Statement and Presentation by Dr. Norbert Reithofer, Chairman of the
Board of Management of BMW AG, Annual Accounts Press Conference 2013
Ladies and Gentlemen!
We have a clear vision for the years leading up to 2020: To be the
leading provider of premium products and premium services for
We are already the top-selling premium automaker worldwide. For us,
however, leading the premium segment is more than volume leadership.
We set standards for products, technologies and services,
as well as manufacturing.
We bring innovations onto the market.
We create new segments and visionary design.
We turn our customers into fans.
We are shaping individual mobility of the future.
To achieve this vision, we have been implementing our Strategy Number
ONE within the company since 2007. This demands persistence, strength
and consistency. As a part of our Strategy Number ONE, we set three
major milestones for the years: 2012, 2016 and 2020. We successfully
completed the first third of our strategy in 2012. We achieved all of
our interim targets. But, we still have two stages to go. We are now
focusing on the next step through to 2016. This will set the
foundation for 2020.
This is also the philosophy behind the latest model from BMW, which we
are presenting to you today: The BMW 3 Series Gran Turismo. It
combines the dynamic performance of a sedan with the functionality of
a Touring model. This model further enhances the already highly
desirable range of BMW 3 Series cars. In fact, in 2012, one in every
four BMWs sold was a 3 Series. What's more, the 3 Series is the most
successful series in the premium segment overall. The new Gran Turismo
shows once again what unites us all at the BMW Group: The passion for
Our common goal is to future-proof individual mobility.
Now, let me share with you where we currently stand and where we will
focus going forward. I will concentrate on the following points:
What did we achieve in 2012?
How do things stand five years into our Strategy Number ONE?
What can our customers look forward to in 2013?
How will we approach the next stage of the strategy in 2016?
First: What did we achieve in the business year 2012?
Our commercial success has a firm foundation: the desirability of our
products and the strength of our brands. BMW is currently ranked 14th
in Fortune Magazine's list of the "World's Most Admired
Companies". We are the only automaker and the only European
company listed among the Top 15 of the Top 500 Most Admired companies
in the world. No premium manufacturer in our industry has ever sold
more vehicles in a single year than we did in 2012.
Here are the sales figures in detail:
BMW Group: over 1.84 million cars.
BMW brand: 1.54 million cars.
MINI brand: over 301,000 cars.
Rolls-Royce brand: Exactly 3,575 cars.
Motorcycles: Over 117,000 BMW and Husqvarna motorcycles.
These are all new records. This positive trend in our sales figures is
reflected in the Group's key financials for 2012:
Revenues: EUR 76.8 billion
Profit before tax: EUR 7.8 billion.
Net profit: EUR 5.1 billion.
EBIT margin for the Automobile segment of 10.9 percent.
Our financial services business contributed over EUR 1.5 billion to
the Group result.
So one thing is clear: We set new records in terms of revenues,
pre-tax profit and net profit in 2012. This gives us the financial
leeway that we need to make the right decisions for the future. In
2012, we spent EUR 3.9 billion on R&D. In addition, the volume of
investment rose to EUR 5.2 billion. This is more than ever before.
Investing early secures our future growth.
The automotive industry is undergoing a transformation an
"Iconic Change", as we call it. It will be up to the
customer to determine which technologies will succeed and which
services will be in demand.
One thing is clear: We want to drive and shape the technological
transformation to sustainable mobility. This will require all of our
First, to develop new models and appealing mobility services,
And second, to continue improving our structures and processes
to further strengthen how we will work together.
What does this mean? In the coming years we will invest:
In both new and familiar technologies
In existing and new locations
In our brands and sub-brands
In established and aspiring markets
In new services and sales structures
And in ensuring our managers and associates have the skills needed
Key to all of these plans: We are making these investments from our
own resources. Acting with an eye on the horizon is the best guarantee
for making the future we envision become reality.
This is also confirmed by the positive movement in BMW ordinary
BMW ordinary shares rose by over 40 percent during 2012 compared to
the closing price for the previous year. To put this in perspective:
The DAX gained about 29 percent during the same period. BMW shares
also achieved a new record high of EUR 74 in 2012. This figure has
already been surpassed this year. As is the standard practice in the
BMW Group, both our shareholders and our associates benefit from our
positive business performance through our employee share award plan.
The Executive Board and Supervisory Board will therefore propose a
dividend of EUR 2.50 per ordinary share and EUR 2.52 per preferential
share at this year's Annual General Meeting. This is the highest
dividend we have ever paid.
All permanent staff at German locations will receive a profit-related
bonus for their part in this 2012 result. It remains one of the
highest in Germany, compared across sectors and industries. Our
results for 2012 stem from strong team performance. On behalf of the
Executive Board, I would like to thank all of our associates for their
efforts during 2012.
Our associates are our most important success factor, both now and in
the future. This is why we increased the number of vocational trainees
in Germany by about ten percent last year. 1,376 young people began
their professional careers with the BMW Group at the start of the 2012
training year. The total number of trainees at the end of the year was
Premium is beyond mainstream. Premium means always raising the bar.
That also means making bold, counter-cyclical decisions. This is not
always easy. But there can be no progress without this sort of
decision and action.
There are many examples of this within the BMW Group.
We have often gone against the trend building new plants. Think of
Dingolfing in the middle of the Oil Crisis in the early 1970s, or
Leipzig in 2005, when many people were doubting whether Germany could
still be a competitive manufacturing location. In the mid-1990s we
opened our plant in Spartanburg, when other automakers from the US
were withdrawing. In China, our plant in Shenyang began production in
2003, when we were selling only about 18,000 cars there. In 2012 we
produced over 320,000. Today, these plants are key pillars of our
global production network.
We focused on production that made most efficient use of resources at
an early stage. As long ago as the early 1970s, we engaged the first
environmental officer in the automotive industry. Since then,
sustainable action has been firmly established as part of our
business. In 2012 the BMW Group was listed as a sector leader in the
Dow Jones Sustainability Index for the eighth time in a row. Our
position as a recognized trailblazer in the area of clean production
is a focal point in our current Annual Report.
We created the premium Sports Activity Vehicle segment. Until then
there were no all wheel drive cars on the roads that were so sporty.
From the late 1990s to date, we have sold over 2.7 million BMW X
models. Next year we will expand our offering in this segment with the
In 2007, we launched our Strategy Number ONE as a clear roadmap to
2020. The goal was and still is to secure the future profitability
of the BMW Group. For 2012 we wanted to achieve an EBIT margin of 8 to
10 percent in the Automobile segment.
This brings me to the second key point: How do things stand one-third
of the way into the implementation of Strategy Number ONE?
There are four pillars to our strategy:
Shaping the future
Access to technologies and customers.
We have implemented measures in all four pillars in the past five
What did we achieve between 2007 and 2012?
We have become more profitable. In terms of the EBIT margin of our
Automobile segment, we were even over the corridor of the 8 to
10-percent range that we defined. We doubled our profit before tax in
2012 compared to 2007.
The price of BMW ordinary shares increased by over 70 percent between
year-end 2007 and year-end 2012. During the same period, the DAX share
index lost 5.6 percent in value.
We have consistently moved forward with our Efficient Dynamics
technology program. By year-end 2012 our fleet was made up of 73
models with maximum CO2 emissions of 140 grams per kilometer.
In 2007 it was 27 models. Currently, we have 35 models that even fall
below the 120 grams CO2 per kilometer level. Our core BMW 3, 5 and 7
Series are also available as full hybrid versions. There will be
further improvements in Efficient Dynamics, too: by the year 2020, we
want to reduce the CO2 emissions of our fleet by at least another 25
percent from their 2008 level. Our leading position in the field of
sustainability is also the reason why we were the official automobile
supplier to the Summer Olympics in London. Among our highly efficient
fleet were a number of MINI E and BMW ActiveE models.
We have invested as much in training and professional development
program for our employees as we have in Efficient Dynamics around
EUR 1.2 billion in the last five years.
We have ensured our associates are qualified for the technological
transformation, even during the years of financial crisis. In many
surveys, the BMW Group maintains its position as one of the most
Through the end of 2012 we expanded our global production network to
29 locations in 14 countries. In 2007 we had 23 production facilities
in 12 countries. The latest example is our new Tiexi plant in
Shenyang, which we run together with our Joint Venture Partner
Brilliance. For us, planning a new location means setting new
standards. Tiexi is the most advanced car factory in China and one of
the most sustainable in the world.
As you can see: We achieved all of the interim targets in our strategy
for 2012 and in some cases exceeded them. Compared to when Strategy
Number ONE began, the BMW Group is now a stronger, more global and
more future-proofed company.
Even in the context of changed external conditions, our strategy has
At the time of the global financial and economic crisis in 2008 and
2009, the BMW Group achieved a profit and paid a dividend.
In 2010 and 2011 we brought the company back on the road towards
success. We benefited from the impetus provided by positive economic
developments in the early part of this period.
In 2012 we continued our success story despite a challenging and
This brings me to the third key point:
What can our customers look forward to in 2013?
This year we will offer our customers new models from all three car
brands and BMW motorcycles. The BMW Z4 will be updated, as well as the
BMW 5 Series with its sedan, Touring and Gran Turismo models.
The following will be new to the market:
The BMW 3 Series Gran Turismo.
The BMW M6 Gran Coupé.
and the new MINI Paceman.
Under the Rolls-Royce banner, the Wraith will be the most dynamic and
powerful Rolls Royce ever.
There will also be a BMW 4 Series model for the first time. We have
shown the BMW 4 Series Concept Coupé in Detroit and the media response
has been very positive.
We intend for our successful course to continue this year as well.
We aim to achieve a new sales record at Group level.
The Group profit before tax should be similar to last year.
However, we are all aware that: The global financial environment is
both uncertain and volatile. Our business performance is exposed to
High public debt levels.
The continuing recession in the EU.
China's flattening growth.
Uneven development in the automobile markets.
And political instability in numerous regions around the world.
Having a clear strategy to 2020 leads us to look to the future with
We will break new ground in 2013 by putting electric cars into series
production. Already, the first Pre-production BMW i3s rolled off the
assembly line in Leipzig in January. This is a clear signal to anyone
who may still have had any doubts: The BMW i3 is definitely coming
onto the market. It will be a reality by late 2013.
We will then be able to offer our customers a new dimension in driving
pleasure. As media representatives, you will be able to road-test the
electric BMW i3 yourselves already this fall. The BMW i3 is our
approach for emission-free driving in urban areas.
Our experience with the MINI E and BMW ActiveE test fleets has shown
A range of 150 km is entirely sufficient for the great majority of
drivers. Moreover, with a range-extender, the range can be increased.
Across the globe, the average distance driven on a daily basis is 64
kilometres and cars are parked for 22 hours each day. This time can be
used to recharge the battery.
Aside from these practical reasons, we have always emphasized the need
for emission-free cars in our portfolio. This enables us to achieve
the long-term regulatory requirements for CO2 emissions that apply to
new cars in the EU, US, China and other countries.
Many people here in Germany have a fairly sceptical view of the
subject based on our local and regional circumstances. However, anyone
driving in other countries in Europe or in a state like California
will notice that many major cities now have parking areas with
charging stations for electric cars. And true megacities have no
choice but to promote alternative methods of mobility in the medium
term. For instance, in Beijing, the China Daily reported in August
2012 that there were over a million applicants for fewer than 20,000
registration plates. Electric cars are exempt from this registration
and the associated fees.
We are approaching the topic of electro mobility holistically. In the
manufacture of the BMW i family we are also setting new standards:
In the use of innovative materials
In the careful use of resources and
In the industrialization of electric mobility.
As an engineer I can tell you for sure: We are revolutionizing how
cars are made.
The BMW i3's car architecture is unique with a
"life-module" and a "drive-module".
The materials are unique the cabin from carbon fiber and the
"drive- module" from aluminum.
The manufacturing processes are also unique: Unlike traditional
methods of manufacture, we are using high-tech bonding to connect the
The short manufacturing times are unique as well: Far fewer components
are used. Processing times can be reduced through parallel operation.
As a result, it takes only half as long to make a BMW i3 compared to a
car of a similar size in our portfolio.
There is another important aspect, too: The work process itself is
much easier for the workers compared to traditional body
The new car architecture makes workplaces more ergonomic.
Assembly is much quieter.
The production halls also use natural light.
The future belongs to those who dare to make their vision a reality.
We believe in sustainable mobility. Many customers have already
expressed interest in buying a BMW i3 a car they do not know with
technologies they are not familiar with. What this tells me is that:
Our customers have faith in our know-how and power of innovation. They
trust that we will deliver Sheer Driving Pleasure" with an
electric car as well. This also applies to our mobility services.
These are a clearly defined part of our vision for 2020. Our
car-sharing initiative DriveNow together with Sixt AG is doing well.
Likewise, our innovative Apps such as "ParkNow", "Park
at my House" and "My City way", facilitate mobility
within the city. These are results obtained by our BMW i Ventures
Company. In 2012 we also introduced DriveNow and ParkNow in San
Francisco. Over 85,000 customers in Germany and the US are already
This brings me to my fourth and last point: How will we approach the
next stage of Strategy Number ONE in 2016?
We are shaping our future using our own ideas and from a position of
strength. Our task is to ensure that the BMW Group has a promising
future as well as a successful present.
In 2016, BMW will be 100 years old. We aim to sell over two million
BMW, MINI and Rolls-Royce cars that year. BMW Motorcycles and
Financial Services will also continue to contribute to our success.
Profitability is and will remain a key prerequisite for overcoming the
challenges using our own resources. This is why we strive to maintain
a range of 8 to 10 percent in terms of the EBIT margin of our
Automobile Segment for the long term.
We will continue to develop our premium brands BMW, MINI and
Rolls-Royce at the right times. We are adding even more variety to our
customers' driving pleasure.
Within our core BMW brand we offer a range of possibilities:
from emission-free cars in the BMW i family
to highly efficient and innovative BMW models
and efficient, high-performance cars in the BMW M range.
All of this is BMW.
The BMW M GmbH set a new sales record as it marked its 40th
anniversary in 2012. Sales of more than 26,000 "M" vehicles
put us well ahead of our competitors.
What's more, a BMW M3 won the German Touring Car Championships in
2012. After a 20-year absence from this important European racing
series, we won the driver, team and manufacturer's titles as soon as
we returned. Competition spurs us on. This applies to both motor sport
and our core business.
We will continue to chart a new course for our company and for our
industry. That's how we define premium. That's what makes us stand
out. That's BMW.
BMW Group cautiously optimistic for 2013
Ambitious targets in challenging environment
Sales volume set to rise to new record figure in 2013
Earnings before tax expected at previous year's level
High rate of expenditure for new technologies and models
EBIT margin between 8% to 10% targeted for Automotive segment
All Strategy Number ONE interim targets fully attained
Reithofer: Several hundred advance orders received for BMW i3
Munich. After achieving a record-breaking year in 2012, the BMW
Group's outlook for the current 12-month reporting period is
cautiously optimistic, based on ambitious targets set amid a
persisting difficult and volatile economic environment. "We are
aiming to achieve a further rise in unit sales in the current year and
hence a new sales volume record", stated Norbert Reithofer,
Chairman of the Board of Management of BMW AG, at the Annual Accounts
Press Conference in Munich on Tuesday.
In view of the strong demand for its vehicles, the BMW Group will
continue to invest in boosting capacity in 2013, thus enabling it to
remain successfully on course. Development costs for new technologies
and vehicle concepts will also continue to rise. 2013 alone will see
the launch of eleven new models. By the end of 2014, some 25 new
models will have been added to the range, ten of them totally new
"Due to high levels of expenditure for new technologies and
models as well as investment in the production network, we expect to
report Group profit before tax on a similar scale to the year
2012", continued Reithofer.
Despite the additional costs referred to, the Automotive segment
continues to forecast an EBIT margin of between 8% and 10% for the
current year. This corridor is also seen as a sustainable EBIT margin
for the time beyond 2013. However, depending on political and economic
developments, actual margins could end up being above or below the
The Motorcycles segment forecasts further sales volume growth in the
current year for the BMW brand thanks to attractive new models such as
the R 1200 GS, which should, in turn, bring about a further rise in
segment revenues and earnings.
The Financial Services segment is also expected to put in another
strong performance and remains committed to achieving a return on
equity of at least 18%.
Forecasts for the current year are based on the assumption that
worldwide economic conditions will not change significantly.
Strategy Number ONE: First third successfully completed
The BMW Group has been tirelessly pursuing its Strategy Number ONE
with great success since 2007, enabling it to achieve the intended
impact of becoming significantly more profitable and competitive. The
Group is also extremely well placed to meet future challenges:
"We have now successfully implemented the first third of our
strategy. All interim targets have been fully attained",
Group profit before tax doubled during the period between 2007 and
2012. At 10.9%, the Automotive segment's EBIT margin exceeded the
targeted corridor of 8% to 10% during the past year. By way of
comparison: the segment EBIT margin in 2006 was still only at a level
of 6.4%. The return on equity of the Financial Services segment in
2012 was 21.2% (Number ONE target: >18%). The improvement in
reported figures is also reflected in the share price: between the end
of 2007 and the end of 2012, the price of BMW common stock rose by
more than 70 percent.
Strategy Number ONE has also seen the birth of a whole host of
innovative vehicle concepts including the BMW i3 as well as
remarkable advances in terms of reducing fuel consumption thanks to
EfficientDynamics technology. As from the beginning of 2013, the
emissions of 73 BMW Group models do not exceed 140 grams of CO2 per
kilometre driven. The equivalent figure five years ago was 27 models.
The average fuel consumption of the fleet is 5 litres of diesel and
6.3 litres of petrol per 100 kilometres driven.
The BMW Group will continue its rigorous implementation of Strategy
Number ONE through to 2020 and remain on a profitable growth course.
The target for 2016 is to sell more than two million BMW, MINI and
Several hundred advance orders received for BMW i3
Electromobility will be very much in the spotlight for the BMW Group
in 2013. "The future belongs to those who dare to venture",
remarked Reithofer. The first pre-series BMW i3 came off the
production line in January 2013. This innovative vehicle, which has
been specifically designed to run with zero emissions for use in an
urban environment, will come onto the market by the end of the year.
"Several hundred advance orders have already been received for
the BMW i3", added Reithofer.
The BMW i3 is designed with a carbon-fibre-reinforced plastic (CFRP)
passenger compartment, an aluminium chassis, and sets new standards in
the field of lightweight construction. The i3 will be 250 to 350
kilograms lighter than a conventional electric car.
The BMW i3 has an approximate range of 150 kilometres, which based
on experience gleaned from the MINI E and BMW Active E test fleets
is absolutely sufficient in most circumstances. Customers can also opt
to increase this capability with a so-called Range Extender.
Production times are reduced significantly by employing unique
production methods and a significantly lower number of assembly parts.
The BMW i3 will require only half the time needed to produce a
To have any chance of addressing the growing ecological challenges in
the world's metropolitan areas, there is no getting around the use of
zero-emission drive technology. "In the medium term, megacities
have no choice but to encourage the use of alternative drive
systems", underlined Reithofer. Electric vehicles in Beijing, for
instance, are already exempt from the allocation procedure for number
plates and from fees.
Reithofer: 2012 best year in BMW Group's corporate history
The BMW Group can look back on an excellent 2012 financial year:
"The past year has been the most successful year in the BMW
Group's corporate history, with new records achieved for sales volume,
revenues, and Group earnings", stated Reithofer.
Revenues increased year-on-year by 11.7% to reach a new high of
76,848 million (2011: 68,821 million). Despite greater expenditure
on new technologies and increased personnel costs, earnings also
climbed to new record levels, with profit before financial result
(EBIT) up by 3.5% to 8,300 million (2011: 8,018 million), profit
before tax (EBT) up by 5.9% to 7,819 million (2011: 7,383 million)
and Group net profit up by 4.4% to 5,122 million (2011: 4,907
The total number of BMW, MINI and Rolls-Royce brand vehicles delivered
to customers worldwide in 2012 rose by 10.6% to a new high of
1,845,186 units (2011: 1,668,982 units), thus enabling the BMW Group
to maintain its position as the world's leading premium vehicle
Capital expenditure and R&D ratio within targeted corridor
Capital expenditure rose sharply (+41.9%) from 3,692 million in 2011
to 5,240 million in 2012 due to the number of new models, increased
production capacities at various sites and preparation for the launch
of the BMW i. The capital expenditure ratio increased to 6.8% (2011:
5.4%). Research and development expenditure went up by 17.2% to
3,952 million (2011: 3,373 million), mostly on projects aimed at
securing the Group's future, resulting in an R&D ratio of 5.1%
Dividend to increase to 2.50 per share of common stock
The Board of Management and the Supervisory Board will propose to
shareholders at the Annual General Meeting on 14 May 2013 that the
dividend be increased to a new high level of 2.50 (2011: 2.30) per
share of common stock and 2.52 (2011: 2.32) per share of preferred
stock. Based on these figures, the total distribution will rise to
1,640 million (2011: 1,508 million), corresponding to a distribution
ratio of 32.0% (2011: 30.7%).
Automotive segment: EBIT rises to 7.62 billion
The BMW, MINI, and Rolls-Royce brands all posted new sales volume
records in 2012. Automotive segment revenues went up by 11.0% to
70,208 million (2011: 63,229 million), thanks to the sharp rise in
the number of vehicles sold. The segment EBIT rose to 7,624 million
(2011: 7,477 million/+2.0%), resulting in an EBIT margin of 10.9%.
Profit before tax amounted to 7,195 million (2011: 6,823
Free cash flow for the Automotive segment totalled 3,809 million, an
improvement of 643 million on the previous year and well above the
target of over 3 billion set for the full year.
Sales of BMW brand cars increased by 11.6% to 1,540,085 units (2011:
1,380,384 units), thus exceeding the mark of 1.5 million units for the
first time in a single financial year. The MINI brand surpassed the
sales volume threshold of 300,000 units for the first time in a
12-month reporting period, with sales volume up by 5.8% to 301,526
units (2011: 285,060 units). Rolls-Royce was the clear market leader
in the ultra-luxury segment in 2012. In total, 3,575 units were sold
during the year (2011: 3,538 units/+1.0%),
Motorcycles segment also achieves sales volume record
117,109 BMW and Husqvarna brand motorcycles were sold worldwide during
the past year (2011: 113,572 units; +3.1%), a new sales volume record
for the segment.
Sales of BMW brand motorcycles went up by 2.0% to 106,358 units (2011:
104,286 units), while Husqvarna handed over 10,751 motorcycles to
customers (2011: 9,286/+15.8%). In future, the Motorcycles segment
intends to focus exclusively on the BMW brand. At the end of January
2013, the BMW Group signed a contract for the sale of Husqvarna with
the Austrian company Pierer Industrie AG.
Segment revenues were 3.8% higher at 1,490 million (2011: 1,436
million). EBIT fell to 9 million (2011: 45 million/-80.0%) as a
result of the new direction being taken for the BMW Group's
motorcycles business. Profit before tax decreased accordingly to 6
million (2011: 41 million/-85.4%).
Financial Services segment remains on growth course
The Financial Services segment continued to perform well in the past
year. Revenues went up by 11.7% to 19,550 million (2011: 17,510
million). Profit before tax came in at 1,561 million (2011: 1,790
million/-12.8%), whereby the decrease in segment earnings was
primarily a reflection of the previous year's extremely high figures.
In 2011, the segment recorded exceptional income of 439 million
resulting from the reduction in provisions for residual value and bad
debt risks. Business with end-of-contract leasing vehicles gave rise
to an exceptional gain of 124 million in 2012.
The number of new lease and credit financing contracts signed
worldwide (1,341,296) was 12.1% up on the previous year. The number of
lease and financing contracts in place with dealers and retail
customers at the end of the year rose by 7.1% to a total of 3,846,364
Workforce up by 5.6%
The BMW Group's workforce increased during the period to 31 December
2012, growing by 5.6% over the year to 105,876 employees (2011:
100,306 employees) worldwide. The BMW Group needs engineers and
skilled workers, in order to keep pace with the continued strong
demand for the BMW Group's cars, forge ahead with innovations, and
develop new technologies.
1,376 young people 1,200 of them in Germany started their
vocational training with the BMW Group at the beginning of the new
training year. The number of trainees in Germany therefore increased
by more than 10%. At the end of 2012, the BMW Group employed a total
of 4,266 apprentices worldwide.
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