Success for the BMW Group in 2005
The BMW Group continued to perform successfully in 2005 and was able to achieve the targets communicated since the beginning of the year. As a result of the significant sales volume increase and on-going efficiency improvement measures, the negative impact of adverse currency effects and high raw material prices was almost completely offset by the year-end. The profit before tax for 2005, at euro 3,287 million, was, as predicted, approximately at the same high level as in the previous year (2004; euro 3,583 million/-8.3%).
ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â¨ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â¨During the past year, the BMW Group has therefore once again been able to prove its inherent strength, despite the difficult conditions facing the worldwide automobile industry and a fair value loss recognised on the exchangeable bond option on the shares of Rolls Royce plc, London held by the BMW Group. The increase in the share price of the engine manufacturer resulted in an non-cash expense of euro 356 million being recorded in 2005. The profit before financial result and taxes (EBIT) increased by 0.5% to a new record level of euro 3,793 (2004: euro 3,774 million).
At euro 2,239 million, the net profit for the year was at a similar high level to the previous year (2004: euro 2,242 million/- 0.1%). Amongst other items, lower tax rates in some countries outside Germany also contributed to this development. Earnings per share amounted to euro 3.33 (2004: euro 3.33) per share of common stock and euro 3.35 (2004: euro 3.35) per share of preferred stock. Group cash flow increased by 8.0% to euro 5,602 million (2004: euro 5,187 million) and free cash flow from Industrial Operations increased by 82.0% to euro 3,717 million (2004: euro 2,042 million).
“2005 was another very strong and successful year for the BMW Group”, stated Helmut Panke, Chairman of the Board of Management of BMW AG. “The BMW Group is currently the premium manufacturer with the highest sales volume in the world and is also ahead of almost all of its direct competitors in terms of profitability”, continued Dr. Panke.
In order to improve transparency in its financial reporting, the BMW Group elected, in accordance with IAS, to adopt an accounting option relating to the accounting treatment of pension obligations. Pension obligations are now presented in full in the balance sheet. In this context, the comparative figures for the previous year were adjusted accordingly, as a result of which the profit before tax for the financial year 2004 increased by euro 29 million and profit for that year increased by euro 20 million.
Group revenues went up by 5.2% to a new high of euro 46,656 million (2004: euro 44,335 million) on the back of increased sales volumes and the extremely positive performance recorded in the area of financial services business. The pre-tax margin, at a group level, was 7.0% (2004: 8.1%).
“The product and market initiative is, and will remain, an essential factor for the BMW Group’s successful performance. Using this as our basis, we will continue to press on determinedly along our course of growth and expansion”, emphasised Dr. Panke. Thanks to the strong range of brands and products, further growth potential is forecast for the current year: “We expect the BMW Group to remain on growth course in the financial year 2006 and to achieve a new sales volume record” stated Dr. Panke.
Dividend to increase again
In the light of the high level of profitability and positive outlook for the new financial year, the Board of Management and the Supervisory Board will propose a further dividend increase to the Annual General Meeting to be held on 16 May 2006. It will be proposed that the unappropriated profit of BMW AG available for distribution amounting to euro 424 million will be used to a pay an increased dividend of euro 0.64 per share of common stock (2004: euro 0.62) and one of euro 0.66 per share of preferred stock (2004: euro 0.64).
Additional share buy-back proposed
In addition, the Board of Management and the Supervisory Board of BMW AG will again propose a resolution at the Annual General Meeting authorising the buy-back of up to 10% of the company’s share capital. It has not yet been decided whether, or the extent to which, the authorisation will be applied to buy back further shares. The buy-back programme resolved in September 2005 covering 20,232,722 shares of common stock, or 3% of share capital, was completed on 15 February 2006. In total, shares were bought back for an amount of approximately euro 759 million, at an average price per share of euro 37.51.
Automobiles segment adversely affected by currency factors and raw material prices
The sales volume of all brands reached record levels in 2005. With 1,327,992 BMW, MINI and Rolls-Royce brand cars sold in the past year, the BMW Group beat the sales volume record set in the previous year by 9.9% (2004: 1,208,732 cars).
With its core model series, the 3, 5 and 7 Series, the BMW brand was the worldwide frontrunner in 2005 in each of the relevant segments. The sales volume of the BMW brand rose by 10.1% to 1,126,768 (2004: 1,023,583) units. For the first time, more that 200,000 MINI brand cars were sold in a single year, with the number of cars delivered increasing by 8.7% to 200,428 (2004: 184,357) units. The Rolls-Royce brand confirmed its position at the top of the absolute luxury class. 796 Phantoms were delivered to customers, marginally higher than the 792 sold in the previous year.
The profit before tax of the Automobiles segment for the financial year 2005 amounted to euro 2,976 million: due to the negative currency impact and high raw material prices, this was 5.9% below the previous year’s figure of euro 3,164 million. Segment revenues rose by 7.8% to euro 45,861 million (2004: euro 42,544 million).
Motorcycles segment reports sharp increase in earnings
The profitability of the Motorcycles segment improved significantly in 2005. The segment profit before tax increased by 93.5% to euro 60 million (2004: euro 31 million). Segment revenues climbed by 18.9% to euro 1,223 million (2004: euro 1,029 million) on the back of new models. The sales volume for the full year rose by 5.6% to 97,474 (2004: 92,266) units.
Financial Services segment: growth course continued
The Financial Services segment continued to improve earnings in 2005. At euro 605 million, the segment’s profit before tax was 17.5% higher on a year-on-year basis (2004: euro 515 million). The volume of new customer financing contracts rose by 13.2% to euro 23,507 million (2004: euro 20,759 million) and hence a new record level. The proportion of new BMW and MINI cars financed by the Financial Services segment in 2005 fell slightly to 41.1% (2004: 42.0%).
Capital expenditure remains at a high level
Capital expenditure in 2005, at euro 3,993 million, again remained at a high level, albeit down by 8.1% (2004: euro 4,347 million). Capitalised development costs recognised as assets in accordance with IAS increased by 24.5% to euro 1,396 million (2004: euro 1,121 million). A total of euro 2,597 million (-19.5/ 2004: euro 3,226 million) was invested in property, plant and equipment and in intangible assets.
Production volume increased
As a result of the higher level of sales volume, the BMW Group also achieved new record figures in production volume terms: in total, 1,323,119 BMW, MINI and Rolls-Royce brand cars were manufactured, an increase of 5.8% (2004: 1,250,345 units).
Source: BMW Group PressÃƒÂ¢Ã¢â€šÂ¬Ã‚Â¨
Written By: MF Staff
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