2002 Most Successful Business Year for the BMW Group Capital Expenditure At Record Level Sales Increases Anticipated for All Brands in 2003
MUNICH, Germany, March 19 -- On the basis of the consistent implementation of its premium brand strategy in 2002, the BMW Group once again surpassed the record levels of sales, revenues and profits of the previous year. Against a background of a difficult market environment and in a phase of substantial expenditure for the launch of new models, the company completed the most successful business year in its history.
"2002 once again proved the strength of the BMW Group," said Dr. Helmut Panke, Chairman of the Board of Management of BMW AG at the Annual Accounts Press Conference on 19 March in Munich. "With the expenditures for the product and market offensive, the BMW Group is laying the foundation for the continuation of its successful development over the years to come. Provided the Iraq crisis is solved within a foreseeable period, we anticipate that all brands will achieve sales volume increases in 2003."
Capital expenditure increased by 15.0%
In 2002, the BMW Group invested euro 3,184 million in the expansion of the product range and in broadening market activities, in property, plant and equipment and intangible assets. In addition, euro 858 million of expenditure for development have been recognized as assets in accordance with IAS. The increase in capital expenditure by 15% over the previous year (euro 3,516 million) to euro 4,042 million reflects the fact that the BMW Group is now in the decisive phase of the implementation of its product and market offensive. Including development costs recognised as assets, the investment rate increased in 2002 to 9.6% and is thus above the highest ration previously recorded in 2001 (9.1%).
As in past years, the BMW Group financed capital expenditure entirely out of cash flow. The latter increased in 2002 by 4.1% to euro 4.374 million (previous year euro 4,202 million).
New record figures in sales, revenues and profits
For the first time, the BMW Group passed the sales mark of one million units with the brands BMW and MINI. A total of 1,057,344 automobiles were sold (+16.7% / previous year 905,657 units). Of these, 913,225 units were of the brand BMW (+3.7% / previous year 880,677 units) and 144,119 units of the brand MINI (previous year 24,980 units).
The BMW Group increased its total revenues in 2002 by 9.9% to the record level of euro 42,282 million (previous year euro 38,463 million). The profit before tax of the Group (profit from ordinary activities) was increased by 1.7%, achieving a record figure of euro 3,297 million (previous year euro 3,242 million). The net profit increased by 8.3% to euro 2,020 million (previous year euro 1,866 million) and thus surpassed the euro 2.0 billion mark for the first time ever.
Increased profit in all segments
All lines of business contributed to this performance. The profit from ordinary activities of the Automobile segment amounted to euro 2,883 million, 3.3% higher than in the previous year (euro 2,792 million). After adjustment for a one-off gain of euro 75 million on the sale of property, the previous year's figure was euro 2,717 million, so that the improvement was 6.1% on a comparable basis. The Motorcycles segment achieved a 1.7% increase and reported a profit from ordinary activities of euro 60 million (2001: euro 59 million). The Financial Services segment achieved a record profit from ordinary activities of euro 422 million, an improvement of 8.2% over the previous year (euro 390 million).
Dividend proposed at level of previous year
The Board of Management and the Supervisory Board propose to the Annual General Meeting to use the unappropriated profit available for distribution in BMW AG amounting to euro 351 million to pay a dividend on the equity entitled to dividends (euro 622.2 million common stock and euro 50.6 million preference stock, each with a nominal value of euro 1) of euro 0.52 for each share of common stock and euro 0.54 for each share of preferred stock, both unchanged from the previous year.
More than 5,000 jobs created
Due to the positive business development, the BMW Group created 5,132 new jobs worldwide in 2002, mainly in development, production and sales departments. This represents an increase of 5.3%. As of 31 December 2002, the BMW Group had a workforce of 101,395 employees. After adjusting for disposals and transfers of group companies, the equivalent headcount at the end of 2001 was 96,263 employees. Some three quarters of the staff of the BMW Group are employed in Germany. Here, the workforce increased by 3,280 associates to a total of 76,143 - a plus of 4.5%.
In the year 2002, the BMW Group recruited another 370 apprentices. At present, almost 4,200 young people (+9.7%) are learning a profession with the BMW Group.
Strong growth for the BMW Group worldwide
As in the previous years, worldwide demand for the cars of the BMW Group in 2002 outpaced demand in the market as a whole as well as in the premium segments. The BMW Group was able to increase its market share in nearly all of the main automobile markets. The market with the largest sales volume remained Germany where the BMW Group was able to increase car sales by 5.0% compared to the previous year to 258,170 units, and thus continue to perform well within an overall declining market (BMW brand -2.4% to 235,149 vehicles; 23,021 vehicles of the MINI brand).
Sales of the BMW Group in other Western European countries climbed to 368,878 units, an increase of 19.7% compared to the previous year. This comprised 291,041 BMW brand cars (+1.0%) and 77,837 MINI brand cars. The BMW Group was largely unaffected by the mainly negative trends on the East European markets and achieved satisfying growth rates in that region.
The BMW Group experienced its most successful year ever in the North American market. The number of cars sold by the BMW Group in the USA in 2002 increased by 20.4% to 256,622 units, with 232,032 (+8,9%) vehicles of the BMW brand and 24,590 of the MINI brand.
The BMW Group is also still on growth course in Asia, where the sales volume increased by 28.4% to 78,436 units (BMW brand +11.0% to 67,797 vehicles, MINI brand 10,639 vehicles). In Japan, the BMW Group increased the sales volume considerably by 26.3% to 45,275 units (BMW brand -0.7% to 35,604 vehicles; MINI brand 9,671 vehicles). Sales of the BMW Group on the rapidly growing Chinese market rose by 41.4% to 15,473 units. A further Asian market with above-average growth rates in 2002 was South Korea, where the BMW Group sold 5,101 cars and thus achieved a growth rate of 87.7%.
Brand BMW well above previous year's sales record
A total of 913,225 BMW automobiles were delivered to customers in 2002, 3.7% more than in the previous year. This growth is mainly due to the strong demand for the models of the BMW 3 Series (+5.1% to 561,249 units), the Sports Activity Vehicle BMW X5 (+22.1% to 100,906 units) and the BMW 7 Series (+63.4% to 53,504 units). With 50,961 vehicles, the sales volume of the new BMW 7 Series in the first full year of production was around 4% better than that achieved by the predecessor model in the equivalent period. In addition, 2,543 vehicles of the BMW 7 Series predecessor model were sold. At the end of June, the last BMW Z3 Roadster came off the production line at the Spartanburg plant. During the seven years of production, almost 300,000 of these vehicles were supplied to customers. The new BMW Z4 was launched on the North American market in the autumn of 2002. Up to the end of 2002, more than 3,800 vehicles of this model were delivered to customers. The BMW 5 Series achieved an above- average performance in relation to its product life cycle. Sales of 172,323 vehicles in 2002 were only 11.1% below the previous year's level.
MINI launched successfully on worldwide markets
With the MINI brand, the BMW Group has successfully established a market position for a premium car in the small car sector. A total of 144,119 MINI cars were sold worldwide in 2002, well beyond the expectations of the BMW Group. Following the successful launch in markets outside Europe, MINI brand cars are now available in more than 70 markets around the world. The development in North America is particularly pleasing. After an excellent start in 2002, the USA, with sales of 24,590 cars, has already become the second most important sales market for the MINI brand after the United Kingdom (34,715 cars).
Demand for the MINI shows a clear trend towards the more powerful engine versions and optional equipment. The MINI Cooper leads the sales-mix with a share of approximately 56% of the MINI brand sales, followed by the MINI One with nearly 26% and the MINI Cooper S, only available since the middle of 2002, with more than 18%.
BMW motorcycles with tenth successive annual sales record
The Motorcycle Segment increased its sales volume in 2002 by 8.1% and thus out-performed the previous year's record (2001: 95,327) for the tenth time in succession. A total of 103,020 units were sold, comprising 92,599 BMW motorcycles and 10,421 BMW C1. This positive performance was particularly supported by motorcycle sales in Italy (+27.2%, 12,910 motorcycles), France (+12.8%, 8,133 motorcycles) and Spain (+18.4 %, 4,181 motorcycles). In Germany, the largest market for BMW motorcycles, a market share of over 18% was achieved in 2002. High growth rates were also achieved by the BMW Group outside Europe despite the generally negative environment in some markets.
The top selling models in 2002 were those BMW motorcycles with boxer engines, in particular, once again, the R 1150 GS of which 18,085 were delivered to customers, including the Adventure version.
Financial Services continues positive development
The Financial Services segment continued its positive development in the financial year 2002. The business volume of the segment in 2002 amounted to euro 26.5 billion, 4.7% above the previous year's level of euro 25.3 billion. In new business, 1,382,148 contracts were signed in 2002, an increase of 14.3% compared to the previous year. Overall, the segment experienced a steady increase in financing contracts for new cars throughout the year. Approximately 46% of new contracts related to customer business. 641,638 contracts were signed in 2002, 18.3% more than in the previous year. In dealer financing, the number of new contracts increased by 11.0% to 740,510 contracts.
36.1% of new vehicles sold by the BMW Group worldwide were financed or leased in 2002 by the Financial Services segment.
Expansion of the product and brand portfolios
In 2003, the company will unveil more new products than ever before. The prelude to this was provided at the beginning of the year by the new Rolls- Royce Phantom. With the Rolls-Royce brand, the BMW Group has rounded off its product range in the absolute luxury segment and completed the expansion of its brand portfolio. A diesel version will be launched for the MINI brand in Europe in 2003. For the brand BMW, the new 5 Series will be launched in 2003. In addition, the BMW Z4 will be introduced in Europe and Asia and three updated BMW 3 Series versions will be launched during the first quarter of 2003. Furthermore, two new models will be presented towards the year-end, the BMW X3 and the BMW 6 Series Coupe. The BMW 5 Series Touring, the new BMW 6 Series Cabrio and the new BMW 1 Series will follow in 2004 along with other products.
By expanding the product range so significantly and increasing its market presence, particularly in the Asian region, the BMW Group is laying the foundation for continuing success. This expansion, accompanied by corresponding levels of expenditure for the future, is taking place over a comparatively short period of time and will shape the financial year 2003.
Outlook 2003
In the light of the tense global political situation, it is difficult at the beginning of 2003 to make a definite forecast about business development. Provided the Iraq crisis is solved within a foreseeable period, the BMW Group anticipates that all brands will achieve sales volume increases in 2003.
The exceptionally high level of spending on the product and market offensive mainly affects the Automobile segment, which is thus facing particularly high levels of expenditure in 2003. At group level, however, the BMW Group will strive to match the level of earnings achieved in 2002 and again prove its strength as it moves through a period of transition into a new order of magnitude.
units/million 2002 2001 Change in %
Deliveries to customers
Automobiles 1,057,344 905,657 +16.7
- BMW 913,225 880,677 +3.7
- MINI 144,119 24,980 +476.9
Motorcycles(1) 103,020 95,327 +8.1
Vehicle production
Automobiles 1,090,258 946,730 +15.2
- BMW 930,221 904,335 +2.9
- MINI 160,037 42,395 +277.5
Motorcycles(1) 97,553 100,213 -2.7
Revenues 42,282 38,463 +9.9
Thereof:
Automobiles 38,179 33,542 +13.8
Motorcycles(1) 1,130 1,059 +6.7
Financial Services 8,213 7,514 +9.3
Reconciliations -5,240 -3,652 -43.5
Profit before tax 3,297 3,242 +1.7
Thereof:
Automobiles 2,883 2,792 +3.3
Motorcycles(1) 60 59 +1.7
Financial Services 422 390 +8.2
Reconciliations -68 1 -
Net profit for the year 2,020 1,866 +8.3
Earnings per share (common stock)
in euro 3.00 2.78 +7.9
Earnings per share (preferred stock)
in euro 3.02 2.80 +7.9
Return on sales in % 7.8 8.4 -
Capital expenditure 4,042 3,516 +15.0
Cash flow 4,374 4,202 +4.1
Workforce(2) 101,395 96,263 +5.3
(1) including C1
(2) at 31 December 2002; before adjusting for disposals and transfers of
group companies, the figure was 97,275 at 31 December 2001. The
increase is thus 4.2%