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BMW Group sales volume up on last year.
As expected, the BMW Group’s sales volume for the first quarter 2008 was up on the previous year. In total, 351,787 BMW, MINI and Rolls-Royce brand cars were sold worldwide during the first three months of 2008. The BMW Group has therefore achieved a new first-quarter sales volume record in the face of difficult business conditions.
In its motorcycle business, the BMW Group was unable to match the previous year’s high first-quarter sales figure. 21,046 BMW motorcycles were sold during the first three months of 2008, 8.6 % fewer than one year earlier due mainly to model life-cycle factors.
The Financial Services segment was able to expand the volume of business generated in the period under report. At the end of the first quarter 2008, a total of 2,701,860 lease and financing contracts were in place with dealers and retail customers, up 15.6 % compared to one year earlier.
Reported earnings affected by external factors.
Group revenues rose by 11.2 % to euro 13,285 million, reflecting the sales volume increase recorded in the first quarter 2008. The US dollar exchange rate against the euro held down the increase in revenues. Adjusted for exchange rate factors, Group revenues rose by 16.6 %.
The financial crisis, rising raw material prices and the further weakening of the US dollar all had a negative impact on first-quarter Group earnings. The profit before financial result amounted to euro 827 million, 9.3 % down on the same quarter last year. External factors also affected profit before tax. At euro 641 million, the result was 24.8 % lower than the previous year’s figure. The first-quarter net profit of the BMW Group fell by 17.0 % to euro 487 million.
BMW Group remains committed to its targets for 2008.
The BMW Group considers that the impact of the financial crisis in the USA could well pose one of the main challenges for business in 2008. At present, however, it is extremely difficult to predict how the financial crisis is likely to develop. Based on its current assessment of the market, the BMW Group has taken the changed risk situation sufficiently into account in the form of balance sheet risk provisions and additional measures to stabilise the situation.
In reaching its assessment, the BMW Group is working on the basis that the current impact of the financial crisis reflects a certain amount of over-reaction. If, however, the situation on the car markets – particularly for pre-owned cars – does not ease over the course of 2008, there is a risk that this could have a negative impact on the BMW Group’s earnings for the year. In this context, further developments on the markets are being closely watched with a view to amending the level of risk provision where necessary.
Currency fluctuations (above all the continuing weakness of the US dollar) and rising raw material prices are two further external factors that continue to have an adverse impact on earnings.
Despite this challenging business environment, the BMW Group aims to continue its successful business performance in the financial year 2008. The intention is to counter the effect of the adverse external factors described above by achieving stable growth in the operating segments and continuously implementing efficiency and productivity improvements.
The BMW Group believes that through its rigorous focus on the premium segment it will be able to retain its position as the world’s leading premium manufacturer. New high sales volume levels for all three brands and a strong market position in all parts of the world will provide the basis for profitable growth in 2008. Purposeful expansion of the product range and determined engagement on new markets will also help to achieve these objectives.
Robust performance expected in all segments.
For the purpose of its outlook for the financial year 2008, the BMW Group is working on the basis that the situation that has arisen on the automobile and financial markets in the wake of the financial crisis will improve over the course of the year. Adverse external factors relating to unfavourable exchange rates and rising raw material prices will again affect the Automobiles segment’s reported earnings in 2008. Moreover, the BMW Group’s automobile business will also be negatively affected by the impact of the financial crisis, particularly in the area of pre-owned car sales in North America. Nevertheless, the BMW Group aims to improve the Automobile segment’s earnings in a year-on-year comparison. The continuing high demand for vehicles manufactured by the BMW Group provides a stable foundation for achieving this aim. In addition, efficiency is continuously being improved.
The BMW Group’s Motorcycles segment is continuing with its new model initiative in 2008. It is therefore forecasted that motorcycle sales for the full year will be up on the previous year. In Europe, despite some adverse developments on markets such as Germany, Italy and Spain, sales volume is still forecasted to rise sharply overall. Motorcycle sales in the USA should remain roughly at the previous year’s level despite the uncertain economic situation. In spite of the difficult conditions, the Motorcycles segment is aiming to achieve slightly higher earnings than in 2007.
With due regard to the uncertainties prevailing on the financial markets, the BMW Group’s Financial Services segment is again forecasted to make an important contribution to the overall performance for the financial year 2008. This will be achieved through organic growth in the segment’s established lines of business and targeted regional expansion, especially in the markets of Eastern Europe and Asia. The Financial Services segment’s comprehensive range of service-oriented products for dealers and retail customers and the high quality of customer care are important competitive factors that will enable the BMW Group to enhance its strong market position. These factors give good reason to believe that earnings of the Financial Services segment will develop robustly in 2008, notwithstanding the adverse impact of the financial crisis described above.
Excluding the exceptional gain on the Rolls-Royce exchangeable bond recognised in 2007, the BMW Group aims to achieve higher pre-tax group earnings in 2008 than one year earlier. The new strategic direction adopted by the BMW Group will also bear its first fruit and contribute towards a better quality of earnings.
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