BMW Group firmly on course and confirms targets for 2019

The BMW Group’s operations remained well on course during the second quarter, despite a challenging market environment. In line with forecast, the Group achieved an improvement in both earnings and profitability compared to the first quarter and confirms its targets for the financial year 2019.

Against the prevailing market trend, in the first half of the year the BMW Group delivered more vehicles to customers than ever before, thereby gaining segment share in key markets. With its attractive, rejuvenated range of models, the BMW brand finished with a clear lead in the premium segment in June.

“At the six-month stage, we are on course to meet our targets for the full year. We are inspiring customers with new products and once again succeeded in increasing automobile deliveries to a new record level in the first half of the year,” said Harald Krüger, Chairman of the Board of Management of BMW AG, on Thursday in Munich. “We deliver what we promise – even in fast-changing times. We consistently leverage new technologies to successfully master the enormous challenges facing our industry during this current phase of transformation.”

E-mobility continues to gather pace

As announced, the BMW Group is again significantly upping the pace when it comes to electric mobility: The 25 electrified models initially announced for 2025 will now be available in 2023, two years earlier than originally planned. Over half of these 25 models will be fully electric. The basis for these models are flexible vehicle architectures for all-electric vehicles, plug-in hybrids and conventional combustion-engine models as well as a highly flexible production system that enables the company to respond swiftly to fluctuating market requirements. By 2021, deliveries of electrified vehicles are predicted to double compared to 2019. The BMW Group then expects to see a steep growth curve up to 2025, with the volume of electrified vehicles delivered forecast to grow on average by more than 30% per year.

As a pioneer in the field of electric mobility, the BMW Group is already a leading supplier of electrified vehicles. By the end of 2019, the company plans to have more than half a million vehicles with either all-electric or plug-in hybrid drivetrains on the road. In two years’ time, the BMW Group will be offering five all-electric series production vehicles. In addition to the BMW i3 â€“ demand for which increased by more than 20% in the first six months of 2019 – production of the all-electric MINI* will commence at the Oxford plant in November. When the vehicle was presented in July, more than 40,000 customers expressed their keen interest in the MINI ELECTRIC*. In 2020, production of the all-electric BMW iX3 will begin in Shenyang, China, followed in 2021 by the BMW iNEXT, which will be manufactured at the BMW Group’s Dingolfing plant. In the same year, the BMW i4 will go into series production at the Munich plant.

BMW Group flexibly positioned in terms of drivetrain technologies

Regulatory and customer requirements can differ significantly from one market to the next. Alternative drivetrain technologies are also being introduced at varying speeds in different regions. Therefore the BMW Group is focusing on the following: “We are consistently expanding e-mobility with all-electric vehicles and plug-in hybrids and continuing to optimise our already economical combustion engines. Moreover, we are also investing in new technologies such as the fuel cell,” commented Krüger.

On this road to the future of mobility, substantial upfront expenditure was again necessary during the period under report and, as expected, has again exceeded the high level seen in 2018. Second-quarter research and development expenses totalled € 1,400 million, 5.9% more than the previous year. Investments in property, plant and equipment climbed by more than one third to € 1,176 million (2018: € 846 million; +39.0%), mainly due to the ongoing new model initiative and the modernisation of our plant structures, making them more flexible. The growing proportion of electrified vehicles is also contributing to higher production costs. Unfavourable exchange rate factors and rising prices for raw materials had a dampening impact on earnings between April and June and competition also remained fierce on many markets.

Second-quarter Group revenues up slightly

In the second quarter 2019, the BMW Group set a new record for vehicle sales, comprising 647,504 BMW, MINI and Rolls-Royce premium vehicles (2018: 637,878 units; +1.5%) delivered. This positive development was largely influenced by the contribution of the BMW Brilliance Automotive joint venture in China. Group revenues for the three-month period rose to € 25,715 million (2018: € 24,993; +2.9%). Affected by upfront expenditure for future mobility, profit before financial result (EBIT) amounting to € 2,201 million was lower than in the previous year (2018: € 2,739 million; -19.6%). Group profit before tax (EBT) amounted to € 2,053 million (2018: € 2,866 million; -28.4%). The second-quarter EBT margin for the Group came in at 8.0% (2018: 11.5%). Group net profit amounted to € 1,480 million (2018: € 2,076 million; -28.7%).

During the first six months of 2019, the BMW Group delivered a total of 1,252,837 vehicles to customers (2018: 1,242,507 units; +0.8%). At € 48,177 million, Group revenues were slightly up on the previous year (2018: € 47,658 million; +1.1%). Earnings in the first half of the financial year 2019 were impacted by a provision of approximately € 1.4 billion recognised in the first quarter in connection with the Statement of Objections received from the EU Commission relating to ongoing antitrust proceedings. Accordingly, at € 2,790 million, profit before financial result (EBIT) reported for the six-month period was significantly lower than in the previous year (2018: € 5,446 million; -48.8%). Group profit before tax (EBT) amounted to € 2,815 million (2018: € 6,005 million; -53.1%), corresponding to an EBT margin of 5.8% (2018: 12.6%). The BMW Group reports six-month Group net profit of € 2,068 million (2018: € 4,358 million; -52.5%).

“In the second quarter, despite high upfront expenditure to drive tomorrow’s mobility, we proved our operating efficiency by achieving a very solid level of free cash flow,” pointed out Nicolas Peter, Member of the Board of Management of BMW AG, Finance. “The BMW Group sets itself ambitious targets, even in challenging times: We want to grow sustainably and profitably and shape the transformation of our industry, fully leveraging our own underlying strength.”

In order to do so, the BMW Group is committed to implementing even faster processes and leaner structures, resulting in greater efficiency. The BMW Group thus intends to secure the financial headroom needed to be able to decisively shape individual premium mobility on a sustainable basis over the coming decade . Among other advantages, the Performance > NEXT initiative will shorten development times for new vehicle models by up to one third. On the product side, up to 50% of today’s drivetrain variants will be eliminated from 2021 onwards, in the transition to creating enhanced flexible vehicle architectures. Moreover, the model portfolio is regularly assessed with a view to finding additional potential ways of reducing complexity. Potential for greater synergy and efficiency in indirect purchasing as well as material and production costs is also being leveraged throughout the Group. By the end of 2022, the Group intends to save more than 12 billion euros through efficiency-boosting measures.