The BMW Group Is Moving Into a New Dimension
2004 will be the year of new models
Record figures for sales volume and earnings expected
MUNICH, Germany, March 17 -- The BMW Group will continue on its successful growth course during the financial year 2004. New models and the expansion of sales activities on the international markets will contribute to new high levels for sales volumes and earnings. "We expect increasing sales volumes in 2004 for all brands and will continue to build on the BMW Group's position as one of the most profitable automobile companies in the world," stated Helmut Panke, Chairman of the Board of Management of BMW AG, at the Annual Accounts Press Conference on 17 March in Munich. "As a result of the product and market initiative carried out in recent years, the BMW Group is now moving into a new dimension. That is the basis for profitable growth in the future."
Attaining a new level with ten model series
In 2004, the BMW Group will introduce more new vehicle models to the market than ever before in its history. With the BMW 6 Series, the BMW X3, the BMW 5 Series Touring, the BMW 1 Series and the MINI Convertible, the Group will be bringing out new products and extending its product range in all of the important market segments. The up-front expenditure incurred over the past few years will now produce results. In the words of Helmut Panke: "2004 will be the year of new models. In future, the BMW Group will be represented in all relevant market segments with premium products."
The financial year 2003: positive development in all segments
Despite the fact that economic conditions prevailing on some of the world's automobile markets were difficult, the BMW Group set a new sales volume record with 1,104,916 BMW, MINI and Rolls-Royce brand cars during the financial year 2003. This was 4.5% ahead of the previous year's record (2002: 1,057,344 cars).
The BMW Group was able to increase market share in a number of the main markets. The sales volume in the USA, at 277,037 units, was 8.0% up on the previous year (2002: 256,622 cars).
The BMW Group sold 637,949 cars in Western Europe, 1.9% more than in the previous year (2002: 626,219 cars). This included 255,821 cars sold on the German market (-0.9% / 2002: 258,170 cars). A total of 93,030 BMW, MINI and Rolls-Royce brand cars were sold in Asia, 18.5% more than in the previous year (2002: 78,527 cars).
Influenced by product-life cycles, sales volume growth picked up momentum significantly in the course of the second half of 2003. The main reason for this development was the launch of the new BMW 5 Series Sedan in July 2003. By the year-end, 70,522 cars had been sold. Overall, the sales volume of the BMW 5 Series, at 185,481 cars, surpassed the previous year's figure by 7.6% (2002: 172,323 cars). The BMW 7 Series also provided growth momentum in 2003, with the sales volume rising by 8.2% to 57,899 units, thus achieving the highest ever sales volume in a single year since its introduction at the end of the 1970s.
Overall, the BMW Group delivered 928,151 BMW cars to customers in 2003, 1.6% more than in the previous year (2002: 913,225 cars).
The success of the MINI brand continued in 2003 and contributed substantially to the sales volume growth of the BMW Group. With a total of 176,465 Mini brand cars sold, unit sales were almost a quarter higher (22.4%) than in the previous year.
With the Rolls-Royce brand, the BMW Group has expanded its range of products into the very top end of the luxury segment. 300 Rolls-Royce motor cars had been handed over to customers by the end of 2003.
In 2003, the motorcycle business as a whole was affected by adverse economic conditions on the international motorcycle markets. The Motorcycles segment held its own within this difficult environment. With 92,962 units sold, the sale volume surpassed the previous year's level for the eleventh year in succession. (+0.4% / 2002: 92,599 motorcycles). BMW motorcycles were, for example, again able to defend their position as market leader in Germany.
The Financial Services segment also continued its growth course in 2003. The number of new contracts signed rose by 14.2% to a new high level of 1,578,829 contracts (2002: 1,382,148 contracts). The business volume of the segment climbed in 2003 by 8.1% to stand at euro 28,647 million (2002: euro 26,505 million).
More than 3,000 new jobs created
In conjunction with the expansion of business, the BMW Group workforce also increased during the past financial year. At the end of 2003, the BMW Group had a worldwide workforce of 104,342 employees, 2.9% more than at the end of 2002. After adjusting for disposals and transfers of group companies, the Group created 3,131 new jobs. Three quarters of the BMW Group's employees are based in Germany. The workforce here increased to 78,569 employees (+3.2% / 2002: 76,143 employees).
The BMW Group's focused need for additional trained staff will continue in 2004.
Significant momentum in earnings growth as 2003 progressed
As with the development in sales volumes, revenues and earnings also showed the expected dynamic improvement during the second half of 2003 as the positive effects of the BMW 3 Series and BMW X5 model up-dates and the new BMW 5 Series Sedan gained ground.
Group revenues in 2003, at euro 41,525 million, were 2.1% lower than in the previous year as a consequence of the low US dollar exchange rate against the euro (2002: euro 42,411 million). Adjusted for changes in exchange rates, the Group achieved a sales revenue growth of 4.2%.
At euro 3,205 million, the Group profit from ordinary activities almost matched the previous record level reported in 2002 (-2.8% / 2002: euro 3,297 million. The net profit of the BMW Group was euro 1,947 million, 3.6% down against the previous year (2002: euro 2,020 million).
Helmut Panke: "In spite of the high level of up-front expenditure for new models and a difficult economic climate, we were still able to achieve earnings at the previous year's high level. This again demonstrates the underlying strength of the BMW Group."
The announcement of changes to statutory regulations relating to early retirement part-time working arrangements held earnings back and resulted in additional provisions of euro 110 million. Moreover, changes in German tax legislation relating to the treatment of existing corporation tax credits led to an exceptional tax expense of euro 50 million for the financial year 2003. Excluding these one-off items, the net profit for the year would have been euro 2,063 million.
The pre-tax return on sales at a Group level was 7.7% (2002: 7.8%). Earnings per share were euro 2.89 (2002: euro 3.00) per share of common stock and euro 2.91 per share of preferred stock (2002: euro 3.02).
Proposed dividend increase
In view of the sustained high quality of earnings and the positive outlook for business, the Board of Management and the Supervisory Board have proposed an increased dividend. Subject to approval, the unappropriated profit available for distribution in BMW AG of euro 392 million will be used to pay a dividend of euro 0.58 for each common stock share (2002: euro 0.52), 12% higher than in the previous year and a dividend of euro 0.60 for each preferred stock share (2002: euro 0.54), 11% higher than in the previous year. Share capital entitled to receive dividends amounts to euro 673.5 million (622.2 million common stock shares and 51.3 million preferred stock shares, each with a nominal value of 1 euro).
Capital expenditure and cash flow increased again
The BMW Group is laying the foundations for continued expansion in the years ahead with high levels of capital expenditure. In 2003, the Group invested euro 3,249 million in intangible assets and property, plant and equipment (2002: euro 3,184 million).
On top of this came development costs of euro 996 million (2002: euro 858 million) which are required to be recognised as assets in accordance with IAS 38, so that total additions to intangible assets and property, plant and equipment amounted to euro 4,245 million (2002: euro 4,042 million). This represents an increase of 5.0%. At 38.9 %, the proportion of development costs recognised as assets remains relatively low in comparison to the industry as a whole (2002: 34.9%).
Including capitalised development costs, the investment rate (i.e. capital expenditure as a percentage of group revenues) increased to 10.2% in 2003, which is higher than the previous highest rate recorded in 2002 (9.5%). This above-average increase was mainly attributable to the currency-related lower level of revenues.
Cash flow in 2003 rose by 2.7% to a new record level of euro 4,490 million (2002: euro 4,374 million) and thus once again exceeded capital expenditure.
R&D costs at previous year's level
Research and development costs, at euro 2,146 million, were at a similarly high level to the previous year level (2002: euro 2,133 million). They represent 5.2 % (2002: 5.0%) of revenues. Research and development costs include depreciation and disposals of euro 583 million (2002: euro 536 million) relating to development costs recognised as assets. Total research and development costs, including research costs and non-capitalised development costs, amounted to euro 2,559 million (2002: euro 2,455 million). At this level, the research and development ratio was 6.2 % (2002: 5.8%) of revenues.
Production capacities still fully utilised
As with sales volume, the BMW Group also achieved new production volume records for cars in 2003. 1,118,940 BMW, MINI and Rolls-Royce brand cars were manufactured (2002: 1,090,258), 2.6% more than in the previous year (including contract production of the BMW X3).
Production of BMW cars was affected to an exceptional extent in 2003 by the product initiative. The Group was able to carry out its ambitious programme with the aid of flexible work-time arrangements and on-going process optimisation. In 2003, 944,072 BMW cars came off the production lines, 1.5% more than in the previous year (930,221). On top of this, 174,366 MINI brand cars were manufactured, an increase of 9.0% compared to 2002 (160,037). The production start-up phase for the Rolls-Royce Phantom was completed. At present, five motor vehicles are being manufactured per day. Overall, 502 Rolls-Royce Phantoms were manufactured in 2003.
The complete Annual Report 2003 can be downloaded from the Group's website underwww.bmwgroup.com.
BMW Group in figures
2003 2002 Change
in %
Vehicle production 1,118,940 1,090,258 +2.6
thereof:
BMW units 944,072 930,221 +1.5
MINI units 174,366 160,037 +9.0
Rolls-Royce units 502 -- --
Motorcycles units 89,745 93,010 -3.5
Deliveries to customers 1,104,916 1,057,344 +4.5
thereof:
BMW units 928,151 913,225 +1.6
MINI units 176,465 144,119 +22.4
Rolls-Royce units 300 -- --
Motorcycles units 92,962 92,599 +0.4
Workforce at the end of the year(1) 104,342 101,395 +2.9
Cash flow euro million 4,490 4,374 +2.7
Revenues(2) euro million 41,525 42,411 -2.1
Capital expenditure euro million 4,245 4,042 +5.0
Profit from ordinary
activities euro million 3,205 3,297 -2.8
thereof:
Automobiles euro million 2,761 2,883 -4.2
Motorcycles euro million 50 60 -16.7
Financial Services euro million 452 422 +7.1
Reconciliations euro million -58 -68 -14.7
Income taxes euro million 1,258 1,277 -1.5
Net profit euro million 1,947 2,020 -3.6
Earnings per share(3) euro 2.89/2.91 3.00/3.02 -3.7/-3.6
1 The comparable number of employees at 31 December 2002 after
adjusting for disposals and transfers of group companies was 101,211.
2 Following the adoption of International Accounting Standards (IAS)
for the Group financial statements at 31 December 2001, the BMW Group
harmonised its internal and external reporting systems in 2003,
resulting in a number of reclassifications in the income statement
for 2002. Group revenues for the financial year 2002 before
harmonisation were euro 42,282 million. The reclassifications
had no effect on the profit from ordinary activities and net profit.
A detailed analysis of the adjustments can be found in the Internet
under www.bmwgroup.com/ir.
3 Earnings per share in accordance with IAS 33 per share of
common/preferred stock.
