- Six-month EBIT exceeds € 5 billion for first time
- Solid sales volume growth despite volatile markets
- Sharp rise in second-quarter revenues to € 23.9 billion
- EBT nears previous year's record level
- BMW Group reaffirms targets for 2015
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 € 5 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 € 23,935 million (2014: € 19,905 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 € 2,525 million (2014: € 2,603 million; -3.0%), while the profit before tax (EBT) came in at € 2,582 million, slightly below the € 2,654 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 € 1,749 million, net profit for the three-month period also came extremely close to the previous year’s figure (2014: € 1,767 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 € 5 billion for first time
Group revenues for the six-month period climbed by 17.6% to € 44,852 million (2014: € 38,140 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 € 5,046 million (2014: € 4,693 million), thus exceeding the € 5-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 € 4,851 million, nevertheless surpassed the previous year’s record figure (2014: € 4,813 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 € 3,265 million was also slightly up on the previous year’s record figure (€ 3,225 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 € 21,650 million (2014: € 18,504 million). EBIT declined to € 1,819 million (2014: € 2,161 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 € 1,844 million (2014: € 2,250 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 € 40,543 million (2014: € 35,063 million), reflecting the sales volume performance and favourable currency factors.
EBIT was slightly lower at € 3,613 million (2014: € 3,741 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 € 3,478 million (2014: € 3,893 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 range 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 € 622 million (2014: € 528 million) on the back of strong sales volumes and a high-value model mix. EBIT improved to € 112 million (2014: € 55 million; +103.6%), similar to profit before tax, which also increased to € 112 million (2014: € 54 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 € 1,189 million (2014: € 1,000 million). EBIT improved to € 227 million (2014: € 119 million; +90.8%). Profit before tax showed a similar picture, with a jump of 93.2% to € 226 million (2014: € 117 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 € 6,154 million (2014: € 5,155 million). Profit before tax increased by 9.7% to € 496 million (2014: € 452 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 € 12,212 million (2014: € 10,045 million), while profit before tax came in at € 1,055 million (2014: € 905 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 | € million | 3,008 | 1,530 | 96.6 |
| Revenues | € million | 23,935 | 19,905 | 20.2 |
| Thereof: | ||||
| Automotive | € million | 21,650 | 18,504 | 17.0 |
| Motorcycles | € million | 622 | 528 | 17.8 |
| Financial Services | € million | 6,154 | 5,155 | 19.4 |
| Other Entities | € million | 1 | 1 | - |
| Eliminations | € million | -4,492 | -4,283 | -4.9 |
| Profit before financial result (EBIT) | € million | 2,525 | 2,603 | -3.0 |
| Thereof: | ||||
| Automotive | € million | 1,819 | 2,161 | -15.8 |
| Motorcycles | € million | 112 | 55 | - |
| Financial Services | € million | 503 | 459 | 9.6 |
| Other Entities | € million | 94 | 16 | - |
| Eliminations | € million | -3 | -88 | - |
| Profit before tax (EBT) | € million | 2,582 | 2,654 | -2.7 |
| Thereof: | ||||
| Automotive | € million | 1,844 | 2,250 | -18.0 |
| Motorcycles | € million | 112 | 54 | - |
| Financial Services | € million | 496 | 452 | 9.7 |
| Other Entities | € million | 144 | 25 | - |
| Eliminations | € million | -14 | -127 | 89.0 |
| Income taxes | € million | -833 | -887 | 6.1 |
| Net profit | € million | 1,749 | 1,767 | -1.0 |
| Earnings per share2 | € | 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
| € million | 4,838 | 3,472 | 39.3 |
| Revenues | € million | 44,852 | 38,140 | 17.6 |
| Thereof: | ||||
| Automotive | € million | 40,543 | 35,063 | 15.6 |
| Motorcycles | € million | 1,189 | 1,000 | 18.9 |
| Financial Services | € million | 12,212 | 10,045 | 21.6 |
| Other Entities | € million | 3 | 3 | - |
| Eliminations | € million | -9,095 | -7,971 | -14.1 |
| Profit before financial result (EBIT) | € million | 5,046 | 4,693 | 7.5 |
| Thereof: | ||||
| Automotive | € million | 3,613 | 3,741 | -3.4 |
| Motorcycles | € million | 227 | 119 | 90.8 |
| Financial Services | € million | 1,058 | 924 | 14.5 |
| Other Entities | € million | 134 | 26 | - |
| Eliminations | € million | 14 | -117 | - |
| Profit before tax (EBT) | € million | 4,851 | 4,813 | 0.8 |
| Thereof: | ||||
| Automotive | € million | 3,478 | 3,893 | -10.7 |
| Motorcycles | € million | 226 | 117 | 93.2 |
| Financial Services | € million | 1,055 | 905 | 16.6 |
| Other Entities | € million | 121 | 82 | 47.6 |
| Eliminations | € million | -29 | -184 | 84.2 |
| Income taxes | € million | -1,586 | -1,588 | 0.1 |
| Net profit | € million | 3,265 | 3,225 | 1.2 |
| Earnings per share2 | € | 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
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