Good Start for BMW Group, Motorcycle Sales Up but Revenues Down

Good Start for BMW Group, Motorcycle Sales Up but Revenues Down

The BMW Group has started the 2018 financial year with a strong first quarter. Despite volatile conditions and unfavorable exchange rates, new best ever figures were recorded for sales volume and net profit. There were high upfront expenditures for future vehicles, but the automotive segment also set a new record for its result from operations (EBIT).

On the motorcycle side, BMW Motorrad sales volume in the first quarter was only slightly better than last year — but it was enough to set a seventh consecutive first quarter sales record. Worldwide deliveries to customers edged up 0.6% to 35,858 units (2017: 35,636 units). At the same time, segment performance was held down by the impact of the current model change and by currency effects. Revenues fell by 15.5% to € 524 million (2017: € 620 million). EBIT was also adversely affected by the same factors and finished at € 77 million (2017: € 125 million; -38.4%). Pre-tax profit for the three-month period amounted to € 78 million (2017: € 125 million; -37.6%). The first-quarter EBIT margin for the Motorcycles segment came in at 14.7% (2017: 20.2%). In the light of slightly slower production ramp-up of new models, retail sales for 2018 are now expected to grow slightly.

BMW Motorrad Canada reported 264 sales in April resulting in a decrease of -8.0% as compared to April, 2017.  Year-to-date sales were 637 units, an increase of +5.8% over the same period in 2017.  A key model contributing to the year-over-year growth in Canada was the BMW G310GS. BMW Motorrad USA did not report motorcycle sales numbers.

New first-quarter highs for automobile sales volume and net profit

First-quarter deliveries of BMW, MINI and Rolls-Royce brand vehicles rose by 3.0% to 604,629 units (2017: 587,237). All three major sales regions contributed to the increase. Due to currency effects, Group revenues for the three-month period fell by 5.1% to € 22,694 million (2017: € 23,926 million). Adjusted for currency effects, revenues were at a similar level to the previous year (-0.7%). Profit before financial result (EBIT) was also influenced by currency factors and came in at € 2,733 million (2017: € 2,821 million / -3.1%). Group profit before tax (EBT), which is relevant for the BMW Group financial guidance, amounted to € 3,165 million (2017: € 3,180 million / -0.5%) and reached the previous year’s high level despite rising costs and upfront expenditure for R&D activities. This performance was partly due to the financial result, which improved despite the impact of items working in the opposite direction. The previous year’s first-quarter financial result benefited from a positive valuation effect of € 183 million arising in conjunction with the participation of new investors in the HERE mapping service. Improvements in other financial result totalling € 122 million had also impacted the previous year’s figure. In the current year, the financial result for the period from January to March includes the valuation effect arising in connection with the acquisition of the 50% stake in the DriveNow joint venture from Sixt SE amounting to € 209 million.

Overall, the EBT margin for the Group came in at 13.9% (2017: 13.3%), the highest quarterly figure since 2011. First-quarter Group net profit amounted to € 2,301 million (2017: € 2,274 million) and was therefore slightly up (+1.2%) on the record figure reported for the previous year.

First-quarter Automotive segment revenues were also impacted by currency effects and finished the quarter slightly down (-3.4%) at € 19,326 million (2017: € 20,001 million). By contrast, EBIT of € 1,881 million (2017: € 1,877 million) remained at the previous year’s record level (+0.2%), despite the high level of upfront expenditure for R&D. The EBIT margin improved accordingly to 9.7% (2017: 9.4%) and was thus at the upper end of the target range of 8 to 10%. At € 2,281 million (2017: € 2,285 million), profit before tax was also at a similarly high level to the previous year (-0.2%).

Overall, the BMW brand delivered 517,447 units (2017: 503,445 units) to customers, its best result to date for a first quarter (+2.8%). Sales-volume growth was driven especially by the new generation of the BMW 5 Series and the BMW X1. These vehicles were introduced in spring 2017 and both have recorded double-digit growth.

The MINI brand also performed well during the first quarter, recording its best sales volume result to date for a first quarter, with 86,375 units delivered to customers (2017: 83,059 units; +4,0%) The market launch of the updated MINI and the MINI Convertible in March is expected to create growing momentum over the remainder of the year.

First-quarter sales of Rolls-Royce Motor Cars rose by 10.1% year-on-year to 807 units (2017: 733 units). Customer demand for Rolls-Royce models remains strong worldwide with the exception of the Middle East, where the market remains volatile. The new Phantom, the brand’s flagship, has been on sale since January, with order intake set to remain high through to the year-end. Preparations are well underway for the market launch of the Rolls-Royce Cullinan.

The BMW Group remains committed to its strategy of achieving a well-balanced distribution of sales worldwide, using its highly flexible production, sales and marketing structures to even out fluctuating demand between individual regions. All three of the Group’s major sales regions contributed to volume growth during the first quarter, driven in particular by strong performances on the Chinese mainland and in the USA.

Sales figures for Europe edged up by 1.0% to 270,725 units (2017: 267,996 units). First-quarter deliveries to customers in France were slightly up on the previous year (+3.1%). Business in the UK, however, contracted (-2.7%) in the wake of the continuing uncertainty regarding the progress of Brexit negotiations.

Sales of BMW, MINI and Rolls-Royce brand vehicles in Asia in the first quarter 2018 grew by a solid 6.3% to 212,693 units (2017: 200,140 units). China again accounted for the lion’s share of the increase, with deliveries of the Group’s three automotive brands up 7.1% compared to one year earlier.

In the Americas region, the BMW Group recorded volume growth of 4.0% to 106,348 units (2017: 102,238 units). The figure includes 84,630 units sold in the USA, also slightly up year-on-year (+3.0%).

Financial Services segment remains on course

The contract portfolio under management within the Financial Services segmentgrew by 1.0% during the three-month period under report and stood at 5,434,664 contracts at 31 March 2018 (31 December 2017: 5,380,785 contracts). During the first quarter, 451,908 (2017: 465,634) new leasing and credit financing contracts were signed with retail customers (-2.9%). Segment revenues and earnings were influenced by currency factors: First-quarter revenues fell by 5.3% to € 6,674 million (2017: € 7,046 million) and profit before tax by 5.7% to € 561 million (2017: € 595 million). The BMW Group continues to record adequate levels of provision with respect to residual value and credit risk exposures in the leasing and financing lines of business.

Increase in workforce size

The BMW Group’s workforce comprised 131,181 employees at the end of the first quarter, 1.0% more than at 31 December 2017. Skilled workers and IT specialists in future-oriented areas, such as digitalisation, autonomous driving and electric mobility continue to be recruited.

BMW Group reaffirms targets for the financial year 2018

The BMW Group is confident of achieving its projected targets for the current financial year – largely thanks to its strong brands, its attractive product portfolio and the expectation that international automobile markets will continue their generally upward trend. These favorable factors are offset by extremely high levels of upfront expenditure for new technologies, fierce competition and rising personnel expenses. The global political and economic environment is expected to remain volatile.

The BMW Group reaffirms its targets for the full year. “We are targeting new record figures in the Automotive segment for sales volume and revenues in 2018,” stated Harald Krüger. “Group profit before tax is expected to be at least at the previous financial year’s level.” The BMW Group continues to forecast an EBIT margin in the target range of 8 to 10% for the Automotive segment.

In connection with the planned bundling of mobility services, the BMW Group has announced that – if approved by the competition authorities in the current year – the foundation of the joint venture will have a one-off valuation and earnings effect and will result in an adjustment to the outlook. Under these circumstances, the Group profit before tax for 2018 would be slightly higher than one year earlier. The effect described above has no impact on the EBIT margin of the Automotive segment.

Forecasts for the current year are based on the assumption that worldwide economic and political conditions will not change significantly.

 


The BMW Group – an overview
1st quarter
2018
1st quarter
2017
Change in %
Deliveries to customers
Automotive units 604,629 587,237 3.0
Thereof:  BMW units 517,447 503,445 2.8
 MINI units 86,375 83,059 4.0
 Rolls-Royce units 807 733 10.1
Motorcycles units 35,858 35,636 0.6
       
Workforce 1 (compared to 31.12.2017) 131,181 129,932 1.0
       
Automotive segment EBIT margin3 % 9.7 9.4 +0.3 %Points
Motorcycles segment EBIT margin3 % 14.7 20.2 -5.5 % Points
EBT margin BMW Group 3 % 13.9 13.3 +0.6 %Points
       
Revenues 3 € million 22,694 23,926 -5.1
Thereof: Automotive3 € million 19,326 20,001 -3.4
Motorcycles3 € million 524 620 -15.5
Financial Services € million 6,674 7,046 -5.3
Other Entities € million 2 2
Eliminations3 € million -3,832 -3,743 -2.4
       
Profit before financial result (EBIT) 3 € million 2,733 2,821 -3.1
Thereof: Automotive3 € million 1,881 1,877 0.2
Motorcycles3 € million 77 125 -38.4
Financial Services € million 569 604 -5.8
Other Entities € million 9 4
Eliminations3 € million 197 211 -6.6
       
Profit before tax (EBT) 3 € million 3,165 3,180 -0.5
Thereof: Automotive3 € million 2,281 2,285 -0.2
Motorcycles3 € million 78 125 -37.6
Financial Services € million 561 595 -5.7
Other Entities € million 70 -4
Eliminations3 € million 175 179 -2.2
       
Income taxes 3 € million -864 -906 4.6
Net profit 3 € million 2,301 2,274 1.2
Earnings per share 2, 3  € 3.47/3.47 3.45/3.45 0.6/0.6

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

3 2017 figures were adjusted according to IFRS 15 – see note [5] in quarterly report.

 

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