Combined Group and Company Management Report

Abbreviated BMW Group Annual Report 2012.

BMW Group finishes financial year with record figures

The BMW Group remained firmly on the road to success in 2012 with record figures. Despite an increasingly volatile market environment, sales of BMW, MINI and Rolls-Royce brand cars increased by 10.6 % to 1,845,186* units (2011: 1,668,982*), ensuring that the BMW Group retained pole position in the premium segment.

All three automobile brands performed exceedingly well, each contributing in their own measure towards this resounding success. Record sales volume figures were registered across the board with 1,540,085* BMW (2011: 1,380,384* units; + 11.6 %), 301,526 MINI (2011: 285,060 units; + 5.8 %) and 3,575 Rolls-Royce cars (2011: 3,538 units; + 1.0 %) sold during the 12-month period. The new BMW 3 Series, 5 Series, 6 Series and BMW X models were particularly successful within a portfolio of models brimming with attractive cars. The MINI Countryman, the MINI Coupé and the new MINI Roadster also played an important role in making 2012 another highly successful year for the BMW Group.

Although the majority of motorcycle markets contracted considerably during the reporting period, our Motorcycles segment also broke its previous sales volume record. We handed over 117,109 BMW and Husqvarna motorcycles to customers in various markets worldwide, 3.1 % more than in the previous year (2011: 113,572 units). The number of BMW brand motorcycles sold in 2012 climbed by 2.0 % to 106,358 units (2011: 104,286 units). Husqvarna recorded a sales volume of 10,751 units (2011: 9,286 units; + 15.8 %).

The Financial Services segment can also look back on a successful year. The number of new contracts signed with retail customers worldwide rose by 12.1 % to 1,341,296 for the 12-month period (2011: 1,196,610 contracts). The number of leasing and financing contracts in place with retail customers and dealerships totalled 3,846,364 units at the end of the reporting period (2011: 3,592,093 contracts; + 7.1 %).

Revenues and earnings attain new heights

The dynamic rise in new car sales in 2012 enabled the BMW Group to attain new heights in terms of both revenues and earnings. Group revenues grew dynamically, rising by 11.7 % to reach € 76,848 million for the year (2011: € 68,821 million). Despite greater investment in technologies of the future, increased intensity of competition and higher personnel costs, earnings also climbed to new heights in 2012. EBIT rose to € 8,300 million (2011: € 8,018 million; + 3.5 %) and earnings before tax improved by 5.9 % to € 7,819 million (2011: € 7,383 million). It should be noted that the previous year’s figures include a positive exceptional factor of € 524 million arising on the reductions of provision for residual value and credit loss risks. Business with end-of-contract leasing vehicles gave rise to an exceptional gain of € 124 million in 2012. Income tax expense for the year under report totalled € 2,697 million (2011: € 2,476 million; + 8.9 %), resulting in a slightly higher effective tax rate of 34.5 % (2011: 33.5 %). At € 5,122 million, Group net profit marked a new record, surpassing the high level reached the previous year by 4.4 % (2011: € 4,907 million).

BMW Group revenues by region

BMW Group revenues by region enlarge
BMW Group revenues by region
BMW Group revenues by region

Automotive business also achieved new record figures in terms of both revenues and earnings. At € 70,208 million, revenues were 11.0 % up on the previous year (2011: € 63,229 million). EBIT rose to € 7,624 million (2011: € 7,477 million; + 2.0 %), while segment profit before tax totalled € 7,195 million (2011: € 6,823 million; + 5.5 %).

In the Motorcycles segment revenues reflected the good sales volume performance and rose by 3.8 % to € 1,490 million. EBIT, however, was below that of the previous year (€ 9 million; – 80.0 %) due to the sale of Husqvarna Motorcycles. Segment profit before tax fell accordingly by 85.4 % to € 6 million.

The Financial Services segment remained on its growth course and made another excellent contribution to the BMW Group’s performance in 2012. Segment revenues rose sharply (+ 11.7 %) to € 19,550 million (2011: € 17,510 million). Segment EBIT, however, declined to € 1,558 million (2011: € 1,763 million; – 11.6 %), while profit before tax dropped to € 1,561 million (2011: € 1,790 million; – 12.8 %). Lower earnings for the segment must be seen in the light of the figure reported for the previous year, which included a positive exceptional factor of € 439 million arising on the reduction of residual value and credit loss risks. Business with end-of-contract leasing vehicles gave rise to an exceptional gain of € 124 million in 2012.

BMW Group Capital expenditure and operating cash flow

BMW Group Capital expenditure and operating cash flow
BMW Group Capital expenditure and operating cash flow
BMW Group Capital expenditure and operating cash flow

2012 and was therefore 41.9 % above that of the previous year (2011: € 3,692 million). During the year under report, investments in property, plant and equipment amounted to € 4,028 million (2011: € 2,598 million; + 55.0 %). Capitalised development costs totalled € 1,089 million (2011: € 972 million; + 12.0 %). The capitalisation ratio for development expenditure decreased compared to the previous year to 27.6 % (2011: 28.8 %). The capital expenditure ratio for the year rose to 6.8 % of Group revenues (2011: 5.4 %; + 1.4 percentage points), close to the targeted level of 7 %. As in previous years, capital expenditure was covered by operating cash flow1.

We again invested primarily in the introduction of new models such as the BMW 6 Series Gran Coupé, the derivatives of the BMW 3 Series, the MINI Roadster and the revised models of both the BMW 7 Series and the X1. Moreover, preparations for the manufacture of electric cars under the sub-brand BMW i progressed apace during the period under report.

BMW Group and Toyota Motor Corporation sign cooperation agreement

The BMW Group and the Toyota Motor Corporation (TMC) continue to work together in the field of sustainable mobility. The two entities signed a contract at the end of January 2013 with respect to cooperation in the fields of fuel cells, lightweight-construction technologies and the development of sports cars.

The BMW Group and TMC also signed an agreement on the joint research of lithium-air batteries, a post-lithium battery technology. With the signing of this agreement, the joint research on the next generation of lithium-ion batteries initiated in March 2012 has now entered the second phase.

BMW Group incorporated BMW Peugeot Citroën Electrification

The BMW Group and PSA Peugeot Citroën mutually agreed to terminate cooperation in the BMW Peugeot Citroën Electrification joint venture. The BMW Group is taking over the company and will carry on with the work that has been begun. The decision of the two partners does not have any impact on the current engineproducing cooperation arrangements between PSA Peugeot Citroën and the BMW Group.

New strategy in Motorcycles segment

A new strategy developed for the Motorcycles segment means that the BMW Group will be concentrating in future solely on its BMW brand. Against this background, the takeover of Husqvarna Motorcycles has been agreed upon with Pierer Industrie AG, Austria. The transaction is due to be completed during the first six months of 2013, subject to approval by the Austrian merger control authorities.

* Including automobiles from the joint venture BMW Brilliance.

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Updated March 13, 2012