Constant innovation and new models, like the self-parking 7, should cushion BMW against market flucuations

Constant innovation and new models, like the self-parking 7, should cushion BMW against market flucuations

BMW Group booked record revenues and sales volumes in the second quarter of 2015 while profit before financial result (EBIT) for the first half beat EUR5bn for the first time.

Second-quarter revenues rose 20.2% to EUR23,935m helped by currency factors and a slight sales volume increase but higher personnel costs, increased expenditure on new product start-ups and a change in the model mix (generally involving a higher proportion of compact vehicles) were the main reasons for a 3% dip in the profit before financial result (EBIT) to EUR2,525m. Net profit dipped 1% to EUR1,749m.

Worldwide unit sales rose 7.5% to a record 573,079 units.

Group revenues for the first half rose 17.6% to EUR44,852m. EBIT rose 7.5% to EUR5,046m and net profit was 1.2% up at EUR3,265m. Car sales rose 7.8% to 1,099,748 units.

"We remain firmly on track, achieving our best figures to date in terms of sales volume, revenues and earnings," said BMW chairman Harald Krüger. "We remain committed to achieving an evenly balanced distribution of worldwide sales and maintaining the flexibility to react appropriately to developments on individual markets."

CFO Friedrich Eichiner commented on China: "For some time now, we have been drawing attention to the normalisation of the Chinese automobile market. In the medium and long term, however, we remain utterly convinced of its potential for growth, given the comparatively low rate of vehicle ownership, the country’s well developed infrastructure and the strong affinity of the fast growing middle class for brands."

Second-quarter automotive revenues rose 17.0% to EUR21,650m but EBIT declined 15.8% to to EUR1,819m "reflecting," BMW said, "the challenging business conditions prevailing in individual markets, driven in particular by ever fiercer competition. The earnings performance was also influenced by changes in the model mix, with compact vehicles accounting for a higher proportion than one year earlier".

First half revenues were 15.6% higher at EUR40,543m and EBIT fell 3.4% to  EUR3,613m.

BMW brand sales rose 4.9% to 480,465 units in the second quarter and by 5.2% to 932,041 in the second half.

Mini, with new hatchback models, recorded a 23.8% increase in unit volume to 91,626 units. Second half sales were up 25.8% to a record 165,938 units.

Rolls-Royce half year volume slipped 10.1% to 1,769 vehicles.

"In 2015 we intend to achieve solid growth and new record figures for sales volume and profit before tax," said Eichiner.

However, the scale of the increase during the forecast period is likely to be held down by fierce competition on automobile markets, rising personnel costs, continued high levels of upfront expenditure to safeguard business viability in future and upcoming challenges relating to the 'normalisation' of the Chinese market, the automaker said.

"A number of risks will also have to be faced, including the precarious state of the Russian market and macroeconomic uncertainties in Europe. The political and economic environment is also expected to remain volatile."

But BMW expects a boost in the current year from the launch of 15 new models and model revisions and also from the "forecast positive development of automobile markets around the world".

"Automotive segment revenues are set to grow significantly for the full year on the back of increased sales volume and favourable currency factors. We reaffirm our forecast of an EBIT margin within a target range of 8 to 10% for the automotive segment."

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BMW Group firmly on track

  • 04.08.2015
Six-month EBIT exceeds EUR5 billion for first time

Solid sales volume growth despite volatile markets

Sharp rise in second-quarter revenues to EUR23.9 billion

EBT nears previous year's record level

BMW Group reaffirms targets for 2015

 

Munich. The BMW Group continued to perform well throughout the second quarter 2015. Group revenues and sales volume figures reached new heights for the period from April to June, with the Motorcycles segment raising its profit before tax to a new record level. Group profit before financial result (EBIT) for the six-month period exceeded EUR5 billion for the first time.

 

In order to maintain its strategy of profitable growth, the BMW Group remains committed to achieving an evenly balanced distribution of global sales in the world’s three major sales regions – Europe, Asia and the Americas – with the aim of preventing excessive dependence on individual markets. At the same time, the Chinese market is normalising, thereby becoming increasingly competitive.

 

Second-quarter group revenues rose by 20.2% to EUR23,935 million (2014: EUR19,905 million). With a tailwind of favourable currency factors, this growth was even more pronounced than the underlying sales volume increase achieved by the BMW Group. Higher personnel costs, increased expenditure on new product start-ups and a change in the model mix (generally involving a higher proportion of compact vehicles) were the main reasons for a minor dip in the profit before financial result (EBIT) below the previous year's outstanding level. EBIT amounted to EUR2,525 million (2014: EUR2,603 million; -3.0%), while the profit before tax (EBT) came in at EUR2,582 million, slightly below the EUR2,654 million reported one year earlier (-2.7%). In the second quarter of 2014, the BMW Group achieved its best-ever pre-tax profit to date. At EUR1,749 million, net profit for the three-month period also came extremely close to the previous year’s figure (2014: EUR1,767 million; -1.0%).

Worldwide sales of BMW, MINI and Rolls-Royce brand vehicles between April and June increased by 7.5% to 573,079 units (2014: 533,187), thus setting a new record for the second quarter.

 

Six-month EBIT exceeds EUR5 billion for first time

 

Group revenues for the six-month period climbed by 17.6% to EUR44,852 million (2014: EUR38,140 million), with currency factors partially fuelling the increase, in contrast to the previous year. Overall, profit before financial result (EBIT) rose by 7.5% for the six-month period to EUR5,046 million (2014: EUR4,693 million), thus exceeding the EUR5-billion mark for this period for the first time. Despite the lower result from equity-accounted investment, partly reflecting the ongoing normalisation of the Chinese market, profit before tax (EBT), at EUR4,851 million, nevertheless surpassed the previous year’s record figure (2014: EUR4,813 million; +0.8%), This outcome was achieved despite the fact that fair value losses on financial derivatives held down this key performance indicator. Net profit for the six-month period amounting to EUR3,265 million was also slightly up on the previous year’s record figure (EUR3,225 million; +1.2%). The total number of cars sold by the BMW Group during the first half of the year rose by 7.8% to 1,099,748 units (2014: 1,020,211 units).

 

“We remain firmly on track, achieving our best figures to date in terms of sales volume, revenues and earnings,” commented Harald Krüger, the Chairman of the Board of Management of BMW AG on Tuesday in Munich. “We remain committed to achieving an evenly balanced distribution of worldwide sales and maintaining the flexibility to react appropriately to developments on individual markets.”

 

CFO Friedrich Eichiner commented on the situation in China as follows: “For some time now, we have been drawing attention to the normalisation of the Chinese automobile market. In the medium and long term, however, we remain utterly convinced of its potential for growth, given the comparatively low rate of vehicle ownership, the country’s well-developed infrastructure and the strong affinity of the fast-growing middle class for brands.”

 

Automotive segment: EBIT margin within target range

 

Second-quarter revenues of the Automotive segment rose by 17.0% to EUR21,650 million (2014: EUR18,504 million). EBIT declined to EUR1,819 million (2014: EUR2,161 million; -15.8%), reflecting the challenging business conditions prevailing in individual markets, driven in particular by ever-fiercer competition. The earnings performance was also influenced by changes in the model mix, with compact vehicles accounting for a higher proportion than one year earlier. Segment result before tax amounted to EUR1,844 million (2014: EUR2,250 million; -18.0%). The EBIT margin came in at 8.4% (2014: 11.7%) and hence within the target range of 8 to 10%. The pre-tax return on sales was 8.5% (2014: 12.2%).

 

Compared with the previous year, Automotive segment revenues for the six-month period were 15.6% higher at EUR40,543 million (2014: EUR35,063 million), reflecting the sales volume performance and favourable currency factors. EBIT was slightly lower at EUR3,613 million (2014: EUR3,741 million; -3.4%). The EBIT margin finished at 8.9% (2014: 10.7%) and hence within the target range of 8 to 10%. Profit before tax for the six-month period amounted to EUR3,478 million (2014: EUR3,893 million; -10.7%). The pre-tax return on sales was 8.6% (2014: 11.1%).

 

The BMW brand recorded a new sales volume high in the second quarter, with 480,465 units (2014: 458,088 units; +4.9%) delivered to customers. Sales volume for the six-month period grew by 5.2% to 932,041 units (2014: 886,347 units). Momentum was provided by numerous models, including the BMW X5 and X6 as well as the 2 and 4 Series.

 

A total of 64,285 units (2014: 11,067 units) of the BMW 2 Series were sold during the six-month period, driven by sales of the new Active Tourer and the 2 Series Convertible. Sales of the BMW 3 Series declined to 219,369 units (2014: 236,289 units; -7.2%), partly due to the fact that the Convertible and Coupé models are now reported as part of the BMW 4 Series. By the same token, these models helped boost worldwide sales of the BMW 4 Series to 79,351 units (2014: 47,031 units; +68.7%).

 

Demand for the various models of the BMW X family remains strong. The BMW X5 saw sales volume rise by 25.9% to 85,983 units (2014: 68,283 units) during the first six months of the year. Sales volume figures for the BMW X6 were equally impressive, rising by 22.7% to 22,125 units (2014: 18,033 units). Keys to the new BMW X4 were handed over to 28,146 customers. The BMW i also continued to make good progress, with sales more than doubling to 12,562 units (2014: 5,405 units).

 

MINI recorded a 23.8% increase in sales volume in the second quarter, with sales jumping to 91,626 units (2014: 74,028 units). The six-month period also saw double-digit growth, with sales up by 25.8% to a new high of 165,938 units (2014: 131,896 units). The most pronounced increases were recorded for the MINI 3 and 5 door models, whose sales more than doubled to 107,542 units (2014: 47,056 units). A further surge should be generated by the new MINI Clubman, which is due to appear in showrooms towards the end of October.

 

Rolls-Royce Motor Cars posted its second-best six-month sales volume figure in the company's history, with 1,769 vehicles delivered to customers during the first half of 2015 (-10.1%). Worldwide sales in the second quarter stood at 988 units (2014: 1,071 units; -7.8%).

 

In line with its strategy of achieving a balanced distribution of sales worldwide, the BMW Group recorded sales volume growth in all of its major sales regions in the period from January to June.

 

The first half of 2015 saw an extremely good performance in Europe, with sales up by 9.5% to 488,490 units (2014: 446,188 units). The number of vehicles sold in Germany during this period increased by 2.6% to 137,830 units (2014: 134,308 units). Great Britain – the BMW Group's fourth largest market – saw a 15.2% increase to 110,822 units (2014: 96,180 units) during the six-month period, while the number of vehicles sold in France rose by 22.6% to 38,670 units (2014: 31,551 units). An increase of 8.5% was recorded in Italy, with sales volume rising to 35,980 units (2014: 33,157 units).

 

Sales of BMW and MINI vehicles in Asia grew by 4.4% to 337,107 units (2014: 322,943 units) for the six-month period, including a 2.3% increase in sales on the Chinese mainland to 230,788 units (2014: 225,490 units). Double-digit growth rates were recorded in Japan, with six-month sales climbing by 10.6% to 33,960 units (2014: 30,692 units).

 

A good six-month performance was also recorded for the Americas region, with sales of BMW Group vehicles rising to 242,379 units (2014: 221,280 units), an increase of 9.5% compared with the corresponding period one year earlier. In the USA, sales volume increased by 9.6% to 199,418 units (2014: 182,008 units).

 

Motorcycles segment sets new records

 

The Motorcycles segment registered its best quarter to date. Segment revenues for the the period from April to June grew by 17.8% to EUR622 million (2014: EUR528 million) on the back of strong sales volumes and a high-value model mix. EBIT improved to EUR112 million (2014: EUR55 million; +103.6%), similar to profit before tax, which also increased to EUR112 million (2014: EUR54 million; +107.4%). Sales volume climbed by 11.3% to 47,048 units (2014: 42,259 units). These earnings and sales volume figures all marked new records for a second quarter. The upward trend in business has been boosted by the new BMW R 1200 R, R 1200 RS, S 1000 RR, S 1000 XR and F 800 R models.

BMW Motorrad also produced its best-ever first half-year performance in more than 90 years of operations. Segment revenue for the six-month period rose by 18.9% to EUR1,189 million (2014: EUR1,000 million). EBIT improved to EUR227 million (2014: EUR119 million; +90.8%). Profit before tax showed a similar picture, with a jump of 93.2% to EUR226 million (2014: EUR117 million). Sales volume was 10.5% higher at 78,418 units (2014: 70,978 units).

 

Financial Services segment continues to perform well

 

The Financial Services segment also continued to perform well in the second quarter, recording new best figures for the period. Segment revenues were 19.4% higher than the previous year at EUR6,154 million (2014: EUR5,155 million). Profit before tax increased by 9.7% to EUR496 million (2014: EUR452 million) thanks to growth in new customer business and a stable risk position. Exchange rate factors also had a positive impact.

 

Six-month revenues grew by 21.6% to EUR12,212 million (2014: EUR10,045 million), while profit before tax came in at EUR1,055 million (2014: EUR905 million; +16.6%).

 

A total of 801,526 new contracts (2014: 728,914 contracts: +10.0%) were signed in the period from January to June in conjunction with financing and leasing business. The portfolio of lease and financing contracts in place with retail customers at 30 June rose by 6.6% to a total of 4,146,505 contracts (2014: 3,888,137 contracts).

 

Workforce enlarged

 

The size of the workforce increased by 6.2% at 30 June 2015 compared with one year earlier. Overall, the BMW Group had a worldwide workforce of 119,489 employees (2014: 112,500 employees). The BMW Group continues to recruit engineers and skilled experts in order to keep pace with rising demand for BMW Group vehicles, forge ahead with innovations and develop new technologies.

 

BMW Group reaffirms targets for the full year

 

Thanks to its attractive range of models, the BMW Group can look ahead with confidence at the current financial year and reaffirms its targets for the full year. “In 2015 we intend to achieve solid growth and new record figures for sales volume and profit before tax,” stated Eichiner. The BMW Group also firmly intends to remain the world's leading premium manufacturer of vehicles in 2015.

 

However, the scale of the increase during the forecast period is likely to be held down by fierce competition on automobile markets, rising personnel costs, continued high levels of upfront expenditure to safeguard business viability going forward and upcoming challenges relating to the normalisation of the Chinese market. A number of risks will also have to be faced, including the precarious state of the Russian market and macroeconomic uncertainties in Europe. The political and economic environment is also expected to remain volatile.

 

Further tailwind is expected in the current year from the market launch of a total of 15 new models and model revisions and also from the forecast positive development of automobile markets around the world.

 

Automotive segment revenues are set to grow significantly for the full year on the back of increased sales volume and favourable currency factors. We reaffirm our forecast of an EBIT margin within a target range of 8 to 10% for the Automotive segment.

 

The BMW Group expects the Motorcycles segment to continue its seasonally influenced upward trend during the current year, with additional impetus coming from new models. Sales of BMW motorcycles over the year as a whole are forecast to grow solidly.

 

The Financial Services segment should also continue to perform well throughout 2015. Despite rising equity capital requirements worldwide, the BMW Group forecasts a return on equity (RoE) for 2015 in line with the previous year’s level (2014: 19.4%), thus remaining ahead of the target of at least 18%.

 

The BMW Group’s forecasts for the financial year 2015 are based on the assumption that political and economic conditions remain stable.

 

* * *

The BMW Group – an overview

 

2nd quarter
2015

2nd quarter
2014*

Change in %

Sales volume

       

Automotive

units

573,079

533,187

7.5

Thereof:

       

BMW

units

480,465

458,088

4.9

MINI

units

91,626

74,028

23.8

Rolls-Royce

units

988

1,071

-7.7

Motorcycles

units

47,048

42,259

11.3

Workforce1

 

119,489

112,500

6.2

Operating cash flow

Automotive segment

EURmillion

 

3,008

1,530

96.6

Revenues

EURmillion

23,935

19,905

20.2

Thereof:

       

Automotive

EURmillion

21,650

18,504

17.0

Motorcycles

EURmillion

622

528

17.8

Financial Services

EURmillion

6,154

5,155

19.4

Other Entities

EURmillion

1

1

-

Eliminations

EURmillion

-4,492

-4,283

-4.9

Profit before financial result (EBIT)

EURmillion

2,525

2,603

-3.0

Thereof:

       

Automotive

EURmillion

1,819

2,161

-15.8

Motorcycles

EURmillion

112

55

-

Financial Services

EURmillion

503

459

9.6

Other Entities

EURmillion

94

16

-

Eliminations

EURmillion

-3

-88

-

Profit before tax (EBT)

EURmillion

2,582

2,654

-2.7

Thereof:

       

Automotive

EURmillion

1,844

2,250

-18.0

Motorcycles

EURmillion

112

54

-

Financial Services

EURmillion

496

452

9.7

Other Entities

EURmillion

144

25

-

Eliminations

EURmillion

-14

-127

89.0

Income taxes

EURmillion

-833

-887

6.1

Net profit

EURmillion

1,749

1,767

-1.0

Earnings per share2

EUR

2.66/2.67

2.68/2.69

-0.7/-0.7

*Prior year figures partially adjusted in accordance with IAS 8

1 figures exclude dormant employment contracts, employees in the work and non-work phases of pre-retirement part-time arrangements and low wage earners
2 earnings per share of common stock/preferred stock

 

 

The BMW Group – an overview

 

January to June 2015

January to June 2014*

Change in %

Sales volume

       

Automotive

units

1,099,748

1,020,211

7.8

Thereof:

       

BMW

units

932,041

886,347

5.2

MINI

units

165,938

131,896

25.8

Rolls-Royce

units

1,769

1,968

-10.1

Motorcycles

units

78,418

70,978

10.5

Workforce1

 

119,489

112,500

6.2

Operating cash flow

Automotive segment

EURmillion

4,838

3,472

39.3

Revenues

EURmillion

44,852

38,140

17.6

Thereof:

       

Automotive

EURmillion

40,543

35,063

15.6

Motorcycles

EURmillion

1,189

1,000

18.9

Financial Services

EURmillion

12,212

10,045

21.6

Other Entities

EURmillion

3

3

-

Eliminations

EURmillion

-9,095

-7,971

-14.1

Profit before financial result (EBIT)

EURmillion

5,046

4,693

7.5

Thereof:

       

Automotive

EURmillion

3,613

3,741

-3.4

Motorcycles

EURmillion

227

119

90.8

Financial Services

EURmillion

1,058

924

14.5

Other Entities

EURmillion

134

26

-

Eliminations

EURmillion

14

-117

-

Profit before tax (EBT)

EURmillion

4,851

4,813

0.8

Thereof:

       

Automotive

EURmillion

3,478

3,893

-10.7

Motorcycles

EURmillion

226

117

93.2

Financial Services

EURmillion

1,055

905

16.6

Other Entities

EURmillion

121

82

47.6

Eliminations

EURmillion

-29

-184

84.2

Income taxes

EURmillion

-1,586

-1,588

0.1

Net profit

EURmillion

3,265

3,225

1.2

Earnings per share2

EUR

4.96/4.97

4.90/4.91

1.2/1.2

*Prior year figures partially adjusted in accordance with IAS 8

1 figures exclude dormant employment contracts, employees in the work and non-work phases of pre-retirement part-time arrangements and low wage earners
2 earnings per share of common stock/preferred stock

Original source: BMW