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BMW Group: First-quarter EBIT of minus euro 55 million
06.05.2009 Fact & Figures
Group liquidity further improved +++ Positive free cash flow of euro 220 million in first quarter +++ BMW Group continues to see 2009 as year of transition +++
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Group liquidity further improved
Positive free cash flow of euro 220 million in first quarter
BMW Group continues to see 2009 as year of transition
Munich. The BMW Group asserted its position in the first quarter 2009 despite the weak state of the sales markets brought about by the global financial and economic crisis. “We have continued our forward-looking finance and cost management strategies with great determination during the opening quarter of the year”, stated Norbert Reithofer, Chairman of the Board of Management of BMW AG on Wednesday in Munich. “In view of the difficult conditions still prevailing on the financial markets, we remain focused in our efforts to improve our liquidity position”, continued Reithofer. Strengthening the liquidity base creates manoeuvring room and ensures that the BMW Group will be able to continue its policy of investing in the future.
The BMW Group’s first-quarter performance was nevertheless perceptibly impaired by the ongoing reluctance of consumers to spend and by high refinancing costs. Group revenues for the quarter fell by 13.4% to euro 11,509 million (first quarter 2008: euro 13,285 million) as a result of the drop in sales volumes. The Group reports a loss before financial result (EBIT) of euro 55 million (first quarter 2008: profit before financial result of euro 827 million). The loss before tax was euro 198 million (first quarter 2007: profit before tax of euro 641 million). The loss after tax was euro 152 million (first quarter 2008: profit after tax of euro 487 million).
A whole range of efficiency improvement measures are being implemented at great pace on both the cost and the revenues side to enable the BMW Group to overcome the current crisis. The BMW Group continued to improve its cost structures during the first three months of the year. It also managed to reduce inventory levels further and to cut back working capital in the Automobiles segment during the same period by euro 1,076 million. “We were able to generate a positive free cash flow of euro 220 million during the first quarter”, stated Reithofer. Group liquidity improved to a total of euro 10.025 billion by the end of the quarter.
BMW Group continues to see 2009 as year of transition
The BMW Group continues to see the current year as one of transition. In view of the fact that it is almost impossible to predict how the global economy will fare in the near future, it is still currently not feasible to give reliable earnings forecasts for the full year 2009. In view of the ongoing weakness of the markets, it is likely that the BMW Group’s worldwide sales volume will be lower than in the previous year. “We intend to maintain or further increase our market shares in the premium segment in the current year”, emphasised Reithofer.
From 2010 onwards, it is expected that the renewed product range will provide impetus for business. This trend should be fuelled further between 2010 and 2012 when the new versions of high-selling models come onto the markets. For the year 2012, the BMW Group continues to target a return on capital employed (ROCE) in excess of 26% and an EBIT margin of between 8% and 10% for its Automobile segment.
A number of new models are to be launched in the near future that will boost sales. The new BMW 7 Series has been available in Europe since the end of 2008. The BMW flagship, which is already the market leader in Western Europe, will be available to customers worldwide by spring 2009. Due to the longer period of availability in the current year, sales of the 7 Series are expected to be above the previous year’s level. The new BMW Z4 will be launched in May. The X1 and the 5 Series Gran Turismo will come onto the markets towards the end of the year. The new MINI Convertible has been available since March. The M variants of the BMW X5 and BMW X6 were presented at the beginning of April.
Consumer reluctance to spend hits Automobiles segment earnings
Weak automobile markets in the wake of the global financial and economic crisis resulted in a sharp sales volume decrease in the first quarter. The total number of BMW, MINI and Rolls-Royce brand vehicles delivered to customers fell by 21.2% to 277,264 units (first quarter 2008: 351,787 units). Despite the sharp decrease, the BMW Group nevertheless performed better than the premium segment as a whole. Sales of BMW brand cars dropped by 20.5% to 233,498 units (first quarter 2008: 293,550 units). The number of MINI brand cars sold fell by 24.9% to 43,592 units (first quarter 2008: 58,054 units). Rolls-Royce’s sales performance, with 174 units sold, remained close to the previous year’s high level (first quarter 2008: 183 units/-4.9%).
The BMW Group was able to defend its lead over competitors during the first three months of 2009. The BMW brand increased its market share of the worldwide premium segment to 20.7%. Market share was also increased on the BMW Group’s largest market, the USA.
Earnings of the Automobiles segment fell sharply due to lower sales volumes brought about by the economic crisis. The segment reports a negative EBIT of euro 251 million (first quarter 2008: positive EBIT of euro 619 million) and a loss before tax of euro 471 million (first quarter 2008: profit before tax of euro 539 million). Revenues decreased by 21.0% to euro 9,605 million (first quarter 2008: euro 12,162 million). Net financial assets of the Automobiles segment increased during the quarter by euro 119 million to euro 9,165 billion.
Sales volume decrease for BMW Motorrad in first quarter
Difficult business conditions also affected the performance of the Motorcycles segment. The BMW Group sold 17,232 BMW motorcycles during the first three months of 2009, 18.1% fewer than one year earlier (first quarter 2008: 21,046 units). Revenues fell by 15.9% to euro 290 million (first quarter 2008: euro 345 million). EBIT fell to euro 28 million (first quarter 2008: euro 36 million/-22.2%) and the profit before tax dropped to euro 26 million (first quarter 2008: euro 34 million/-23.5%).
The BMW Group continues to expand its motorcycle model range. The three K-series models (K1300 S/R/GT) presented in the previous year have been available to customers since the beginning of February 2009. The new F 800 R will be introduced to the markets in May and the road version of the S1000 RR racing machine will follow at the end of the year.
Financial services business affected by credit crisis
The international financial crisis continued to affect financial services business during the period under report. First-quarter segment revenues edged up by 3.8% to euro 4,003 million (first quarter 2008: euro 3,857 million). EBIT decreased to euro 70 million (first quarter 2008: euro 79 million/-11.4%), while the profit before tax fell to euro 72 million (first quarter 2008: euro 84 million /-14.3%).
The number of lease and financing contracts in place with dealers and retail customers rose by 11.3% to a total of 3,007,406 contracts. The business volume in balance sheet terms at 31 March 2009 totalled euro 60,986 million. The proportion of new cars of the BMW Group financed or leased by the Financial Services segment was 47.9%, 1.2 percentage points above the proportion recorded one year earlier. The proportion for the financial year 2008 had been 48.5%.
The number of employees decreased further during the period under review. The workforce was reduced in this period by 929 employees, of whom approximately 300 had signed voluntary severance contracts in the previous year and left the company during the first quarter of 2009. In addition, positions becoming free due to natural staff attrition were not filled. The BMW Group workforce comprised 99,112 employees worldwide at the end of the first quarter 2009 (31 March 2008: 106,887 employees), representing a 7.3% decrease on a year-on-year basis. Compared to 31 December 2008, the number of employees was decreased by 0.9%.
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The full Quarterly Report to 31 March 2009 is available for download at www.bmwgroup.com/ir.
The BMW Group – an Overview
2009 1st Quarter
Automobiles units 267,637 405,595 -34.0
Motorcycles units 29,111 28,589 1.8
Deliveries to customers
Automobiles units 277,264 351,787 -21.2
BMW units 233,498 293,550 -20.5
MINI units 43,592 58,054 -24.9
Rolls-Royce units 174 183 -4.9
Motorcycles units 17,232 21,046 -18.1
Workforce at period-end 99,112 106,887 -7.3
Operating cash flow euro million 1,122 1,063 5.6
Revenues euro million 11,509 13,285 -13.4
Profit/loss before financial result (EBIT) euro million -55 827 -
Automobiles euro million -251 619 -
Motorcycles euro million 28 36 -22.2
Financial Services euro million 70 79 -11.4
Other Entities euro million 12 36 -66.7
Eliminations euro million 86 57 -
Profit/loss before tax euro million -198 641
Automobiles euro million -471 539 -
Motorcycles euro million 26 34 -23.5
Financial Services euro million 72 84 -14.3
Other Entities euro million 24 -5 -
Eliminations euro million 151 -11 -
Income taxes euro million 46 -154 -
Net profit/loss euro million -152 487 -
Earnings per share euro -0.23/-0.23 0.74/0.74 -
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