| |
|
The performance of the BMW Group in the first quarter 2009 was significantly impaired by the consequences of the international economic and financial crisis. In addition to sharp drops in sales volume on major markets, the BMW Group’s reported figures were impacted by continued high refinancing costs.
Car sales volume as expected down on previous year
As a result of the global financial and economic crisis, the number of cars sold by the BMW Group during the first quarter 2009 declined as predicted well short of the previous year’s first-quarter performance. The total number of BMW, MINI and Rolls-Royce brand cars sold in the first three months of 2009 fell by 21.2 % to 277,264 units.
Increasingly adverse conditions also took their toll on the Group’s motorcycles business. The BMW Group sold 17,232 BMW motorcycles worldwide during the period from January to March 2009
(– 18.1 %).
At the end of the period under report, the Financial Services segment was managing a portfolio of 3,007,406 lease and financing contracts with retail customers and dealers, up 11.3 % on the previous year’s figure.
Revenues and earnings badly hit by economic crisis
First-quarter revenues also declined as a result of the huge contraction on the major automobile markets. At euro 11,509 million, revenues were 13.4 % down on the same quarter last year. Adjusted for exchange rate factors, revenues for the three-month period would have decreased by 14.6 %.
The negative impact of the current economic situation is also reflected in the BMW Group’s earnings performance. The first-quarter loss before financial result of euro 55 million and the first-quarter loss before tax of euro 198 million were therefore both down on the previous year. The BMW Group reports a loss of euro 152 million for the period.
BMW Group’s outlook for the remainder of 2009
The BMW Group expects difficult business conditions to continue throughout the remainder of the financial year 2009. Increasing numbers of corporate insolvencies and rising unemployment in the wake of the economic and financial crisis are causing a great deal of uncertainty as far as future economic developments are concerned. Numerous major car markets are therefore currently bracing themselves for double-digit volume decreases. At present, it is not possible to predict when the crisis situation will ease on a sustainable basis. The unprecedented magnitude of economic downturn and the uncertainty that currently prevails mean that it is still not possible to make reliable predictions for the remainder of the year 2009.
The BMW Group took early measures to allow for changing business conditions. The first indications in 2008 triggered early adjustments to risk provisions for leased cars and for allowances on loan receivables. Based on current assessments, the BMW Group has recognised a sufficient level of risk provision in its balance sheet for additional risks.
These measures now give the BMW Group additional scope to extend its leading competitive position during the current economic and financial crisis. As a result of the continuing uncertainties on international financial markets, the BMW Group is deliberately strengthening its liquidity base. Through the coordinated use of various refinancing instruments, the BMW Group has demonstrated that the supply of liquidity is ensured at all times, even in difficult market conditions.
On the sales side, positive impetus is being provided by numerous new models being introduced to the markets in 2009: In spring the new BMW 7 Series (together with the extended wheelbase version) will be launched on the world markets. The new 7 Series is receiving a positive response from customers and media alike. The new MINI Convertible has been available since March and the new BMW Z4 will be handed over to the first customers in May. Over the course of the rest of the year, the BMW Group will be making additions to the X-model family and introducing the BMW X1. The BMW Group will also expand its range of products in the second half of the year when it launches the BMW 5 Series Gran Turismo, the concept study of which was presented at the Geneva Motor Show.
The BMW Group is responding to the challenges it faces with a range of sales strategies. This also includes tailoring volumes to suit demand in individual sales markets. In view of the current adverse conditions on the car markets, flexible production structures represent an important competitive advantage for the BMW Group. Production volumes were brought into line with falling demand at an early stage. The customer-oriented sales and production system enables capacities and sales processes to be adjusted flexibly and at short notice.
The BMW Group will benefit from numerous efficiency improvements in 2009, already reflected in lower personnel expenses. The profitability programme is being implemented on schedule and proving to be a useful tool in managing fixed costs and working capital. The BMW Group remains committed to continual improvements in efficiency and operating performance.
In addition to these initiatives to improve efficiency and profitability, the BMW Group continues to invest in the future and thus build on its strong competitive position. As well as continuing to work on the enhancement of highly efficient combustion engines, this visionary strategy also includes the development of innovative mobility concepts in conjunction with project i. The BMW Group is convinced that new and forward-looking products and technologies are important factors to take best advantage of the opportunities created by changing markets in both the medium and long term.
In the light of the current set of highly unfavourable external factors, the BMW Group does not expect to achieve the sales volume level recorded in 2008. However, the prevailing uncertainties make it difficult to forecast sales volumes at present. The BMW Group is therefore working with various market and sales volume performance scenarios and preparing appropriate measures to take account of future developments.
In the motorcycles line of business, the BMW Group will continue to pursue its new model initiative throughout the rest of the year in an effort to counter consumer spending reticence caused by the financial crisis. Sales of motorcycles are nevertheless expected to be lower than in the previous year.
Conditions for financial services business will again be exposed to a high degree of volatility in 2009. The availability of attractive credit and lease products for potential customers of the BMW Group will remain the basis for sustainable growth in segment business volumes. The same applies for the financing requirements of dealers of the BMW Group’s three core brands.
Based on current assessments, the BMW Group has recognised sufficient levels of provision in the balance sheet for existing risks. If the situation on used car markets deteriorates over the course of 2009, further losses on the sale of vehicles coming out of leases cannot be ruled out. Given the current economic situation, it seems unlikely that the risk profile of the retail customer and dealer financing lines of business will improve in the short term.
Profitability targets for 2012 remain in place
In the face of the business conditions described above, it is not currently possible to make further quantitative assertions regarding earnings.
The profitability targets for 2012 set in conjunction with Strategy Number ONE remain in place. The BMW Group will remain on its strategic course by speeding up costcutting and efficiency improvement measures. The plan is to achieve a return on capital employed (ROCE) in excess of 26 % and a return on sales of between 8 % and 10 % in the Automobiles segment.
In view of the volatile climate, Strategy Number ONE is proving to be an appropriate and forward-looking entrepreneurial decision to redirect the BMW Group. A great deal of preliminary work was carried out in conjunction with the original development of the strategy. Now, in the midst of difficult business conditions, this groundwork is proving to be an important instrument for managing the business in the short-term. The initiatives that emerged from Strategy Number ONE are an important part of coping with the crisis and will significantly improve the BMW Group’s ability to capitalise on opportunities once the crisis is over. The value-added approach adopted by the BMW Group is seen as a key factor in achieving ambitious targets in the future.
|
|
|
