BMW Group increases deliveries, revenues and earnings

The BMW Group recorded growth in deliveries, revenues and earnings in the third quarter and is therefore well on its way to achieving its targets for 2019. Group net profit increased at a double-digit percentage rate, helped to some extent by a base effect from the previous year’s reported figures. Moreover, profitability has continued to improve over the course of the nine-month period. To compensate for the high upfront expenditure on future-oriented technologies, the BMW Group is working hard on continually improving efficiency.

“At the nine-month stage, we are well on our way to achieving our targets for the year as a whole,” said Oliver Zipse, Chairman of the Board of Management of BMW AG, in Munich on Wednesday. “However, we are looking further into the future, having recognised that far-reaching technological transformation is a great opportunity for the BMW Group. I am convinced that our business model will only benefit from this. The vehicle of the future, with all its integrated digital functions, is a high-tech product of a complexity that is still underestimated.”

The BMW Group sees enormous potential for the future role of the automobile on the back of these technological developments: “The decisive transformation is taking place inside the vehicle. We are bringing technological solutions to the road that ensure the automobile continues to meet the expectations and needs of society going forward. Areas of key focus include digital connectivity and creating environmentally compatible mobility,” said Zipse.

Significant expansion in e-mobility – increase in upfront expenditure

The BMW Group is significantly expanding its range of e-mobility products. By 2023, the company will have 25 electrified models on the roads – more than half of which will be all-electric. The key to implementation is highly flexible vehicle architectures and an equally agile production system that enables a model to be manufactured as an all-electric, a plug-in hybrid or a combustion engine version to ideally meet demand in each relevant market segment. By 2021, demand for electrified vehicles is likely to double compared to 2019. The BMW Group then expects to see a steep growth curve up to 2025, with sales of electrified vehicles growing on average by more than 30% annually.

As a pioneer in e-mobility, the BMW Group is already a leading supplier of electrified vehicles. By the end of 2021, the company aims to have more than a million all-electric or plug-in hybrids on the roads worldwide.

All-electric vehicles planned with increased frequency

At that stage, the BMW Group will offer five all-electric series-built vehicles. Alongside the BMW i3, demand for which has increased by approximately 20% so far this year, November will also see production of the all-electric MINI* begin at the Oxford plant (UK). Over 78,000 customers have meanwhile expressed a keen interest in the MINI ELECTRIC*. In 2020, production of the all-electric BMW iX3 will begin at the Shenyang plant (China), followed in 2021 by the BMW iNEXT, which will be manufactured at the Dingolfing plant (Germany). The BMW i4 is also due to go into series production at the Munich plant the same year.

In paving the way for the future of mobility, a substantial level of upfront expenditure was again required during the period under report. Research and development expenses for the nine-month period totalled € 4,247 million, 9.4% up on the previous year (€ 3,881 million). The growing proportion of electrified vehicles is also driving up costs. Exchange rate factors and rising prices for raw materials also put downward pressure on earnings. Capital expenditure for property, plant and equipment and other intangible assets during the period from January to September increased by 14.5% to € 3,308 million (2018: € 2,889 million), mainly in connection with continuing the new model initiative as well as the modernisation and flexibilisation of existing plant structures.

Revenues and net profit significantly up in third quarter

The BMW Group set a new record for third-quarter deliveries with its highly attractive and rejuvenated model range. In total, 613,361 units of the Group’s BMW, MINI and Rolls-Royce premium brand vehicles were delivered during the three-month period (2018: 592,303; +3.6%). The BMW Brilliance Automotive joint venture in China continued to play a major role in this positive development. Group revenues rose to € 26,667 million (2018: € 24,715 million; +7.9%). Profit before financial result (EBIT) improved by around one third to € 2,289 million (2018: € 1,722 million; +32.9%). In the third quarter of the previous financial year, performance had been significantly dampened by supply distortions and unexpectedly intense competition due to the changeover to WLTP regulations as well as higher expenditure for goodwill and warranty measures. All of these factors had contributed to a significant decline in profit before financial result in the third quarter, especially in the Automotive segment.

In 2019, third-quarter Group profit before tax (EBT) increased significantly to € 2,248 million (2018: € 1,822 million; +23.4%). The EBT margin came in at 8.4% (2018: 7.4%), while Group net profit improved significantly to € 1,546 million (2018: € 1,387 million; +11.5%).

During the first nine months of 2019, the BMW Group delivered a total of 1,866,198 units to customers (2018: 1,834,810 units; +1.7%). Group revenues increased slightly year-on-year to € 74,844 million (2018: € 72,373 million; +3.4%). Earnings for the nine-month period 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. However, the BMW Group has made it clear that if necessary it will contest the EU Commission’s allegations with all the legal means at its disposal. Profit before financial result (EBIT) reported for the nine-month period amounted to € 5,079 million, significantly lower than in the previous year (2018: € 7,168 million; -29.1%). Group profit before tax (EBT) amounted to € 5,063 million (2018: € 7,827 million; -35.3%), corresponding to an EBT margin of 6.8% (2018: 10.8%). The BMW Group reported nine-month Group net profit of € 3,614 million (2018: € 5,745 million; -37.1%).

“The efficiency-boosting measures we have implemented are bearing fruit: we are performing at a high level in comparison with our competitors and considering the difficult conditions our business is facing. Nonetheless, we aspire to achieve more than that,” said Nicolas Peter, Member of the Board of Management of BMW AG, Finance. “Upfront expenditure in the technologies of the future such as e-mobility needs to be financed. That is why we continue to work systematically on those matters that lie in our own hands and maintain a clear focus on performance and efficiency.”

A key aspect in achieving these aims for the BMW Group is to develop even faster digital processes and leaner structures. The Performance > NEXT initiative is expected to generate efficiencies in excess of 12 billion euros by the end of 2022. Among other contributing factors, development times for new vehicle models will be reduced by as much as one third. On the product side, up to 50% of traditional drivetrain variants will be eliminated from 2021 onwards in the transition to creating enhanced flexible vehicle architectures – in favour of additional electrified drivetrains. It is in this area that the full impact of these measures will come into effect particularly in the years after 2022. Moreover, the model portfolio is regularly assessed with a view to finding additional ways of reducing complexity. Potential for greater synergy and efficiency in indirect purchasing as well as in terms of material and production costs is also being leveraged throughout the Group. Furthermore, the BMW Group is strengthening its top line performance with new models – especially in the high-margin segments. The company aims to double its sales volume in the luxury segment from 2018 to 2020.