The rate at which it is going, BMW is going to over-shoot the forecasts it gave for growth a couple of years ago. Then it said that it would sell 1.4 million cars in 2008; now it concedes that 1.5 million is equally likely. That would more than double the 700,000 cars of 2001.
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Helmut Panke, the chairman of the board was on something of a triumphal march this morning as he presented the 2004 financial results to the international press in Munich and disclosed that there would be two new product streams by 2008 that would lift the company’s total to 12 segments.
One is to be built in Germany – despite the desperately tight situation with existing capacity. That will be a European-targeted vehicle which currently labours under the ungainly epithet of Space Functional Automobile. Its task is to be elegant and sporting and to interpret space and functionality in a completely different way. That’s as much as they will say.
The other is to be built in the US for the US and has the subsidiary benefit of providing a partial hedge against the low level of the dollar. This is to be an SUV, a coupe and a sports car all in one which makes the mind boggle somewhat. It is to have all-wheel drive, high seating, good ground clearance, four seats and plentiful luggage capacity. That’s more detail than was given on the European sibling but as much as we are going to get for a while.
It says something of the new financial clout of the company that it can contemplate the cost of two such radical departures simultaneously.
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By GlobalDataThe numbers make clear that things are going exceptionally well. Panke scattered his narrative with superlatives. The company is “stronger than ever before”; the figures are “outstanding”; the company has “power and potential.” But he resisted what must have been a huge temptation to draw any comparaison with Mercedes-Benz which could well be in loss in the first quarter of this year according to the portents disclosed at the DaimlerChrysler results meeting a month ago. He patted away a soft question with the oblique response that he did not think that the performance of the company in Stuttgart would have any impact at BMW.
The impressive part of the figures is the further increase in operating margin – up from 8.1% to 8.4% – which is almost Toyota-esque in its commendability. Profitability in the car sector was up 14% to €3.2 billion.
For those who wanted to snipe, and some did – motorcycles were weaker. That was an issue of model and market timings according to the response. And Rolls-Royce had a target of 1,000 sales in the year and missed it by 208 cars. Was it profitable? Don’t worry about it, said Panke. There will now be a full year of sales by a full complement of dealers internationally, and just down the road are both a long wheelbase model and a new convertible. Rolls will be profitable in due course, he said.
In fact he did better than that and promised higher volumes in all three brands. BMW had the new 3-series kicking in from today, and Mini was to get another €100 million of investment in Oxford for more model derivatives. The body shop and paint plant will get most of the money.
Later in the year, the shareholders will get a chance to show what they think of Panke and his dependence on the premium brand markets of the world. They will be invited to surrender up to 10% of their stock when the company floats a share buy-back programme. The cost of the dividend is too high and by buying shares back and borrowing in the debt market there is a serious saving to make. Fewer shares in issue means stronger competition for ownership of the 90% that remain.
It’s going to be interesting to see whether holders are willing to surrender that many shares. And even more interesting to see whether the dominant Quandt family surrender some of theirs. Let the tension surface.
Rob Golding
BMW confirms record 2004 results
