Good Morning, Ladies and Gentlemen.
The BMW Group has made a strong start to 2022 – in an increasingly
volatile geopolitical and global economic environment. Our business is
performing in line with our expectations. The ongoing war in Ukraine
is affecting the availability of vehicle components, which led to
brief production disruptions at several European plants during the
first quarter. Semiconductors also remain in short supply – and we
expect the situation to ease at the earliest in the second half of
2022. In China, restrictions to combat the pandemic are affecting our
local sales, production and logistics.
Our associates are working hard to manage our supply chains with the
greatest possible flexibility so we can minimise the impact on the BMW
Group. As expected, compared to the strong first quarter of 2021,
vehicle sales decreased by 7.8% in Europe and 9.2% in China in the
first three months of this year. However, our US sales still grew by
3.7%. This shows that the BMW Group has an excellent competitive
position and is highly diversified. In the current volatile
environment, we are benefiting once again from our balanced footprint
across all sales regions.
Our consistent focus on emission-free mobility is also gaining
further momentum. With the market launch of the BMW iX and BMW i4 last
year, we released two all-electric models onto the roads that are in
very high demand. In the first quarter, the BMW Group sold a total of
35,289 all-electric vehicles – an increase of nearly 150% over the
previous year.
Two weeks ago, we unveiled the BMW i7* – an all-electric luxury sedan
that underlines our innovation leadership in electrification,
digitalisation and autonomous driving.
The BMW iX1* will also expand our BEV product range over the course
of the year. In the second quarter, we will launch the BMW i3, the
first all-electric 3 Series, tailor-made for the Chinese market.
Ladies and Gentlemen,
As you know, we extended our contract with our Chinese joint venture
BBA until 2040 and increased our stake in BBA from 50 to 75%.
With the conclusion of this transaction, BBA has now been fully
consolidated in the BMW Group’s Financial Statements since 11 February
2022, and therefore fully considered in all items pertaining to the
income statement, the balance sheet and the cash flow statement.
This development is reflected in higher revenues and operating result
in the Automotive Segment. The increase in the cost of sales also
includes depreciation from the purchase price allocation as well as
consolidation effects related to intra-group deliveries.
The previously held equity interest of 50% in BBA was revalued to its
current fair market value. This resulted in a positive one-time effect
of 7.66 billion euros in the Automotive Segment’s first-quarter
financial result.
The net amount from consolidation of BBA’s liquid funds, less the
purchase price, amounted to five billion euros and increased free cash
flow in the Automotive Segment in the first quarter.
Ladies and Gentlemen,
The BMW Group’s financial figures for the quarter are therefore
greatly impacted by the increased stake in BBA and full consideration
of the joint venture in the Group Financial Statements.
Group revenues for the first three months of the year climbed 16.3%
to 31.14 billion euros.
The financial result includes the one-time effect of 7.66 billion
euros from the fair market valuation of the existing 50% stake held in
BBA. This boosted Group earnings before tax, which totalled 12.23
billion euros at the end of March – which resulted in an EBT margin of
39.2%. Without the revaluation of the existing stake and consolidation
effects arising from BBA’s full consolidation, the Group EBT margin
reached 18.4%.
Bolstered by a good performance, we continue to invest systematically
and from a position of strength in the future competitiveness of our
company. As previously announced, we are focusing on the
electrification of our model line-up and on digitalisation, both of
our vehicles and our business processes.
Our research and development expenses according to IFRS is therefore
mainly in connection with new models, electrification and
digitalisation of the vehicle fleet, as well as automated driving.
R&D spending for the first quarter stood at 1.57 billion euros and
was therefore 9.4% higher year-on-year.
The R&D ratio, according to the German Commercial Code, for the
quarter fell slightly to 4.5% (2021: 4.8%), owing to the strong
increase in revenues. We expect the figure for the full year to be
within our target range of 5 to 5.5%
Our capital expenditure is focused on future mobility and was
significantly higher year-on-year at 1.1 billion euros (2021: 760
million euros). This represents a capex ratio of 3.5%. We expect the
ratio for the full year to be close to our target figure of 5%.
Ladies and Gentlemen,
Let’s move on to the individual segments.
In the Automotive Segment, the volume-related decrease in revenues
was offset by a strong operating performance. Segment revenues rose by
17.4% to over 26.73 billion euros.
A share of this increase is also due to the first-time inclusion of
BBA revenues as well as currency tailwinds. In addition, a favourable
model mix and sustained good price realization due to our premium
positioning are reflected in the revenue growth. Price increases in
the markets helped partially to offset the increase in raw material
and energy prices. Income from the resale of end-of-lease vehicles in
the pre-owned car market also continued to develop positively.
The cost of sales in the Automotive Segment increased by 20.9% to
22.63 billion euros. This reflects costs for energy and raw materials,
increased research and development spending and the higher percentage
of electrified vehicles. Effects from the initial consolidation of
BBA, amounting to around 1.2 billion euros, also contributed to the
increase in the cost of sales.
In addition to consolidation effects of approximately 500 million
euros in depreciation of the purchase price allocation, eliminations
of intercompany profits amounting to approximately 700 million euros
were recorded.
The segment achieved an EBIT of 2.37 billion euros for the first
quarter – an increase of 5.9% over the same period of last year. The
EBIT margin came in at 8.9%.
Excluding the consolidation effects mentioned above, the operating
segment result would be around 3.5 billion euros and the EBIT margin
would be 13.2%. This reflects the strength of our core segment in the
first quarter, particularly given the difficult business conditions.
The financial result for the segment climbed to around eight billion
euros in the first quarter of 2022 – compared to just over 500 million
euros for the prior-year quarter. This includes the one-time effect of
7.66 billion euros from the revaluation of the existing 50% stake held
in BBA I referred to before. At the same time, due to the full
consolidation, the at-equity result decreased by 170 million euros in
the first quarter.
The segment’s free cash flow also reflects the full consolidation of
BBA. As expected, the acquisition of BBA’s liquid funds, less the
purchase price, resulted in a net inflow of five billion euros. This
was partially offset by changes in working capital, since temporary
suspensions of production resulted in a decrease in trade payables.
The closure of dealerships in China, due to lockdowns, also led to a
decrease in advance payments received from the dealer network. Free
cash flow for the segment totalled 4.82 billion euros. On this basis,
we confirm our target for the year of at least 12 billion euros.
In the Financial Services Segment, a total of 433,000 financing and
leasing contracts were concluded with retail customers in the first
three months of the year. The number of new contracts was down 11.4%,
compared to the very strong prior-year quarter. In addition to the
limited availability of new vehicles, due to supply issues, this also
reflects more intense competition in the financial services sector,
particularly in China and the US.
The strong product mix and pricing led to a higher average financing
volume compared to the previous year. As a result, new business volume
decreased by only 3.1%.
Segment earnings before tax reached just over one billion euros – a
new all-time high in a first quarter. The situation in pre-owned car
markets around the world remains exceptionally positive and continues
to contribute to high income from the resale of end-of-lease vehicles.
Thanks to an attractive model line-up, the Motorcycles Segment was
able to maintain its sales growth. With more than 47,000 units sold,
we once again reported double-digit growth (+11.3%) and posted our
best-ever first-quarter sales. The segment’s operating earnings for
the quarter totalled 108 million euros, with an EBIT margin of 13.5%.
Ladies and Gentlemen,
With lower economic expectations, rising inflation and high energy
and raw material prices, we face growing uncertainties in our business environment.
Despite these challenging conditions, the BMW Group made a strong
start to 2022. Based on current information, we are able to confirm
our guidance for the full year.
Driven by the full consolidation of BBA, we expect to see a
significant year-on-year increase in both Group pre-tax earnings and
employee numbers.
In the Automotive Segment, despite supply bottlenecks and production
downtimes in the first quarter, we forecast that vehicle sales for the
full year will be on par with last year. The percentage of electrified
vehicles should also increase significantly and the number of
fully-electric vehicles should more than double We expect that the BEV
share will be at least 10% of total sales volume.
We are targeting a slight reduction in CO₂ emissions in the new
vehicle fleet and CO₂ emissions per vehicle produced.
We still expect the EBIT margin in the Automotive Segment to be
within the range of 7 to 9%.
In the Financial Services Segment, we can confirm our target range of
14 to 17% for return on equity.
In the Motorcycles Segment, we anticipate a slight increase in
deliveries, with an EBIT margin within our target range of 8 to 10%.
Our guidance assumes that the semiconductor supply situation will
ease at the earliest in the second half of 2022.
At the same time, we do not expect the limited availability of
vehicle components due to the war in Ukraine to have a significant
impact beyond the first quarter.
It is impossible to foresee how the geopolitical situation will
evolve. That is why the possibility of the conflict expanding beyond
Ukraine or stricter sanctions or countermeasures from Russia are not
factored into our guidance. Further restrictions related to the corona
pandemic in China are also not included.
Ladies and Gentlemen,
Despite geopolitical and global economic uncertainties, the BMW Group
remains on track to meet its goals for the year. We are managing our
supply chains proactively and are able to respond flexibly to changing circumstances.
Demand for our products remains strong – with especially high new
orders for our all-electric vehicles.
We are investing in e-mobility and digitalisation to secure the
future sustainability of our company, while maintaining our strong
operating performance.
That is how we are continuing to navigate the company carefully
through turbulent waters and are in an excellent position for 2022.
Thank you!
*Consumption/emissions data:
BMW i7: Power consumption in kWh/100 km combined:
19.6-18.4 WLTP
BMW iX1: Power consumption in kWh/100 km combined:
18.4-17.3 WLTP (forecast value based on vehicle’s prior development status).
