At its annual financial results conference in Munich today, BMW confirmed record sales and profit figures for 2004. Looking ahead, chairman Helmut Panke said that he expected BMW to further add sales in 2005 across all three of its car brands (BMW, Mini and Rolls Royce). However, he sounded a note of caution for the industry on the global economy, noting the risks posed by high prices for oil and raw materials, as well as the weak dollar.
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The company is aiming for flat earnings in 2005.
Looking at overall markets, he said that developed markets were expected to show little impetus in 2005, with sales growth for the industry continuing to come from emerging markets, though he noted that growth there was expected to be slower than in recent years.
Panke also confirmed that the BMW strategy of entering new market segments will be continued with two entirely new models planned for launch in 2008.
BMW net profit in 2004 increased 14.1% to €2,222 million (2003: €1,947 million). Earnings per share were €3.30 (2003: €2.89) per share of common stock and €3.32 (2003: €2.91) per share of preferred stock.
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By GlobalDataDespite the adverse currency impact from the weak dollar, overall revenues in 2004, at €44,335 million, were 6.8% higher than in the previous year (2003: €41,525 million). The return on sales at a group level thus improved by 0.3% to 8.0% (2003: 7.7%).
“The BMW Group is now reaping the benefits of the up-front expenditure previously incurred to launch new products and to expand the international sales organisation,” said Panke. “Over the past years, we have taken on a new dimension with our range of vehicles, market presence and financial strength and are now stronger than ever before. This ability to perform strongly and profitably allows us to continue emphatically on our course of growth and expansion.”
Panke also announced that the board and the supervisory board of BMW AG will propose at the annual general meeting that the shareholders pass a resolution authorising the buy-back of up to 10% of the company’s share capital. The aim of this measure is to reduce the share capital by withdrawing the shares from circulation.
With 1,208,732 BMW, Mini and Rolls-Royce brand cars sold in 2004, the BMW group beat the sales volume record set in the previous year by 9.4%.
For the first time in its history, the BMW brand rpassed the one million mark with sales of 1,023,583 cars (+10.3% on the previous year). Sales of Mini cars rose to 184,357 units in 2004, an increase of 4.5% over 2003. 792 Rolls-Royce Phantoms were sold in 2004, the largest number sold for 14 years.
Regarding the outlook, Panke said that the company expects a new sales record to be achieved in 2005 and that he was “expecting an increase in retail in the single-digit percentage range.” He said that new and recently released models such as the new 3 series (with the Touring wagon variant to be added in September), 1 series and updated 7 series would mean an expanded company presence in new and traditional markets.
Panke also said that he expected to see the global economic growth slow in 2005, with the euro region seeing only moderate growth and Japan also subdued, although he said that the US was seeing a generally positive mood among consumers and companies. However, he added that high oil and raw material prices as well as the weak dollar remained a risk for global economic development and that economic trends suggested that the company was not expecting much impetus from the automobile markets of the triad countries.
He also said that consumer confidence in Germany remains low and will be a drag on the market there “for the time being”.
Panke looked to emerging markets as a source of industry growth, “although the extremely high growth rates of recent years are unlikely,” he said, adding that this applies particularly to China, where the company has an assembly joint venture with Brilliance.
But he maintained that the company expects to see that in most markets the premium segments will develop better than the market as a whole.
BMW would continue to expand its presence in new and traditional markets, benefiting from new models and also investments in capacity (including recently announced capacity expansion for Mini and the new BMW plant at Leipzig as well as modifications to Spartanburg that have increased its capacity).
Following on from comments made recently in Geneva, Panke also confirmed two new BMW model series for new segments: a ‘space functional’ vehicle and a second model that will be a ‘combination of sports car, coupe and sports activity vehicle’ and built in the US.
The space efficient vehicle will be ‘completely different from anything that has been offered before’ (and therefore, not a minivan). It is described by BMW as a ‘space-functional concept’.
The second vehicle combines a number of concepts and includes a raised seat position, high ground clearance, all-wheel drive and the ‘outer appearance of a coupe’. It will be made in the US at Spartanburg.
Both models will be launched in 2008.
Dave Leggett
