BMW Group Earnings and Profits Hit Record High in 2017

BMW Group Earnings and Profits Hit Record High in 2017

The BMW Group once again demonstrated its ability to generate sustained profitability in 2017, posting its eighth consecutive record year. Despite a significant increase in upfront expenditure for future mobility the company reported its best ever figures to date for sales volume, revenues and earnings. In addition, the BMW Group delivered more than 100,000 electrified vehicles to customers for the first time in a single year, firmly underpinning the Group’s role as a pioneer and key driver of electric mobility. In line with its Strategy NUMBER ONE > NEXT, the BMW Group continues to play a leading role in transforming the mobility sector with its future-oriented ACES program: Automated, Connected, Electrified and Services.

For BMW Motorrad, 2017 was also a record-breaking year. As reported previously, motorcycle and maxi-scooter deliveries rose by 13.2% to 164,153 units (2016: 145,032 units), making it the seventh consecutive record-breaking year and the first in which more than 150,000 units were sold. Segment revenues also rose significantly to €2,283 million (about $2,836 million), which is a 10.3% increase over the €2,069 million ($2,570 million) revenue in 2016. Similarly, profit before financial result (EBIT) improved to €207 million ($257 million), up 10.7% from €187 million ($232 million) in 2016. The BMW Group is targeting an EBIT margin within a range of 8 to 10% in the motorcycles segment. In the financial year 2017, the margin came in at 9.1% (2016: 9.0%). Profit before tax (EBT) increased by 10.8% to €205 million ($255 million) from €185 million ($230 million) in 2016.

Automotive sales volume increased by 4.1% to a new record level of 2,463,526 units in 2017 (2016: 2,367,603 units). Deliveries of electrified vehicles jumped by 65.6% to 103,080 units, driven by the all-electric BMW i3 sales which have risen every year since the model’s market launch in 2013. The BMW Group intends to increase the sales volume of electrified vehicles to at least 140,000 units in 2018 and bring more than half a million electrified vehicles onto the roads by the end of 2019.

Group revenues rose to a new record level of €98,678 million in 2017 (2016: €94,163 million; +4.8%), with currency effects slightly restraining growth. Profit before financial result (EBIT) rose by 5.3% to €9,880 million (2016: €9,386 million). Group profit before tax (EBT) went up significantly year-on-year, partly helped by favorable valuation effects, and – thanks to a 10.2% rise to €10,655 million (2016: €9,665 million) – finished the year for the first time above the ten-billion-euro mark. As in the previous year, all three operating segments – Automotive, Motorcycles and Financial Services – reported record pre-tax earnings, each making a contribution to earnings growth in 2017. The pre-tax return on sales (EBT margin) for the Group improved to 10.8% (2016: 10.3%), ensuring that the BMW Group remains one of the automobile industry’s leaders when it comes to profitability.

Income tax expense amounted to €1,949 million in the year under report (2016: €2,755 million). The significantly lower tax expense in 2017 was mainly due to the reduction in the US federal corporate income tax rate from 35% to 21% with effect from 1 January 2018, which was taken into account in the measurement of deferred taxes at 31 December 2017. The revaluation gave rise to a positive impact of €977 million on deferred taxes recognized through the income statement. Group net profit benefitted accordingly and rose to €8,706 million (2016: €6,910 million; +26.0%).

BMW Welt and the iconic “four cylinder” building in the background of BMW Group’s corporate headquarters.

At the Annual General Meeting on May 17, 2018, the Board of Management and the Supervisory Board will propose to shareholders that the dividend be increased to a new high of €4.00 (2016: €3.50) per share of common stock and €4.02 (2016: €3.52) per share of preferred stock. The distribution rate of 30.2% (2016: 33.3%) will be within the BMW Group’s target range of between 30 and 40%.

Automotive segment revenues grew by 2.5% to €88,581 million (2016: €86,424 million) on the back of positive sales volume figures. EBIT improved slightly by 2.2% to €7,863 million (2016: €7,695 million). The EBIT margin came in at 8.9%, unchanged from the previous year, thus finishing within the target range of between 8 and 10% or higher for the eighth financial year in a row since 2010. Segment profit before tax increased by 9.8% to set a new record of €8,691 million (2016: €7,916 million).

In 2017, the Group again delivered over two million BMW brand vehicles to customers. Sales volume rose by 4.2% to 2,088,283 units year-on-year (2016: 2,003,359 units). The MINI brand set a new sales volume record in 2017 with 371,881 deliveries worldwide and 3.2% year-on-year growth. Rolls-Royce Motor Cars delivered 3,362 units (-16.2%) to customers in almost 50 countries around the globe. The figure was achieved despite volatility in key Middle East markets and the Phantom being unavailable throughout the year due to model change.

The BMW Group again recorded high growth in Asia, where a total of 848,826 BMW, MINI and Rolls-Royce brand vehicles were sold, representing double-digit growth of 13.6% (2016: 747,291 units). The Chinese market made a key contribution to this performance with 595,020 units delivered to customers (2016: 516,785 units; +15.1%).

In Europe, the BMW Group sold a total of 1,101,760 units across its three brands, thus remaining at the previous year’s high level (2016: 1,092,155 units; +0.9%). The sales volume figure of 241,674 units for Great Britain was down on the previous year (2016: 252,205 units; -4.2%). Deliveries to customers in France increased to 89,957 units (2016: 84,305 / +6.7%). The sales volume also increased in Italy with 86,663 deliveries (2016: 83,765 / +3.5%).

The Americas region saw a slight decrease in the number of deliveries over the year as a whole (451,136 units; -2.0%), with the limited availability of BMW X models having an impact on volumes. In a highly competitive market environment, deliveries in the USA dipped slightly to 353,819 units (2016: 366,493 units; -3.5%). In the fourth quarter of 2017, however, a turnaround was perceptible in both the USA (98,137 units; 2016: 96,609 units; +1.6%) and in the Americas as a whole (124,547 units; 2016:122,393 units; +1.8%).

The Financial Services segment also continued to perform well in 2017. The number of new contracts concluded with retail customers rose slightly to 1,828,604 contracts (2016: 1,811,157 contracts; +1.0%) during the twelve-month period. At December 31, 2017, the contract portfolio comprised 5,380,785 contracts, thus growing by 5.2% year-on-year (2016: 5,114,906 contracts). Segment revenues were 7.3% higher at €27,567 million (2016: €25,681 million). Profit before tax increased slightly to €2,207 million (2016: €2,166 million; +1.9%).

The size of the workforce grew by 4.2% in 2017. At December 31, the BMW Group employed 129,932 people worldwide (2016: 124,729 employees). Projects relating to vehicle electrification and autonomous driving played a major role in the additional recruitment. Growth in automotive and motorcycle business on the one hand and the expansion of financial and mobility services on the other also contributed to the rise. The BMW Group continues to place great emphasis on its trainee program and has again invested some €350 million in basic and further training. Overall, more than 4,750 young people worldwide were employed in vocational training and training programmes for young talent at December 31, 2017.

 

 

The BMW Group – an Overview 2017 2016 Change in %
Deliveries to customers
Automotive units 2,463,526 2,367,603 4.1
thereof: BMW units 2,088,283 2,003,359 4.2
 MINI units 371,881 360,233 3.2
 Rolls-Royce units 3,362 4,011 -16.2
Motorcycles units 164,153 145,032 13.2
       
Workforce 1 129,932 124,729 4.2
       
Automotive segment EBIT margin % 8.9 8.9
Motorcycles segment EBIT margin % 9.1 9.0 +0.1 % points
EBT margin BMW Group % 10.8 10.3 +0.5 % points
       
Revenues € million 98,678 94,163 4.8
thereof: Automotive € million 88,581 86,424 2.5
Motorcycles € million 2,283 2,069 10.3
Financial Services € million 27,567 25,681 7.3
Other Entities € million 7 6 16.7
Eliminations € million -19,760 -20,017 1.3
       
Profit before financial result (EBIT) € million 9,880 9,386 5.3
thereof: Automotive € million 7,863 7,695 2.2
Motorcycles € million 207 187 10.7
Financial Services € million 2,194 2,184 0.5
Other Entities € million 14 -17
Eliminations € million -398 -663 40.0
       
Profit before tax (EBT) € million 10,655 9,665 10.2
thereof: Automotive € million 8,691 7,916 9.8
Motorcycles € million 205 185 10.8
Financial Services € million 2,207 2,166 1.9
Other Entities € million 80 170 -52.9
Eliminations € million -528 -772 31.6
       
Income taxes € million -1,949 -2,755 29.3
Net profit € million 8,706 6,910 26.0
Earnings per share 2 13.12/13.14 10.45/10.47 25.6/25.5

1 Excluding dormant employment contracts, employees in the work and non-work phases of pre-retirement part-time working arrangements and low wage earners

2 Earnings per share of common stock/preferred stock

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