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Good performance in first half of 2010
The evident market recovery since the beginning of the year continued to gain pace during the second quarter 2010. We performed exceedingly well on the international markets with a range of new and attractive models. Compared to the same period last year, sales volumes in the Automobiles and Motorcycles segments rose sharply and the business volume of the Financial Services segment expanded.
Dynamic growth for all brands
The BMW Group maintained its leading position on the international car markets in the second quarter 2010 with sharply rising sales volume figures. New models, dynamic growth in China and generally improved business conditions on international automobile markets resulted in a very strong sales volume performance, both in the second quarter and over the six-month period. With 380,412 BMW, MINI and Rolls-Royce cars sold in the second quarter 2010, we delivered 12.5 % more vehicles to customers than in the same period last year. The total number of vehicles sold in the six-month period rose by 13.1 % to 696,026 units.
Our Motorcycles segment performed extremely well, despite unfavourable market conditions. 36,175 BMW motorcycles were sold during the second quarter, 21.6 % more than one year earlier. Sales volume for the first six months of the year was up by 21.4 % to 57,015 units.
Our Financial Services segment continued to perform successfully. The number of lease and financing contracts in place with dealers and retail customers rose by 3.0 % compared to the end of the second quarter 2009 and totalled 3,119,340 contracts at 30 June 2010.
Revenues and earnings well up
Second-quarter Group revenues rose by 18.3 % to euro 15,348 million, bringing the six-month revenue figure up to euro 27,791 million, or 13.5 % ahead of the previous year. Adjusted for exchange rate factors, Group revenues were up by 10.7 %.
Our strong position on international car markets and highly profitable business in our Financial Services segment also had a positive impact on our performance. Earnings before financial result (EBIT) for the second quarter amounted to euro 1,717 million (2009: euro 169 million). The six-month EBIT also jumped sharply, finishing at euro 2,166 million (2009: euro 114 million).
The profit before tax also benefited from this strong performance and amounted to euro 1,299 million for the second quarter 2010 (2009: euro 151 million). The profit before tax for the six-month period was euro 1,807 million (2009: loss before tax of euro 47 million).
Group net profit for the second quarter totalled euro 834 million (2009: euro 121 million) and euro 1,158 million (2009: loss of euro 31 million) for the six-month period.
BMW Group's outlook for the remainder of 2010
Following the successful market launches made in the first six months of the year, we will continue the process of renewal our range of models. The new 5 Series Sedan is now available worldwide. The new BMW 5 Series Touring, as well as the extended-wheelbase version of the BMW 5 Series Sedan for the Chinese market, will be launched mid-September. Alongside the new 5 Series Sedan, which started well, the new additions will significantly strengthen the competitiveness of our model range. The second generation of the successful BMW X3 Sports Activity Vehicle will go on sale from autumn onwards. The MINI Countryman will be added to the MINI range in September. On a similar time scale, the model revisions of the MINI, the MINI Clubman and the MINI Convertible will also become available. The Rolls-Royce Ghost has also performed extremely well in its first year and is now available worldwide. These developments will generate further momentum for profitable growth during the second half of 2010. We also forecast that sales volumes in China will be significantly higher than in the previous year. Sales in the USA are also expected to pick up.
We remain on track to realign the BMW Group through the rigorous implementation of our Strategy Number ONE. This also includes the efficient use of resources, which we see as a key aspect of doing business successfully. Measures taken - such as our initiatives to reduce the cost of materials - are already having a beneficial effect.
As part of the forward-looking "project i", our first series-built electrically driven vehicle designed for the world's major metropolitan regions, will be launched in 2013. The innovative zero-emission Megacity Vehicle will set new standards in terms of sustainability. We also remain committed to the use of state-of-the-art technologies to reduce the fuel consumption and emission levels of combustion engines. These various factors put us in a good position to take advantage of any new opportunities that present themselves in a changing environment, both in the medium term and the long term.
In view of the improved business outlook, we forecast a significant increase in full-year group profit before tax compared to the previous year. The level of earnings now expected represents an important step towards achieving the targets set down in our Strategy Number ONE. Economic risks will nevertheless persist during the second half of 2010. For this reason, the forecast is given on the proviso that macro-economic conditions continue to improve and stabilise.
Automobiles segment
The BMW Group will confirm its position as the world's leading premium car manufacturer over the remainder of the year. In addition to the general recovery of markets worldwide, strong demand for our new models such as the BMW 5 Series and the BMW X1 is having a positive impact on business. For this reason the car sales volume is set to rise by some 10 % to more than 1.4 million units for the full-year. We also forecast a full-year EBIT margin of more than 5 % for the Automobiles segment.
Motorcycles segment
Although the market as whole is contracting, we forecast that sales of BMW motorcycles will increase in 2010. Our successful entry into the supersport motorcycle segment will continue to have a positive impact on performance and create impetus for the revenues and earnings of the Motorcycles segment.
Financial Services segment
The improvement in the general economic environment also has a beneficial impact on the performance of the Financial Services segment. The segment risk profile continued to settle down during the first half of the year. Despite uncertainties regarding the duration and scale of economic recovery, we forecast that residual values will remain more or less stable during the second half of the year. Credit business risks are also likely to continue to return to normal levels.
The situation on North America's used car markets is set to ease further. Continental Europe, and the German market in particular, should see further stabilisation. The steady economic recovery will also contribute to a slight decrease in credit risk for leasing and financing business on the one hand and dealer / importer financing business on the other. The Financial Services segment will also benefit from more favourable refinancing conditions.
As a result of attractive market conditions and the less acute risk situation, pre-tax earnings of the Financial Services segment are forecast to improve significantly, with a target return on equity of over 18 %.
Profitability targets for 2012 confirmed
The BMW Group will continue to pursue the strategic course set in conjunction with Strategy Number ONE. This also includes the profitability targets previously reported on. 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 Automobiles segment.
The full Quarterly Report to 30 June 2010 is available for download on this webpage. As the world's most sustainable carmaker, the BMW Group has decided not to provide a printed copy of the quarterly report.
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