current year.
288,077 units of the BMW 3 Series were sold during the first nine months of the year (2010: 295,608 units). The new BMW 3 Series Sedan was presented to the public in mid-October and will be launched on the markets worldwide on 11 February 2012. “The customers’ response to the new BMW 3 Series has been excellent. We are confident that the new BMW 3 Series will continue the success story of this model series”, emphasised Reithofer.
The MINI brand also achieved a new sales volume record, with sales up in the third quarter by 13.4% to 66,303 units (2010: 58,450 units). In total, 208,216 units (2010: 167,751 units) were sold during the nine-month period, an increase of 24.1% over the previous year. Sales of the MINI Countryman improved further to 61,986 units. The MINI Coupé came onto the markets in September as the fifth model variant.
The Rolls-Royce brand also continues to perform well. 849 units (2010: 758 units; +12.0%) were handed over to customers during the third quarter. In the nine-month period to the end of September, sales rose by 41.3% to a new sales volume record figure of 2,441 units (2010: 1,728 units).
The BMW Group increased its sales volume figures in almost all of the world’s regions in the first nine months of 2011. In Europe, the number of cars sold rose by 10.0% to 635,403 units. Sales increased by 9.5% to 209,772 units in Germany and by 9.7% to 128,382 units in Great Britain. Growth was also recorded in Italy (54,349 units; +8.3%) and France (49,233 units; +2.2%).
Nine-month sales in North America rose to 245,903 units, 13.9% ahead of the previous year’s corresponding figure. The number of vehicles handed over to customers in the USA increased by 14.2% to 219,962 units.
The BMW Group also registered continued growth in Asia, where a sales volume of 282,476 units (+36.8%) was recorded in the first nine months of the year. A total of 178,232 units (+45.9%) was sold in China. In Japan, the number of cars sold rose by 7.6% to 34,591 units.
Sales volume and revenues up for Motorcycles segment
Third-quarter sales volume in the Motorcycles segment increased by 6.5% to 28,862 units (2010: 27,094 units), comprising 26,312 BMW brand motorcycles (2010: 24,493 units; +7.4%) and 2,550 Husqvarna brand motorcycles (2010: 2,601 units). Segment revenues were 14.8% higher at euro 334 million (2010: euro 291 million). As a result of the realignment of the Husqvarna Group, EBIT slipped to a loss of euro 16 million (2010: profit of euro 2 million), while the result before tax dropped to a loss of euro 17 million (2010: euro 0 million).
Nine-month revenues increased by 9.3% to euro 1,181 million (2010: euro 1,081 million). The Motorcycles segment reports a positive EBIT for the period of euro 62 million (2010: euro 88 million) and a profit before tax of euro 60 million (2010: euro 83 million). The number of motorcycles sold in the first nine months of the year increased by 4.7% to 92,972 units (2010: 88,768 units), comprising 86,892 (2010: 81,508) BMW brand and 6,080 (2010: 7,260) Husqvarna brand motorcycles.
Positive performance by Financial Services segment
The Financial Services segment put in another good performance in the third quarter 2011. Segment revenues totalled euro 4,276 million (2010: euro 4,278 million), thus remaining at a similar level to the previous year. The segment’s profit before tax rose by 11.3% to euro 354 million (2010: euro 318 million).
Nine-month revenues edged up by 1.3% to euro 12,640 million (2010: euro 12,480 million). Profit before tax jumped by 66.2% to euro 1,527 million (2010: euro 919 million).
The number of lease and financing contracts in place with dealers and retail customers at the end of the nine-month period grew by 5.1% to 3,303,635 contracts. The number of new financing and lease contracts signed in the period from January to September rose by 10.0% to 882,961 contracts. The leasing business grew by 19.8%, while credit financing increased by 6.1%.
Number of employees increased
The BMW Group’s workforce increased during the period ended 30 September. The number of employees worldwide increased by 4.1% to 100,389 employees at the end of the reporting period (2010: 96,402). One of the reasons for this was the acquisition of ING Car Lease. Skilled workers and engineers were also recruited in order to keep pace with the ongoing strong demand for BMW Group vehicles and to focus on developing new technologies.
The provision of training for young people plays an important role for the BMW Group, with a total of 1,661 apprentices taking up their careers with the BMW Group during the third quarter.
Reithofer: on track to achieve targets for the full year
In view of strong demand for its cars worldwide, the BMW Group remains confident for its full-year performance. “We are on track to achieve our targets for the full year”, stated Reithofer. The expectation remains that group earnings and sales volumes for the full year 2011 will be significantly higher than in the previous year. “We are still 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“, continued Reithofer.
For the full year, the BMW Group continues to forecast an EBIT margin of over 10% for its Automotive segment and a return on capital employed (RoCE) of over 26%. In the Financial Services segment, the aim is to achieve a significant improvement in pre-tax profit and a return on equity of over 18%. All of these targets are based on the assumption that economic and political conditions as well as the global economy remain stable.
The BMW Group remains committed to achieving its stated long-term profitability targets. The BMW Group is striving to achieve a sustainable EBIT margin in its Automobiles segment of between 8% and 10% in 2012 and beyond. Depending on political and economic developments, however, actual margins may end up being above or below the targeted range.