Quarterly Report • Aug 2, 2018
Quarterly Report
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30 June 2018
Page 4 BMW Group in Figures
Page 10 BMWAG Stock and Capital Markets
Page 42 Income Statement
Page 85 Financial Calendar
Page 86 Contacts
Page 4 BMW Group in Figures
Page 10 BMWAG Stock and Capital Markets
BMW Group at a Glance
• 01
| 2nd quarter 2018 | 2nd quarter 2017 | Change in % | ||
|---|---|---|---|---|
| Group | ||||
| Profit before tax1 | € million | 2,873 | 3,058 | – 6.0 |
| Workforce2 (at 30 June 2018 / 31 December 2017) |
131,636 | 129,932 | 1.3 | |
| Automotive segment | ||||
| Deliveries3 | units | 637,878 | 633,582 | 0.7 |
| Revenues1 | € million | 22,192 | 22,165 | 0.1 |
| EBIT margin1, 4 | % (change in %pts) | 8.6 | 10.1 | –1.5 |
| Motorcycles segment | ||||
| Deliveries | units | 51,117 | 52,753 | – 3.1 |
| EBIT margin1, 4 | % (change in %pts) | 14.9 | 15.0 | – 0.1 |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
3 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 106,944 units, 2017: 96,794 units).
4 Profit before financial result as percentage of segment revenues.
Further performance figures
• 02
| 2nd quarter 2018 | 2nd quarter 2017 | Change in % | ||
|---|---|---|---|---|
| Automotive segment | ||||
| Deliveries | ||||
| BMW1 | units | 541,849 | 534,585 | 1.4 |
| MINI | units | 95,055 | 98,155 | – 3.2 |
| Rolls-Royce | units | 974 | 842 | 15.7 |
| Total1 | 637,878 | 633,582 | 0.7 | |
| Production volume | ||||
| BMW2 | units | 550,768 | 517,791 | 6.4 |
| MINI | units | 100,971 | 95,962 | 5.2 |
| Rolls-Royce | units | 1,242 | 782 | 58.8 |
| Total2 | 652,981 | 614,535 | 6.3 | |
| Motorcycles segment | ||||
| Production volume | units | 46,724 | 51,086 | – 8.5 |
| Financial Services segment | ||||
| New contracts with retail customers | 480,303 | 468,603 | 2.5 | |
| Free cash flow Automotive segment | € million | 1,642 | 436 | – |
| Group revenues3 | € million | 25,023 | 25,765 | – 2.9 |
| Automotive3 | € million | 22,192 | 22,165 | 0.1 |
| Motorcycles3 | € million | 658 | 695 | – 5.3 |
| Financial Services | € million | 7,141 | 7,044 | 1.4 |
| Other Entities | € million | 1 | 1 | – |
| Eliminations3 | € million | – 4,969 | – 4,140 | – 20.0 |
| Group profit before financial result (EBIT)3 | € million | 2,746 | 2,932 | – 6.3 |
| Automotive3 | € million | 1,919 | 2,244 | –14.5 |
| Motorcycles3 | € million | 98 | 104 | – 5.8 |
| Financial Services | € million | 607 | 588 | 3.2 |
| Other Entities | € million | 7 | 8 | –12.5 |
| Eliminations3 | € million | 115 | –12 | – |
| Group profit before tax (EBT)3 | € million | 2,873 | 3,058 | – 6.0 |
| Automotive3 | € million | 2,062 | 2,391 | –13.8 |
| Motorcycles3 | € million | 96 | 103 | – 6.8 |
| Financial Services | € million | 605 | 589 | 2.7 |
| Other Entities | € million | 8 | 23 | – 65.2 |
| Eliminations3 | € million | 102 | – 48 | – |
| Group income taxes3 | € million | – 784 | – 841 | 6.8 |
| Profit from continuing operations | € million | 2,089 | 2,217 | – 5.8 |
| Loss from discontinued operations | € million | – 7 | – | – |
| Group net profit3 | € million | 2,082 | 2,217 | – 6.1 |
| Earnings per share3, 4 | € | 3.13 / 3.14 | 3.34 / 3.35 | – 6.3 / – 6.3 |
| Group pre-tax return on sales3, 5 | % (change in %pts) | 11.5 | 11.9 | – 0.4 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 106,944 units, 2017: 96,794 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 103,703 units, 2017: 84,883 units).
3 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
4 Common / preferred stock. In computing earnings per share of preferred stock, earnings to cover the additional dividend of €0.02 per share of preferred stock are spread over the quarters
of the corresponding financial year.
5 Group profit before tax as a percentage of Group revenues.
BMW Group at a Glance
• 03
| 1 January to 30 June 2018 |
1 January to 30 June 2017 |
Change in % | ||
|---|---|---|---|---|
| Group | ||||
| Profit before tax1 | € million | 6,038 | 6,238 | – 3.2 |
| Workforce2 (at 30 June 2018 / 31 December 2017) |
131,636 | 129,932 | 1.3 | |
| Automotive segment | ||||
| Deliveries3 | units | 1,242,507 | 1,220,819 | 1.8 |
| Revenues1 | € million | 41,518 | 42,166 | –1.5 |
| EBIT margin1, 4 | % (change in %pts) | 9.2 | 9.8 | – 0.6 |
| Motorcycles segment | ||||
| Deliveries | units | 86,975 | 88,389 | –1.6 |
| EBIT margin1, 4 | % (change in %pts) | 14.8 | 17.4 | – 2.6 |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
3 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 215,218 units, 2017: 186,966 units). 4 Profit before financial result as percentage of segment revenues.
Further performance figures
• 04
| 1 January to 30 June 2018 |
1 January to 30 June 2017 |
Change in % | ||
|---|---|---|---|---|
| Automotive segment | ||||
| Deliveries | ||||
| BMW1 | units | 1,059,296 | 1,038,030 | 2.0 |
| MINI | units | 181,430 | 181,214 | 0.1 |
| Rolls-Royce | units | 1,781 | 1,575 | 13.1 |
| Total1 | 1,242,507 | 1,220,819 | 1.8 | |
| Production volume | ||||
| BMW2 | units | 1,111,412 | 1,066,966 | 4.2 |
| MINI | units | 202,781 | 193,861 | 4.6 |
| Rolls-Royce | units | 2,121 | 1,637 | 29.6 |
| Total2 | 1,316,314 | 1,262,464 | 4.3 | |
| Motorcycles segment | ||||
| Production volume | units | 88,008 | 105,552 | –16.6 |
| Financial Services segment | ||||
| New contracts with retail customers | 932,211 | 934,237 | – 0.2 | |
| Free cash flow Automotive segment | € million | 1,944 | 2,035 | – 4.5 |
| Group revenues3 | € million | 47,717 | 49,691 | – 4.0 |
| Automotive3 | € million | 41,518 | 42,166 | –1.5 |
| Motorcycles3 | € million | 1,182 | 1,315 | –10.1 |
| Financial Services | € million | 13,815 | 14,090 | – 2.0 |
| Other Entities | € million | 3 | 3 | – |
| Eliminations3 | € million | – 8,801 | – 7,883 | –11.6 |
| Group profit before financial result (EBIT)3 | € million | 5,479 | 5,753 | – 4.8 |
| Automotive3 | € million | 3,800 | 4,121 | – 7.8 |
| Motorcycles3 | € million | 175 | 229 | – 23.6 |
| Financial Services | € million | 1,176 | 1,192 | –1.3 |
| Other Entities | € million | 16 | 12 | 33.3 |
| Eliminations3 | € million | 312 | 199 | 56.8 |
| Group profit before tax (EBT)3 | € million | 6,038 | 6,238 | – 3.2 |
| Automotive3 | € million | 4,343 | 4,676 | – 7.1 |
| Motorcycles3 | € million | 174 | 228 | – 23.7 |
| Financial Services | € million | 1,166 | 1,184 | –1.5 |
| Other Entities | € million | 78 | 19 | – |
| Eliminations3 | € million | 277 | 131 | – |
| Group income taxes3 | € million | –1,648 | –1,747 | 5.7 |
| Profit from continuing operations | € million | 4,390 | 4,491 | – 2.2 |
| Loss from discontinued operations | € million | – 7 | – | – |
| Group net profit3 | € million | 4,383 | 4,491 | – 2.4 |
| Earnings per share3, 4 | € | 6.60 / 6.61 | 6.79 / 6.80 | – 2.8 / – 2.8 |
| Group pre-tax return on sales3, 5 | % (change in %pts) | 12.7 | 12.6 | 0.1 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 215,218 units, 2017: 186,966 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 210,974 units, 2017: 183,598 units).
3 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
4 Common / preferred stock. In computing earnings per share of preferred stock, earnings to cover the additional dividend of €0.02 per share of preferred stock are spread over the quarters of the corresponding financial year.
5 Group profit before tax as a percentage of Group revenues.
BMW Group at a Glance
The BMW Group remained on course during the period under report, setting new sales volume records for both the second quarter of 2018 and the six-month period. In total, 637,8781 BMW, MINI and Rolls-Royce brand vehicles were sold worldwide during the period from April to June (2017: 633,5821 units; + 0.7%). Sixmonth deliveries of the Group's three brands rose by 1.8% to 1,242,5071 units (2017: 1,220,8191 units).
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (second quarter 2018: 106,944, 2017: 96,794 units; 1 January to 30 June 2018: 215,218, 2017: 186,966 units).
The number of motorcycles sold during the reporting period was partially influenced by the model change in the mid-class segment, with 51,117 units sold between April and June (2017: 52,753 units; – 3.1%). Motorcycle deliveries during the six-month period were slightly down year-on-year at 86,975 units (2017: 88,389 units; – 1.6%).
The Financial Services segment's portfolio of contracts with retail customers grew slightly by 2.3% to 5,506,901 contracts at the end of the reporting period (31 December 2017: 5,380,785 contracts). In total, 480,303 new credit financing and leasing contracts were signed with retail customers during the second quarter (2017: 468,603 contracts; + 2.5%), bringing the six-month figure to 932,211 contracts (2017: 934,237 contracts: – 0.2%).
The BMW Group's earnings during the reporting period were impacted by high expenses and upfront expenditure for the product offensive, for research and development as well as an intensely competitive environment, combined with volatile markets and business conditions.
Adverse foreign currency translation effects caused Group revenues to fall short of the previous year's corresponding figure for the six-month period, especially in the first quarter. At € 25,023 million, second-quarter revenues were slightly down on the previous year (2017: € 25,7652 million; – 2.9%). Six-month revenues totalled € 47,717 million (2017: € 49,6912 million; –4.0%). Adjusted for currency effects, revenues were at similar levels to the previous year, both for the second quarter (+0.1%) and the six-month period (– 0.3%).
2 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
9
Group profit before financial result (EBIT) declined to € 2,746 million for the second quarter (2017: € 2,932* million; – 6.3%) and € 5,479 million for the six-month period (2017: € 5,753* million; – 4.8%). Apart from the currency impact, earnings were also dampened by higher expenses and upfront expenditure for the research and development projects necessary to safeguard future business as well as by the depreciation of property, plant and equipment and the amortisation of capitalised development costs.
Group profit before tax was also impacted by the same set of factors, falling to € 2,873 million for the period from April to June (2017: € 3,058* million; – 6.0 %) and to € 6,038 million for the six-month period (2017: € 6,238* million: – 3.2%).
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
The BMW Group had a workforce of 131,636 employees worldwide at the end of the reporting period (31 December 2017: 129,932 employees; + 1.3 %). The need to recruit suitably qualified staff is being driven primarily by projects aimed at securing the Group's future, such as vehicle electrification and autonomous driving.
BMW Group at a Glance
BMWAG Stock and Capital Markets
Markets severely dampened by trade dispute
DAX records losses in first half of year
The second quarter was dominated in particular by the trade dispute between the USA and China. The Chinese government's announcement in May 2018 to reduce import duties for passenger cars from 25 % to 15 % with effect from 1 July eased the conflict temporarily. Against this backdrop, global stock markets recorded only minor gains in April and the early part of May. The tariffs announced by the USA on Chinese goods and the direct countermeasures undertaken by China have unsettled investors. At the end of the quarter, concerns about a possible increase in US import duties on some European imports, such as passenger cars, also weighed heavily on automobile stocks.
The German DAX share index closed the second quarter at 12,306 points, down 4.7% compared to the end of 2017 (12,918 points). From its high for the year of 13,560 points recorded on 23 January, the DAX fell by 9.2% in the period up to the end of June, despite recovering somewhat in the second quarter.
Due to the factors mentioned above, the Prime Automobile Index performed significantly less well than the DAX. Apart from the technological challenges lying ahead for the automobile industry and the related costs, sector investors are also concerned about the current trade dispute. The sector index fell by 11.6% in the second quarter to 1,460 points, declining by 13.5% since the end of 2017.
BMW stocks were not fully immune to the sector trend and also lost ground. BMW common stock closed at € 77.63 at the end of the second quarter, 10.6% lower than at the end of 2017. BMW preferred stock also performed similarly and closed the second quarter at € 68.30, 8.5% down on the closing price recorded at the end of the previous year. So far this year, however, BMW securities have outperformed the sector as a whole, reflecting the positive figures reported for the financial year 2017 and the solid outlook for 2018, which was reaffirmed despite considerable uncertainties.
(Index: 30 March 2018 = 100)
Source: Reuters.
BMW Group at a Glance
BMWAG Stock and Capital Markets
Page 34 Outlook
Page 40 Risks and Opportunities
International automobile markets remain stable
New sales volume record for Automotive segment
Global automobile markets grew by 2.2% during the first six months of 2018.
Demand for vehicles in Europe rose by 2.7% during the first six months of the year. At 2.9 %, growth in Germany was similarly high and even greater in France at 4.7%. Once again, the strongest increase in new registrations in Europe was recorded in Spain, where the market expanded by a further 10.1%. By contrast, vehicle registrations in Italy were 1.4% down year-on-year. Despite a slowdown in the market contraction in the United Kingdom (UK) during the first six-month period, the 6.3% year-on-year decrease was still substantial.
After a slight decline in the previous year, demand in the USA stabilised again with 1.9% more new vehicles registered during the six-month period, helped by the generally robust state of the economy.
Registrations in China during the period from January to June 2018 were slightly up on one year earlier (+ 2.9%), reflecting the ongoing normalisation of the economy and the government's attempts to combat high levels of debt, especially in the corporate sector.
After robust growth in the previous year, the volatile Japanese automobile market slowed during the first half of the year, with new registrations down by 1.9% compared to the previous year.
Now that both countries have come out of recession, pent-up demand in Brazil and Russia was also evident during the six-month period, with the Brazilian market growing by 13.0% and the Russian market by as much as 17.3%.
Interim Group Management Report
Report on Economic Position General Economic Environment
Interim Group Management Report Report on Economic
Position General Economic Environment
Most motorcycle markets in the 250 cc plus class performed well during the first half of 2018, with registrations up by 3.0 % worldwide. Europe's markets developed very positively, expanding at an overall rate of 5.3 %. After a relatively weak first quarter, the German market recovered significantly to end the six-month period with registrations up by 7.7 %. The development in Italy (+ 4.4 %) and France (+ 4.6 %) was also positive. The Spanish motorcycle market grew even more strongly (+ 6.2 %). The downward trend in the USA continues, reflected in a further 4.2 % drop on the previous year.
The European Central Bank (ECB) continued to pursue an expansive monetary policy during the second quarter. While the labour market developed positively and economic growth remained robust, there was still no clear trend towards the targeted inflation rate of 2%. As a consequence, the ECB left the key interest rate in the eurozone at zero per cent before proceeding, in June, to announce a gradual withdrawal from its bond buying programme.
After a weak first quarter, the UK economy remained flat during the second three-month period. With key questions regarding the UK's planned withdrawal from the EU in March 2019 still unanswered, both political and economic uncertainty have increased. Under these circumstances, the Bank of England (BoE) decided to postpone plans for a possible interest rate increase until a later date.
In both March and June, the US Federal Reserve raised its key interest rate by 25 basis points, influenced by continued good job market figures, stable economic growth stimulated by tax breaks, and an inflation rate close to the target value of 2%.
The Chinese economy performed robustly during the second quarter. However, high corporate debt ratios and the escalating trade dispute with the US are regarded as major risks to the country's financial stability. As a result, the Chinese central bank has left its monetary policy unchanged for the time being.
Japan's economy remained stable during the second quarter of 2018. The Japanese central bank maintained its highly expansive monetary policy in view of the continuing low rate of inflation.
Selling prices of premium segment pre-owned vehicles on international markets developed in line with the BMW Group's expectations during the second quarter of 2018. As in the previous three-month period, prices tended slightly lower in Europe, still reflecting ongoing customer uncertainty with regard to diesel-powered vehicles. Prices also fell slightly in North America, but remained stable in Asia.
Interim Group Management Report
Report on Economic Position General Economic Environment
The Automotive segment performed well in both the second quarter and over the six-month period as a whole, achieving new sales volume records. The BMW Group delivered a total of 637,878 1 BMW, MINI and Rolls-Royce brand vehicles to customers in the period from April to June (2017: 633,582 1 units; +0.7%), comprising 541,849 1 BMW (2017: 534,585 1 units; + 1.4%), 95,055 MINI (2017: 98,155 units; – 3.2%) and 974 Rolls-Royce (2017: 842 units; + 15.7%).
Six-month sales of the three brands therefore edged up by 1.8% to 1,242,507 2 units (2017: 1,220,819 2 units), with the BMW brand accounting for 1,059,296 2 units (2017: 1,038,030 2 units; + 2.0 %) and MINI for 181,430 units (2017: 181,214 units; +0.1%). Rolls-Royce Motor Cars recorded significant growth, with total deliveries to customers up to 1,781 units (2017: 1,575 units; + 13.1%).
In Asia, the momentum seen in the first quarter slowed significantly as a consequence of the announcement of customs easing in China from 1 July 2018. Due to the wait-and-see attitude of Chinese customers, the BMW Group recorded a slight decline in deliveries of BMW, MINI and Rolls-Royce brand vehicles in Asia during the second quarter of 2018 to 211,197 1 units
(2017: 215,748 1 units; –2.1%). Over the six-month period, however, deliveries rose by 1.9% to 423,890 2 units (2017: 415,888 2 units). In China, second-quarter sales of the three Group brands fell to 147,059 1 units (2017: 150,614 1 units; – 2.4%). The number of vehicles sold on the Chinese mainland during the six-month period grew slightly by 2.2% to 300,153 2 units (2017: 293,572 2 units).
The BMW Group sold a total of 291,377 units (2017: 287,210 units; + 1.5%) in Europe during the period from April to June 2018. The six-month period saw a slight increase of 1.2% to 562,102 units (2017: 555,206 units). At 81,424 units, second-quarter deliveries in Germany exceeded the previous year's figure by a solid 5.8% (2017: 76,982 units). From January to June, sales figures increased by 3.7% year-on-year (149,718 units; 2017: 144,414 units). In the UK, consumer sentiment was weakened by ongoing uncertainties surrounding the Brexit negotiations. At 63,013 units sold, the threemonth sales volume nevertheless more than matched the previous year's level (2017: 62,540 units; + 0.8%). In the first six-month period, however, figures were slightly down on the previous year (124,294 units; 2017: 125,544 units; – 1.0%).
| Automotive segment at a glance | |||
|---|---|---|---|
• 10
| 2nd quarter 2018 | 2nd quarter 2017 | Change in % | ||
|---|---|---|---|---|
| Deliveries1, 3 | units | 637,878 | 633,582 | 0.7 |
| Production4 | units | 652,981 | 614,535 | 6.3 |
| Revenues3, 5 | € million | 22,192 | 22,165 | 0.1 |
| Profit before financial result (EBIT)5 | € million | 1,919 | 2,244 | –14.5 |
| Profit before tax5 | € million | 2,062 | 2,391 | –13.8 |
| EBIT margin3, 5, 6 | % (change in %pts) | 8.6 | 10.1 | –1.5 |
| 1 January to 30 June 2018 |
1 January to 30 June 2017 |
Change in % | |
|---|---|---|---|
| 1.8 | |||
| units | 1,316,314 | 1,262,464 | 4.3 |
| € million | 41,518 | 42,166 | –1.5 |
| € million | 3,800 | 4,121 | – 7.8 |
| € million | 4,343 | 4,676 | – 7.1 |
| % (change in %pts) | 9.2 | 9.8 | – 0.6 |
| 119,195 | 117,664 | 1.3 | |
| units | 1,242,507 | 1,220,819 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 106,944 units, 2017: 96,794 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 215,218 units, 2017: 186,966 units).
3 Key performance indicators reported on during the year.
4 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 103,703 units, 2017: 84,883 units).
5 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
6 Profit before financial result as percentage of Automotive segment revenues.
7 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 210,974 units, 2017: 183,598 units).
Interim Group Management Report Report on Economic Position General Economic Environment
Automotive Segment
In the Americas region, the positive trend seen at the beginning of the year continued throughout the period from April to June 2018. Second-quarter deliveries rose slightly by 3.8 % to 119,713 vehicles (2017: 115,292 units). During the first half of 2018, a total of 226,061 units of the three Group brands were
sold in the region (2017: 217,530 units; + 3.9 %). Sales figures also improved in the USA, both on a quarterly basis (91,940 units; 2017: 89,616 units; + 2.6 %) and for the six-month period (176,570 units; 2017: 171,785 units; + 2.8 %).
• 11
| in units | 2nd quarter 2018 | 2nd quarter 2017 | Change in % | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
Change in % |
|---|---|---|---|---|---|---|
| Europe | 291,377 | 287,210 | 1.5 | 562,102 | 555,206 | 1.2 |
| thereof Germany | 81,424 | 76,982 | 5.8 | 149,718 | 144,414 | 3.7 |
| thereof UK | 63,013 | 62,540 | 0.8 | 124,294 | 125,544 | –1.0 |
| Americas | 119,713 | 115,292 | 3.8 | 226,061 | 217,530 | 3.9 |
| thereof USA | 91,940 | 89,616 | 2.6 | 176,570 | 171,785 | 2.8 |
| Asia | 211,1971 | 215,7481 | – 2.1 | 423,8902 | 415,8882 | 1.9 |
| thereof China | 147,0591 | 150,6141 | – 2.4 | 300,1532 | 293,5722 | 2.2 |
| Other markets | 15,591 | 15,332 | 1.7 | 30,454 | 32,195 | – 5.4 |
| Total | 637,8781 | 633,5821 | 0.7 | 1,242,5072 | 1,220,8192 | 1.8 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 106,944 units, 2017: 96,794 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 215,218 units, 2017: 186,966 units).
The BMW brand again achieved record sales volume figures for the period under report. The BMW 5 Series, 6 Series as well as the BMW X family and BMWi models, all made important contributions, marking new quarterly and six-month highs.
The BMW 5 Series recorded particularly dynamic growth. Six-month deliveries were up significantly by 14.9 % to 191,185 units (2017: 166,353 units). The new Gran Turismo helped the BMW 6 Series to more than double deliveries in the first half of 2018 to 13,146 units worldwide (2017: 4,703 units). The BMW 1 Series performed well, with deliveries up by a solid 7.2% to 98,396 units in the first half of the year (2017: 91,802 units). Now nearing the end of its model life cycle and in line with expectations, the 192,400 units of the BMW 3 Series delivered to customers were down on the previous year (2017: 207,692 units; – 7.4%).
Despite the X3 model change and the end of the life cycle of the X5, the BMW X family reported a solid increase on the previous year's high level over the six-month period. The BMW Group increased deliveries of its now six X models to 379,400 units worldwide (2017: 357,496 units; + 6.1 %). Sales figures for the BMW X1 rose significantly by 11.8 % to 152,866 units (2017: 136,749 units). Although deliveries of the BMW X3 were slightly down at 78,464 units (2017: 81,607 units; – 3.9 %) for the six-month period, significant growth was recorded for the second quarter (44,695 units; 2017: 39,865 units; + 12.1 %). This improving performance was attributable to the start of production in China and South Africa during the second quarter of 2018 following the model change. With the BMW X5 now approaching the end of its life cycle, the 85,307 units delivered during the first half of 2018 were unable to match the previous year's high figures (2017: 89,958 units; – 5.2%). The new BMW X2 went on sale in March 2018, recording 22,326 deliveries to customers by the end of the reporting period.
General Economic Environment Automotive Segment • 12
| in units | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
Change in % |
|---|---|---|---|
| BMW 1 Series | 98,396 | 91,802 | 7.2 |
| BMW 2 Series | 81,710 | 91,848 | –11.0 |
| BMW 3 Series | 192,400 | 207,692 | – 7.4 |
| BMW 4 Series | 58,594 | 69,907 | –16.2 |
| BMW 5 Series | 191,185 | 166,353 | 14.9 |
| BMW 6 Series | 13,146 | 4,703 | – |
| BMW 7 Series | 27,530 | 32,290 | –14.7 |
| BMW X1 | 152,866 | 136,749 | 11.8 |
| BMW X2 | 22,326 | – | – |
| BMW X3 | 78,464 | 81,607 | – 3.9 |
| BMW X4 | 21,128 | 28,087 | – 24.8 |
| BMW X5 | 85,307 | 89,958 | – 5.2 |
| BMW X6 | 19,309 | 21,095 | – 8.5 |
| BMW i | 16,935 | 15,939 | 6.2 |
| BMW total | 1,059,296 | 1,038,030 | 2.0 |
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 215,218 units, 2017: 186,966 units).
With 181,430 units delivered worldwide, the brand equalled the previous year's volume record for the six-month period (2017: 181,214 units; + 0.1 %). Deliveries of the Countryman grew by more than one third to 48,692 units (2017: 34,828 units; + 39.8 %). At 90,962 units, sales of the MINI 3- and 5-door models fell short of the high level reported one year earlier (2017: 97,820 units; – 7.0 %).
| in units | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
Change in % |
|---|---|---|---|
| MINI Hatch (3- and 5-door) | 90,962 | 97,820 | – 7.0 |
| MINI Convertible | 18,154 | 18,699 | – 2.9 |
| MINI Clubman | 23,622 | 29,867 | – 20.9 |
| MINI Countryman | 48,692 | 34,828 | 39.8 |
| MINI total | 181,430 | 181,214 | 0.1 |
Interim Group Management Report Report on Economic Position General Economic Environment
Automotive Segment
Rolls-Royce Motor Cars sold 1,781 vehicles worldwide during the first six months of the year, 13.1% more than in the same period one year earlier (2017: 1,575 units). Launched in January 2018, the new Rolls-Royce Phantom is currently enjoying high demand. In the first half of 2018, a total of 346 units were delivered to customers (2017: 79 units).
• 14
| in units | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
Change in % |
|---|---|---|---|
| Phantom | 346 | 79 | – |
| Ghost | 494 | 505 | – 2.2 |
| Wraith /Dawn | 941 | 991 | – 5.0 |
| Rolls-Royce total | 1,781 | 1,575 | 13.1 |
The percentage of deliveries accounted for by electrified vehicles is growing continuously and customer demand is making this type of vehicle an increasingly important aspect of the BMW Group's overall volume performance. Thanks to the systematic expansion of alternative drivetrain systems to its model portfolio, the BMW Group occupies a leading position within the premium segment in terms of electrification. During the period from January to June, sales of electrified vehicles rose by over one third to 60,660 units (2017: 42,573 units; + 42.5 %), including 15,736 units of the BMWi3, 6.1 % more than in the same period of the
previous year (2017: 14,825 units). The BMW brand occupies the leading position in the premium segment for plug-in hybrids. Sales figures for BMW plug-in hybrids marketed under the iPerformance brand name jumped by almost half in the first six months to 38,440 units (2017: 25,936 units; + 48.2 %). Launched in June 2017, the MINI Cooper SE Countryman ALL4 recorded worldwide sales of 5,285 units during the period from January to June 2018 (2017: 698 units); (fuel consumption in l / 100 km (combined) 2.3 – 2.1 / / CO2 emissions in g / km (combined) 52 – 49 / / electric power consumption in kWh / 100 km (combined) 14.0 – 13.2).
| in units | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
Change in % |
|---|---|---|---|
| BMW i | 16,935 | 15,939 | 6.2 |
| BMW iPerformance | 38,440 | 25,936 | 48.2 |
| MINI Electric | 5,285 | 698 | – |
| Total | 60,660 | 42,573 | 42.5 |
Management Report Report on Economic Position General Economic Environment
Interim Group
Automotive Segment
In the second quarter of 2018, the BMW Group's production network manufactured a total of 652,981 1 BMW, MINI and Rolls-Royce brand vehicles (2017: 614,535 1 units; + 6.3 %), comprising 550,768 1 BMW (2017: 517,791 1 units; + 6.4 %), 100,971 MINI (2017: 95,962 units; + 5.2 %) and 1,242 Rolls-Royce (2017: 782 units; + 58.8 %). The corresponding figure for the period from January to June totalled 1,316,314 2 units (2017: 1,262,464 2 units; + 4.3%), comprising 1,111,412 2 BMW (2017: 1,066,966 2 units; + 4.2 %), 202,781 MINI (2017: 193,861 units; + 4.6 %) and 2,121 Rolls-Royce brand vehicles (2017: 1,637 units; + 29.6 %).
Six-month revenues for the Automotive segment were affected by the translation of foreign currencies such as the US dollar and the Chinese renminbi, particularly in the first quarter. At € 22,192 million, second-quarter revenues were at a similar high level to the previous year (2017: € 22,165 3 million; + 0.1%). Segment revenues for the period from January to June fell slightly by 1.5% to € 41,518 million (2017: € 42,166 3 million).
In addition to currency effects, earnings were also held down in particular by rising upfront expenditure and costs for the product offensive, for research and development projects relating to electrification and autonomous driving as well as the depreciation of property, plant and equipment and capitalised development costs.
Accordingly, second-quarter EBIT came in at € 1,919 million (2017: € 2,244 3 million; – 14.5%). At 8.6%, the Automotive segment's EBIT margin remained within the target range of between 8 and 10% (2017: 10.1 3%; – 1.5 percentage points). Between January and June, segment EBIT fell moderately to € 3,800 million (2017: € 4,121 3 million; – 7.8%), resulting in an EBIT margin of 9.2% (2017: 9.8 3%; – 0.6 percentage points) for the six-month period. Profit before tax recorded by the Automotive segment for the three-month period totalled € 2,062 million (2017: € 2,391 3 million; – 13.8 %) and for the six-month period € 4,343 million (2017: € 4,676 3 million; – 7.1 %).
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 103,703 units, 2017: 84,883 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 210,974 units, 2017: 183,598 units).
3 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
The BMW Group had a workforce of 119,195 employees in the Automotive segment at the end of the reporting period (31 December 2017: 117,664 employees), slightly up (+ 1.3%) over the six-month period.
Interim Group Management Report
Report on Economic Position
Motorcycles Segment
Motorcycles business was held down by a number of factors during the reporting period, including the model change in the mid-class segment and the large number of new models launched. The significantly lower production output had a negative impact on supplies to the BMW Group's dealer organisation.
Worldwide deliveries by BMW Motorrad decreased slightly by 3.1 % in the second quarter of 2018 to 51,117 units (2017: 52,753 units) and to 86,975 units (2017: 88,389 units; – 1.6 %) for the six-month period as a whole.
In Europe, the number of motorcycles delivered to customers totalled 53,989 units (2017: 58,617 units; – 7.9%). The figure for Germany (11,739 units) was also down on the previous year (2017: 14,461 units; – 18.8%). Shortfalls compared to one year earlier were also recorded for France (9,068 units; 2017: 9,447 units; – 4.0%) and Italy (8,647 units; 2017: 9,099 units; – 5.0%). By contrast, motorcycle sales in Spain improved slightly by 1.3% to 5,647 units (2017: 5,573 units). In the overall contracting US market, the BMW Group reported a slight increase (+ 3.1%) in six-month deliveries to 7,379 units (2017: 7,157 units).
In the period from April to June 2018, the BMW Group manufactured 46,724 motorcycles at its four production
• 16
sites worldwide (2017: 51,086 units; –8.5%). The equivalent figure for the six-month period was 88,008 units (2017: 105,552 units; – 16.6%). The significantly lower production volume negatively affected the supply of products to the dealer organisation. A further contributing factor was the model change in the mid-class Adventure segment.
Motorcycles segment revenues and earnings were negatively impacted by the lower number of units delivered during the reporting period. Second-quarter revenues fell to € 658 million (2017: € 695 1 million; – 5.3%), generating a segment EBIT of € 98 million (2017: € 104 1 million; – 5.8 %) and an EBIT margin of 14.9 % (2017: 15.0 1 %; – 0.1 percentage points). Profit before tax decreased accordingly to € 96 million (2017: € 103 1 million; – 6.8 %). Six-month revenues totalled € 1,182 million (2017: € 1,315 1 million; – 10.1 %). The segment recorded an EBIT margin of 14.8 % (2017: 17.4 1 %; – 2.6 percentage points) on an EBIT figure of € 175 million (2017: € 229 1 million; – 23.6 %). Profit before tax for the six-month period totalled € 174 million (2017: € 228 1 million; – 23.7 %).
| 2nd quarter 2018 | 2nd quarter 2017 | Change in % | ||
|---|---|---|---|---|
| Deliveries2 | units | 51,117 | 52,753 | – 3.1 |
| Production | units | 46,724 | 51,086 | – 8.5 |
| Revenues1 | € million | 658 | 695 | – 5.3 |
| Profit before financial result (EBIT)1 | € million | 98 | 104 | – 5.8 |
| Profit before tax1 | € million | 96 | 103 | – 6.8 |
| EBIT margin1, 2 | % (change in %pts) | 14.9 | 15.0 | – 0.1 |
| 1 January to 30 June 2018 |
1 January to 30 June 2017 |
Change in % | ||
|---|---|---|---|---|
| Deliveries2 | units | 86,975 | 88,389 | –1.6 |
| Production | units | 88,008 | 105,552 | –16.6 |
| Revenues1 | € million | 1,182 | 1,315 | –10.1 |
| Profit before financial result (EBIT)1 | € million | 175 | 229 | – 23.6 |
| Profit before tax1 | € million | 174 | 228 | – 23.7 |
| EBIT margin1, 2 | % (change in %pts) | 14.8 | 17.4 | – 2.6 |
| Workforce (at 30 June 2018 / 31 December 2017) | 3,591 | 3,506 | 2.4 | |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 Key performance indicators reported on during the year.
| The BMW Group had a workforce of 3,591 employees in the Motorcycles segment at the end of the reporting period (31 December 2017: 3,506 employees; + 2.4%). |
|||
|---|---|---|---|
| 2nd quarter 2018 2nd quarter 2017 Change in % |
Interim Group Management Report
Report on Economic Position General Economic
Environment Financial Services Segment
The contract portfolio under management within the Financial Services segment grew by 2.3 % during the six-month period under report and stood at 5,506,901 contracts at 30 June 2018 (31 December 2017: 5,380,785 contracts). In balance sheet terms, business volume increased slightly to stand at € 127,454 million (31 December 2017: € 124,719 million; + 2.2 %).
A total of 480,303 new credit financing and leasing contracts was concluded with retail customers during the period from April to June 2018. Compared to the same quarter one year earlier, the figure corresponded to a slight increase of 2.5 % (2017: 468,603 contracts), with leasing business growing by a solid 9.4 % and credit financing business at a similar level to the previous year (– 0.7 %).
The number of new contracts with retail customers signed between January and June 2018 (932,211 contracts) was similar to the previous year's figure (2017: 934,237 contracts; – 0.2%). Overall, leasing accounted for 33.2% (31 December 2017: 33.0%) and credit financing for 66.8% (31 December 2017: 67.0%) of total new business with new and pre-owned vehicles during the first half of 2018.
A total of 203,352 credit financing and leasing contracts were signed during the first half of the year for pre-owned BMW and MINI brand vehicles (2017: 201,812 contracts), similar to the previous year's level (+ 0.8 %).
The volume of all new credit financing and leasing contracts with retail customers signed during the six-month period under report totalled € 27,205 million, moderately lower than one year earlier (2017: € 28,745 million; – 5.4 %). Adjusted for currency effects, the decrease was only 0.4 %.
In total, 5,060,485 contracts were in place with retail customers at the end of the reporting period (31 December 2017: 4,926,228 contracts), up slightly by 2.7 % over the six-month period. The contract portfolio for the China region grew by a solid 7.0 % compared to 31 December 2017. The Europe / Middle East / Africa region (+ 3.8 %) and the EU Bank 1 region (+ 3.1 %) also recorded growth. The number of contracts in place with retail customers in the Americas and Asia / Pacific regions remained at levels similar to the end of 2017 (+ 0.8 % and – 0.3 % respectively).
The proportion of new BMW Group vehicles 2 either leased or financed by the Financial Services segment during the first half of 2018 was 47.4 % (2017: 47.6 %; – 0.2 percentage points).
| • 17 | |||
|---|---|---|---|
Financial Services segment at a glance
| 2nd quarter 2018 | 2nd quarter 2017 | Change in % | ||
|---|---|---|---|---|
| New contracts with retail customers | 480,303 | 468,603 | 2.5 | |
| Revenues | € million | 7,141 | 7,044 | 1.4 |
| Profit before financial result (EBIT) | € million | 607 | 588 | 3.2 |
| Profit before tax | € million | 605 | 589 | 2.7 |
| 934,237 932,211 |
– 0.2 |
|---|---|
| 14,090 | – 2.0 |
| 1,192 | –1.3 |
| 1,184 | –1.5 |
| 8,645 | 1.0 |
| 13,815 1,176 1,166 8,733 |
| 30. 6. 2018 | 31. 12. 2017 | Change in % | ||
|---|---|---|---|---|
| Business volume in balance sheet terms3 | € million | 127,454 | 124,719 | 2.2 |
1 EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal and its subsidiary in France.
2 The calculation only includes automobile markets in which the Financial Services segment is represented by a consolidated entity.
3 Calculated on the basis of the lines Leased products and Receivables from sales financing (current and non-current) of the Financial Services segment balance sheet.
Interim Group Management Report Report on Economic Position General Economic
Environment Financial Services Segment
In the fleet management business, the BMW Group – with its Alphabet brand – is one of Europe's foremost leasing and full-service providers. Alphabet offers leasing and financing arrangements as well as other specific services to commercial customers. A portfolio of 689,701 fleet leasing contracts was in place at the end of the reporting period (31 December 2017: 679,895 contracts; + 1.4%).
The Financial Services segment recorded a significant drop in the number of new multi-brand financing contracts signed (– 17.0%), mainly reflecting a stronger focus on the Group's own brands. Overall, 70,065 new contracts were signed during the six-month period under report (2017: 84,373 contracts). In total, 405,510 contracts were in place at 30 June 2018, similar to the level at the beginning of the period (31 December 2017: 406,813 contracts; – 0.3%).
The total business volume of dealership financing contracts at the end of the reporting period was almost identical to that reported at the end of the financial year 2017 and totalled € 19,285 million (31 December 2017: € 19,161 million; + 0.6%).
Deposit-taking provides an important source of refinancing for the Financial Services segment. Customer deposits as of 30 June 2018 totalled € 13,772 million and were therefore slightly higher than at the end of the previous financial year (31 December 2017: € 13,572 million; + 1.5%).
Overall, 689,440 new insurance contracts were brokered during the period from January to June (2017: 662,633 contracts; + 4.0 %). The number of insurance contracts in place at the end of the reporting period increased to 3,782,087 (31 December 2017: 3,649,362 contracts; + 3.6 %).
Growth in new business recorded by the Financial Services segment in the second quarter drove segment revenues up slightly by 1.4% to € 7,141 million (2017: € 7,044 million). Segment revenues for the six-month period decreased slightly to € 13,815 million (2017: € 14,090 million; – 2.0%), mainly reflecting currencyrelated factors in the first quarter. Profit before taxes for the second quarter amounted to € 605 million, slightly higher than one year earlier (2017: € 589 million; + 2.7%). By contrast, pre-tax profit for the sixmonth period fell by 1.5% to € 1,166 million (2017: € 1,184 million), mainly due to currency-related factors.
At 30 June 2018, the Financial Services segment had a workforce of 8,733 employees worldwide (31 December 2017: 8,645 employees), a 1.0% increase over the six-month period.
Interim Group Management Report
Report on Economic Position Results of Operations, Financial Position and Net Assets
the previous year, with currency effects and higher research and development expenses more than offsetting the impact of volume growth in the Automotive segment. Currency effects were mainly attributable to the change in the average exchange rates of the US dollar, the Chinese renminbi and the Japanese yen against the euro. Both the net amount of other operating income and expenses as well as the financial result had a positive effect on earnings for the period. Profit before tax for the six-month period to 30 June 2018 was slightly down on the previous year, in line with expectations.
Overall, the gross profit fell moderately compared to
Deliveries of BMW, MINI and Rolls-Royce brand vehicles during the first six months of 2018 increased slightly by 1.8% to 1,242,507 units compared to the previous year. The figure includes 215,218 units (2017: 186,966 units) from the joint venture BMW Brilliance Automotive Ltd., Shenyang.
The BMW Group had a worldwide workforce of 131,636 employees at the end of the reporting period (31 December 2017: 129,932 employees).
| in € million | 2018 | 20171 | Change in % |
|---|---|---|---|
| Revenues | 25,023 | 25,765 | – 2.9 |
| Cost of sales | –19,935 | – 20,230 | –1.5 |
| Gross profit | 5,088 | 5,535 | – 8.1 |
| Selling and administrative expenses | – 2,339 | – 2,339 | – |
| Other operating income and expenses | – 3 | – 264 | – 98.9 |
| Profit before financial result | 2,746 | 2,932 | – 6.3 |
| Financial result | 127 | 126 | 0.8 |
| Profit before tax | 2,873 | 3,058 | – 6.0 |
| Income taxes | – 784 | – 841 | – 6.8 |
| Profit from continuing operations | 2,089 | 2,217 | – 5.8 |
| Loss from discontinued operations | – 7 | – | – |
| Net profit | 2,082 | 2,217 | – 6.1 |
| Earnings per share of common stock in € | 3.13 | 3.34 | – 6.3 |
| Earnings per share of preferred stock in € | 3.14 | 3.35 | – 6.3 |
| in % | 2018 | 20171 | Change in %pts |
|---|---|---|---|
| Pre-tax return on sales2 | 11.5 | 11.9 | – 0.4 |
| Post-tax return on sales3 | 8.3 | 8.6 | – 0.3 |
| Gross profit margin4 | 20.3 | 21.5 | –1.2 |
| Effective tax rate5 | 27.3 | 27.5 | – 0.2 |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 Group profit before tax as a percentage of Group revenues.
3 Group net profit as a percentage of Group revenues.
4 Gross profit as a percentage of Group revenues.
5 Income tax expenses as a percentage of Group profit before tax.
24
Report on Economic Position Results of Operations,
Financial Position and Net Assets
Revenues during the first six months of 2018 fell slightly by € 1,974 million to € 47,717 million due to currency effects and the continued intense competitive environment. Adjusted for currency factors, revenues were at a similar level to the previous year.
Group cost of sales decreased slightly compared to the previous year, mainly due to currency effects.
| in € million | 2018 | 20171 | Change in % |
|---|---|---|---|
| Revenues | 47,717 | 49,691 | – 4.0 |
| Cost of sales | – 37,765 | – 39,170 | – 3.6 |
| Gross profit | 9,952 | 10,521 | – 5.4 |
| Selling and administrative expenses | – 4,514 | – 4,517 | – 0.1 |
| Other operating income and expenses | 41 | – 251 | – |
| Profit before financial result | 5,479 | 5,753 | – 4.8 |
| Financial result | 559 | 485 | 15.3 |
| Profit before tax | 6,038 | 6,238 | – 3.2 |
| Income taxes | –1,648 | –1,747 | – 5.7 |
| Profit from continuing operations | 4,390 | 4,491 | – 2.2 |
| Loss from discontinued operations | – 7 | – | – |
| Net profit | 4,383 | 4,491 | – 2.4 |
| Earnings per share of common stock in € | 6.60 | 6.79 | – 2.8 |
| Earnings per share of preferred stock in € | 6.61 | 6.80 | – 2.8 |
| in % | 2018 | 20171 | Change in %pts |
|---|---|---|---|
| Pre-tax return on sales2 | 12.7 | 12.6 | 0.1 |
| Post-tax return on sales3 | 9.2 | 9.0 | 0.2 |
| Gross profit margin4 | 20.9 | 21.2 | – 0.3 |
| Effective tax rate5 | 27.3 | 28.0 | – 0.7 |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 Group profit before tax as a percentage of Group revenues.
3 Group net profit as a percentage of Group revenues. 4 Gross profit as a percentage of Group revenues.
5 Income tax expenses as a percentage of Group profit before tax.
Interim Group Management Report
Report on Economic Position Results of Operations,
Financial Position and Net Assets
Research and development expenses totalling € 2,610 million (2017: € 2,298 million) were significantly higher than in the previous year due to the ongoing model offensive, vehicle electrification and development work on autonomous driving. Total research
and development expenditure – comprising research costs, non-capitalised development costs, capitalised development costs (excluding amortisation thereon) and advance payments – amounted to € 2,756 million (2017: € 2,650 million) in the first six months of the year.
| in % | 2018 | 20171 | Change in %pts |
|---|---|---|---|
| Research and development expenses as a percentage of revenues | 5.3 | 4.3 | 1.0 |
| Research and development expenditure ratio2 | 5.9 | 5.2 | 0.7 |
| Capitalisation rate3 | 32.7 | 38.0 | – 5.3 |
| in % | 2018 | 20171 | Change in %pts |
|---|---|---|---|
| Research and development expenses as a percentage of revenues | 5.5 | 4.6 | 0.9 |
| Research and development expenditure ratio2 | 5.8 | 5.3 | 0.5 |
| Capitalisation rate3 | 29.1 | 35.6 | – 6.5 |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 Research and development expenditure as a percentage of Group revenues.
3 Capitalised development costs as a percentage of research and development expenditure.
Interim Group Management Report
Report on Economic Position
Results of Operations, Financial Position and Net Assets
At € 4,514 million, selling and administrative expenses were at a similar level to one year earlier.
Depreciation and amortisation on property, plant and equipment and intangible assets recorded in cost of sales and in selling and administrative expenses in the period from January to June 2018 totalled € 2,454 million (2017: € 2,349 million).
The net amount of other operating income and expenses for the period changed from a net negative amount of € 251 million to a net positive amount of € 41 million, mainly as a result of lower allocations to provisions for legal disputes.
Profit before financial result (EBIT) fell slightly to € 5,479 million (2017: € 5,753 million).
The financial result reported for the six-month period was a € 74 million improvement on the previous year. This development included the contribution attributable to other financial result, comprising a € 189 million improvement in the result on investments and a € 9 million deterioration in sundry other financial result. The result on investments benefited in particular from a gain of € 209 million arising in conjunction with the revaluation of the DriveNow companies and was reduced by a loss of € 49 million arising on the BMW Group's shareholding in SGL Carbon SE. At € 51 million, sundry other financial result was significantly down on the previous year (2017: € 60 million). Although interest rate and currency derivatives developments have had a positive effect in the current financial year, the previous year's figure had contained the positive impact of fair value measurement gains on commodity derivatives: as a result of the first-time application of IFRS 9, most of these effects are now recognised directly in equity. This overall improvement in other financial result was offset by an € 85 million deterioration in the result from equity accounted investments to € 405 million. In the first quarter of the previous financial year, the sale of shares in HERE International B. V., Amsterdam, had resulted in a positive impact of € 183 million. The figure reported for the first half of 2018 benefited from the volume-driven increase in the earnings contribution of BMW Brilliance Automotive Ltd., Shenyang, which increased by € 102 million year-on-year. Furthermore, the net interest result reported for the first six months of 2018 deteriorated by € 21 million to a net expense of € 100 million, mainly due to lower interest income. Profit before tax amounted to € 6,038 million and was therefore slightly down year-on-year (2017: € 6,238 million).
The income tax expense for the six-month period amounted to € 1,648 million (2017: € 1,747 million).
Earnings performance by segment
| in € million | 2018 | 20171 | Change in % | Currency adjusted change2 in % |
|---|---|---|---|---|
| Automotive | 22,192 | 22,165 | 0.1 | 3.2 |
| Motorcycles | 658 | 695 | – 5.3 | – 2.0 |
| Financial Services | 7,141 | 7,044 | 1.4 | 5.1 |
| Other Entities | 1 | 1 | – | – |
| Eliminations | – 4,969 | – 4,140 | 20.0 | 25.6 |
| Group | 25,023 | 25,765 | – 2.9 | 0.1 |
| in € million | 2018 | 20171 | Change in % |
|---|---|---|---|
| Automotive | 2,062 | 2,391 | –13.8 |
| Motorcycles | 96 | 103 | – 6.8 |
| Financial Services | 605 | 589 | 2.7 |
| Other Entities | 8 | 23 | – 65.2 |
| Eliminations | 102 | – 48 | – |
| Group | 2,873 | 3,058 | – 6.0 |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
Automotive segment revenues fell slightly in the first half of 2018 due to currency factors. Adjusted for currency effects, they rose slightly on the back of higher deliveries. Cost of sales finished almost identical to the previous year's level. Adjusted for exchange rate effects, they increased slightly, mainly reflecting higher research and development expenses. Overall, the six-month gross profit margin was slightly lower than one year earlier.
The net amount of other operating income and expenses reported by the segment improved from a net expense of € 277 million to a net expense of € 5 million, mainly as a result of lower allocations to provisions for legal disputes.
Profit before financial result fell moderately and amounted to € 3,800 million (2017: € 4,121 million) for the six-month period.
The Automotive segment's financial result for the first half of the financial year 2018 was slightly down on the previous year, mainly as a result of the various effects described above relating to the result for equity accounted investments, income from investment and the changed accounting treatment applied to commodity derivatives. For further information on the changed accounting treatment of commodity derivatives, see note 6 to the Interim Group Financial Statements.
see note 6
Profit before tax for the six-month period deteriorated moderately compared to the previous year.
Management Report
Position Results of Operations, Financial Position
and Net Assets
Position Results of Operations, Financial Position and Net Assets
| BMW Group revenues by segment for the period from 1 January to 30 June | ||||
|---|---|---|---|---|
| • 24 |
| in € million | 2018 | 20171 | Change in % | Currency adjusted change2 in % |
|---|---|---|---|---|
| Automotive | 41,518 | 42,166 | –1.5 | 2.4 |
| Motorcycles | 1,182 | 1,315 | –10.1 | – 6.8 |
| Financial Services | 13,815 | 14,090 | – 2.0 | 3.3 |
| Other Entities | 3 | 3 | – | – |
| Eliminations | – 8,801 | – 7,883 | 11.6 | 20.1 |
| Group | 47,717 | 49,691 | – 4.0 | – 0.3 |
| in € million | 2018 | 20171 | Change in % |
|---|---|---|---|
| Automotive | 4,343 | 4,676 | – 7.1 |
| Motorcycles | 174 | 228 | – 23.7 |
| Financial Services | 1,166 | 1,184 | –1.5 |
| Other Entities | 78 | 19 | – |
| Eliminations | 277 | 131 | – |
| Group | 6,038 | 6,238 | – 3.2 |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
Motorcycles segment revenues fell significantly compared to the first half of the previous year, mainly due to the production ramp-up situation brought about by numerous model changes. Sales mix and currency effects also contributed to the decline in revenues.
Six-month profit before tax was therefore significantly lower than one year earlier.
Report on Economic Position Results of Operations, Financial Position
and Net Assets
| in % | 2018 | 20171 | Change in %pts |
|---|---|---|---|
| Automotive | |||
| Gross profit margin | 17.5 | 20.1 | – 2.6 |
| EBIT margin2 | 8.6 | 10.1 | –1.5 |
| Motorcycles | |||
| Gross profit margin | 24.6 | 24.0 | 0.6 |
| EBIT margin2 | 14.9 | 15.0 | – 0.1 |
| in % | 2018 | 20171 | Change in %pts |
|---|---|---|---|
| Automotive | |||
| Gross profit margin | 18.2 | 19.4 | –1.2 |
| EBIT margin2 | 9.2 | 9.8 | – 0.6 |
| Motorcycles | |||
| Gross profit margin | 24.9 | 26.3 | –1.4 |
| EBIT margin2 | 14.8 | 17.4 | – 2.6 |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 Segment profit before financial result as a percentage of segment revenues.
Financial Services segment revenues fell slightly in the reporting period, mainly due to negative foreign currency translation effects. Adjusted for currency effects, they rose slightly due to the increased size of the portfolio.
The risk profile remained stable during the six-month period from January to June 2018. In a number of European markets, including Germany and France, residual values decreased slightly, in line with expectations.
Profit before tax in the Financial Services segment decreased slightly, mainly as a result of currency effects.
The result before tax in the Other Entities segment improved significantly year-on-year, helped, among other things, by positive valuation effects arising on interest rate derivatives. The impact of inter-segment eliminations on pre-tax profit increased by € 146 million and amounted to € 277 million for the six-month period mainly due to positive reversal effects from the portfolio of leased products.
Position Results of Operations, Financial Position and Net Assets
The consolidated cash flow statements for the Group and the Automotive and Financial Services segments show the sources and applications of cash flows for the financial years for the first six months of the financial years 2018 and 2017, classified into cash flows from operating, investing and financing activities. Cash and cash equivalents in the cash flow statements correspond to the amounts disclosed in the balance sheet.
Cash flows from operating activities are determined indirectly, starting with Group and segment net profit. By contrast, cash flows from investing and financing activities are based on actual payments and receipts.
| in € million | 2018 | 2017 | Change |
|---|---|---|---|
| Cash inflow (+)/ outflow (–) from operating activities | 2,672 | 1,918 | 754 |
| Cash inflow (+)/ outflow (–) from investing activities | – 2,407 | – 2,270 | –137 |
| Cash inflow (+)/ outflow (–) from financing activities | – 707 | –123 | – 584 |
| Effect of exchange rate and changes in composition of Group | – | – 90 | 90 |
| Change in cash and cash equivalents | – 442 | – 565 | 123 |
The cash inflow from operating activities in the first half of 2018 was mainly influenced by the lower yearon-year increase in receivables from sales financing and the change in deferred taxes. These positive developments were offset by an increase in working capital.
The higher cash outflow for investing activities mainly reflects increased payments for investments in intangible assets and property, plant and equipment.
The increase in cash outflows for financing activities resulted mainly to the repayment of commercial paper and the lower number from bonds issued compared with the previous year. The change in other financial liabilities worked in the opposite direction.
Free cash flow for the Automotive segment in the first half of 2018 was as follows:
| in € million | 2018 | 2017 | Change | |
|---|---|---|---|---|
| Cash inflow (+)/ outflow (–) from operating activities | 4,419 | 4,393 | 26 | |
| Cash inflow (+)/ outflow (–) from investing activities | – 2,515 | – 2,187 | – 328 | |
| Net investment in marketable securities and investment funds | 40 | –171 | 211 | |
| Free cash flow Automotive segment | 1,944 | 2,035 | – 91 |
The higher cash outflow for investing activities of the Automotive segment mainly reflects increased payments for investments in intangible assets and property, plant and equipment, as referred to above.
Interim Group Management Report
Report on Economic Position
Results of Operations, Financial Position and Net Assets
Net financial assets of the Automotive segment com-
| in € million | 30. 6. 2018 | 31.12. 2017 | Change |
|---|---|---|---|
| Cash and cash equivalents | 6,435 | 7,157 | – 722 |
| Marketable securities and investment funds | 4,339 | 4,336 | 3 |
| Intragroup net financial assets | 9,764 | 9,774 | –10 |
| Financial assets | 20,538 | 21,267 | – 729 |
| Less: external financial liabilities* | –1,602 | –1,480 | –122 |
| Net financial assets Automotive segment | 18,936 | 19,787 | – 851 |
*Excluding derivative financial instruments.
prise the following:
• 30
Cash flows relating to the Financial Services segment developed as follows in the first half of 2018:
| in € million | 2018 | 2017 | Change | |
|---|---|---|---|---|
| Cash inflow (+)/ outflow (–) from operating activities | – 2,617 | – 4,046 | 1,429 | |
| Cash inflow (+)/ outflow (–) from investing activities | 140 | – 17 | 157 | |
| Cash inflow (+)/ outflow (–) from financing activities | 2,697 | 3,085 | – 388 | |
| Net | 220 | – 978 | 1,198 |
Cash outflows from operating activities in the Financial Services segment were driven primarily by the change in receivables from sales financing.
The cash inflow from financing activities results primarily from the increase in other financial liabilities.
The BMW Group uses a broadly diversified and flexible range of funding sources to finance its operating activities. Almost all of the funds raised are used to finance the BMW Group's Financial Services business. Further details regarding the principles and objectives of financial management are contained in the BMW Group Financial Statements for the year ended 31 December 2017.
During the period from January to June 2018, BMW Group entities issued two euro benchmark bonds with a total volume of € 3.75 billion (in conjunction with the EMTN programme), a GBP-denominated bond amounting to GBP 250 million and private placements in various currencies with a total volume of € 2.4 billion. The BMW Group also placed a bond for US dollar 4 billion on the US capital market. Bonds denominated in Chinese renminbi and Canadian dollar were issued with a total volume of € 0.7 billion.
In addition, six ABS transactions with a volume of € 3.9 billion were issued in Germany, France, Japan, Canada and the USA. The regular issue of commercial paper and deposit-taking by the Group's banking subsidiaries are also used to refinance the BMW Group.
Report on Economic Position Results of Operations,
Financial Position and Net Assets
| • 32 | |
|---|---|
| Group | |||||
|---|---|---|---|---|---|
| in € million | 30. 6. 2018 | 31.12. 20171 | Change in % | Currency adjusted change2 in % |
Proportion of balance sheet total in % |
| Assets | |||||
| Intangible assets | 9,524 | 9,464 | 0.6 | 0.6 | 4.7 |
| Property, plant and equipment | 18,238 | 18,471 | –1.3 | –1.5 | 9.1 |
| Leased products | 36,781 | 36,257 | 1.4 | 0.4 | 18.3 |
| Investments accounted for using the equity method | 2,863 | 2,769 | 3.4 | 3.4 | 1.4 |
| Other investments | 762 | 690 | 10.4 | 17.1 | 0.4 |
| Receivables from sales financing | 82,806 | 80,434 | 2.9 | 2.4 | 41.0 |
| Financial assets | 8,731 | 10,334 | –15.5 | –15.8 | 4.3 |
| Deferred and current tax | 4,537 | 3,559 | 27.5 | 25.3 | 2.3 |
| Inventories | 15,286 | 12,707 | 20.3 | 20.5 | 7.6 |
| Trade receivables | 3,140 | 2,667 | 17.7 | 17.8 | 1.6 |
| Other assets | 9,802 | 9,115 | 7.5 | 8.3 | 4.9 |
| Cash and cash equivalents | 8,597 | 9,039 | – 4.9 | – 4.8 | 4.2 |
| Assets held for sale | 441 | – | – | – | 0.2 |
| Total assets | 201,508 | 195,506 | 3.1 | 2.6 | 100.0 |
| Equity and liab ilities |
|||||
| Equity | 55,769 | 54,107 | 3.1 | 3.4 | 27.7 |
| Pension provisions | 2,709 | 3,252 | –16.7 | –17.0 | 1.3 |
| Other provisions | 11,856 | 11,999 | –1.2 | –1.7 | 5.9 |
| Deferred and current tax | 4,359 | 3,281 | 32.9 | 28.6 | 2.2 |
| Financial liabilities | 97,633 | 94,648 | 3.2 | 2.4 | 48.5 |
| Trade payables | 10,048 | 9,731 | 3.3 | 3.1 | 5.0 |
| Other liabilities | 19,114 | 18,488 | 3.4 | 2.9 | 9.4 |
| Liabilities in conjunction with assets held for sale | 20 | – | – | – | – |
| Total equity and liabilities | 201,508 | 195,506 | 3.1 | 2.6 | 100.0 |
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
The Group balance sheet total was slightly higher than at the end of the financial year 2017.
Receivables from sales financing increased slightly over the six-month period, mainly due to the greater credit financing volumes in the UK and China. A total of 623,126 new credit financing contracts were signed during the first six months of 2018. Compared to the end of the previous year, the segment's contract portfolio grew by 2.6% to 3,729,724 contracts.
Financial assets decreased significantly compared to 31 December 2017, mainly due to the fair value measurement of currency derivatives. Lower fair values of commodity derivatives exacerbated the situation.
Inventories were significantly higher than at the end of the financial year 2017, whereby most of the increase related to finished goods and stocking up effects.
Other assets increased solidly compared to 31 December 2017, mainly in connection with the higher amount of return right assets recognised relating to future leased vehicles.
Compared with the amounts reported in the Group Financial statements for the year ended 31 December 2017, deferred and current income tax assets and liabilities increased significantly in connection with the US tax reform.
32
Interim Group Management Report
Report on Economic Position Results of Operations,
Financial Position and Net Assets
| Group equity rose slightly by € 1,662 million to | to € 4,338 million and decreased by a dividend pay |
|---|---|
| € 55,769 million, increased primarily by the profit | ment amounting to € 2,630 million. |
• 33 in % 30. 6. 2018 31.12. 20172 Change in %pts Group 27.7 27.7 – Automotive segment 39.5 42.0 – 2.5 Financial Services segment 9.9 10.7 – 0.8
1 Equity as a percentage of relevant total assets.
2 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
Pension provisions declined significantly compared to the end of the financial year 2017, mainly due to higher discount rates applicable for the UK.
attributable to shareholders of BMWAG amounting
Financial liabilities rose slightly compared to 31 December 2017, mainly due to the increase in bonds. The repayment of commercial paper had the opposite effect.
Other liabilities increased slightly compared to the end of the financial year 2017, mainly in connection with the higher amount of refund liabilities recognised relating to future leased vehicles.
The line items "Assets held for sale" and "Liabilities in connection with assets held for sale" relate to the discontinued operations of the DriveNow companies. Further information is provided in note 2 to the Interim Group Financial Statements.
see note 2
Overall, the results of operations, financial position and net assets position of the BMW Group continued to develop positively during the six-month period under report.
Further information on transactions with related parties can be found in note 34 to the Interim Group Financial Statements. see note 34 Interim Group Management Report
Report on Outlook, Risks and Opportunities Outlook
Global economy remains stable despite trade disputes
BMW Group confirms outlook
The report on outlook, risks and opportunities describes the expected development of the BMW Group, including material risks and opportunities, from a Group management perspective. It contains forwardlooking statements and is based on expectations and assessments that are subject to uncertainty. As a result, actual outcomes, including those attributable to political and economic developments, could differ – either positively or negatively – from those described below. Further information on this topic is provided in the Annual Report 2017 (Outlook, pp. 90, Risks and Opportunities, pp. 96).
The global economy is currently in a stable situation overall, despite the many risks. However, in view of the ongoing trade dispute, which has meanwhile escalated to take on global proportions, forecasts may well be corrected downwards as the year progresses. The worldwide growth of 3.9% most recently predicted by the International Monetary Fund in its spring forecast could also be affected.
In Europe, the pace of economic growth has slowed down somewhat during the past few months. Gross domestic product (GDP) is currently expected to grow by 2.2% over the year as a whole and therefore slightly down on 2017. However, the economic environment remains quite conducive to growth. Unemployment continues to fall, the weak euro is driving export growth and the ECB is only gradually running down its expansive monetary policy.
In Germany, too, economic indicators remain positive. Record employment figures and historically low unemployment continue to ensure a good economic climate. Despite a slight dip in recent months, the German economy is now expected to grow this year by 2.2%, similar to one year earlier.
The French economy is predicted to grow by 2.0% this year, driven primarily by sustained domestic demand and robust exports.
Interim Group Management Report Report on Outlook,
Risks and Opportunities Outlook
In Italy, although a new government has meanwhile been formed, its stability and impact on the country as well as on Europe remain to be seen. At 1.3%, the GDP forecast for Italy in 2018 continues to be at the lower end of the scale in Europe, in spite of the gradually falling unemployment figures and recent growth in domestic demand creating positive impulses.
Spain also had a change of government recently. Here again, it is not yet clear as to whether it will provide stability due to its lack of a political majority. Nevertheless, despite this uncertainty, the country's economy is expected to grow by 2.7% this year. Unemployment has dropped significantly and robust domestic demand is having a positive impact, although a somewhat more restrictive public spending policy is holding down growth.
In the UK, uncertainty caused by the imminent Brexit is having a dampening effect on the economy. Even two years after the initial referendum, a number of fundamental issues still need to be solved. Despite recent signs pointing to the prospect of a so-called "soft" Brexit, the probability of a "hard" Brexit remains high. For this reason, the UK economy is expected to lose further pace and grow by only 1.4% in 2018.
In the second quarter, the conflict between the USA and its main trading partners further intensified. The hike in import duties on steel and aluminium levied by the USA was promptly followed by retaliatory measures taken by the countries affected, most recently culminating in additional duties of 25% being levied not only on goods imported into the US from China, but also those going in the other direction, valued at 34 billion US dollars on each side. The USA is generally expected to take further measures and a tit-for-tat response is highly likely. Furthermore, additional duties are currently being considered on automobiles imported into the USA, particularly from Europe. Any increase in the severity of this trade dispute could cause a significant slowdown in global economic growth.
The US economy is currently still in excellent shape. The tax reform adopted at the end of last year seems to be having at least a mildly positive impact and the US Federal Reserve continues to be very cautious when it comes to raising interest rates. The very low level of unemployment and strong consumer confidence are powerful drivers of growth and market forecasts for 2018 have meanwhile climbed to 2.8%, regardless of the political turbulence surrounding trade.
The Chinese economy remains on the course set by the country's government, despite the high degree of risk and the imminent threat of an escalating trade dispute. Economic growth in China is generally expected to run at 6.5% in 2018, its greatest challenge being the high level of debt, mostly of a corporate nature, even though the situation has not worsened. Moreover, a major drop in the continually rising property prices could cause turbulence on financial markets as well as an economic downturn in China.
Japan has been unable to maintain the strong growth recorded in 2017 and the country's economy is only likely to grow by 1.1% this year, despite conditions remaining good thanks to robust domestic demand and good export figures on the back of a weak yen.
India has overcome the economic distortions it faced in the wake of the banknote changeover and the tax reform and has meanwhile turned the corner to a path of higher growth. This year, the Indian economy is expected to benefit from strong domestic demand and GDP growth of 7.3 %.
The economic situation in Russia is recovering sluggishly from recession and is likely to grow by only 1.7%. However, above all, the price of oil has meanwhile risen quite considerably, bolstering the Russian economy to a certain degree. In Brazil, too, economic recovery continues to be slow. Domestic demand has gathered pace, but the uncertain outcome of the elections in October continues to be a source of uncertainty.
Outlook
Overall, the world's automobile markets are expected to grow by 1.1% in 2018. Momentum is expected to come from the BRIC countries and other emerging markets as well as from individual markets in Europe. By contrast, markets in the USA, Japan and UK are forecast to contract.
Despite the generally positive economic situation, Europe's automobile market as a whole is only predicted to move sideways over the course of 2018 (15.8 million units; + 1.1 %), mainly due to a further sharp decline in new registrations in the UK.
Demand on the German automobile market is expected to increase by 1.7 % to 3.5 million units in the current year. In France, by contrast, a slight decline is likely to be seen, with forecasts pointing to demand for the full year decreasing to 2.1 million units (–0.5%). New registrations in Italy are predicted to decrease slightly (2.0 million units; –2.0%) and increase sharply in Spain (1.3 million units; + 7.1%). The UK automobile market is likely to experience another difficult year in 2018, with new registrations set to drop by a further 5.1% to 2.4 million units.
Consolidation on the US automobile market is expected to continue during the current year, with new registrations predicted to decline slightly by 0.8 % to around 17.1 million units.
As the process of normalisation continues within the Chinese economy, growth rates for the automobile market are also likely to be lower than in the recent past. Forecasts for the current year point to an increase of 3.3% to 25.5 million units.
The Japanese market remains volatile. Despite the economic recovery, demand for passenger cars is set to drop by 2.7% to 4.9 million units in 2018.
Following recessions in both countries, automobile markets in Russia and Brazil are expected to benefit from pent-up demand in 2018 and therefore expected to grow strongly, albeit starting from a low base. Forecasts currently anticipate growth of 10.3 % to 1.6 million units in Russia and growth of 9.6 % to 2.0 million units in Brazil.
The BMW Group forecasts are based on the assumption that worldwide motorcycle markets in the 250 cc plus class will develop over the remainder of the year in a similar fashion to the first six-month period, with individual markets also continuing to develop divergently. The positive trend in registrations in the major European markets of Germany, France, Italy and Spain is likely to continue, whereas the UK is likely to see demand remain more or less flat. Continuing the trend seen in recent years, the US motorcycle market could well experience a further contraction in the number of new registrations.
Within the eurozone, the ECB has announced its intention to reduce the monthly volume of bond purchasing from € 30 billion to € 15 billion with effect from September 2018. It will not purchase any additional bonds with effect from the start of 2019 and from then on only replace expiring bonds.
In the UK, the Bank of England has signalled that it will gradually raise the key interest rate as soon as the economy has stabilised.
In the USA, the US Federal Reserve is likely to raise the key interest rate further during the course of the year, assuming the economy continues to perform well.
In China, the focus of financial policies will remain on safeguarding the country's financial stability. Both the government and the central bank are expected to support this process with a combination of economic and monetary measures.
With prices remaining flat, the Japanese central bank is set to maintain its expansive monetary policy.
The BMW Group expects first half-year trends in pre-owned vehicle prices in the premium segment to continue during the second half of the year. Due to the ongoing debate on potential driving bans for diesel-powered vehicles in certain countries, pre-owned vehicle prices will probably continue to fall slightly in Europe. Prices in North America are expected to vary depending on the market segment, although the pre-owned vehicle segment remains slightly tense. Pre-owned vehicle markets in Asia are expected to remain stable.
The application of International Financial Reporting Standards IFRS 9 (Financial Instruments) and IFRS 15 (Revenue from Contracts with Customers) is mandatory for the BMW Group with effect from 1 January 2018. While application of IFRS 15 requires adjusted comparative figures for the financial year 2017, no such adjustment is required in the case of IFRS 9. In order to ensure a transparent presentation of changes in key financial performance indicators, the outlook shows values adjusted in accordance with IFRS 15 as well as those actually reported for 2017. With regard to key financial performance indicators for 2018, the outlook is based on values for 2017 adjusted in accordance with IFRS 15. Further information on IFRS 15 and IFRS 9 is provided in notes 5 and 6 to the Interim Group Financial Statements.
Profit before tax expected at previous year's level Even though competition on international automobile markets is set to remain intense, the BMW Group intends to continue its strong business performance in 2018. Notable contributions are likely to come from a variety of new vehicles as well as successful established models. At the same time, investments in important future-oriented projects remain high, including the continued electrification of vehicles, digitalisation and autonomous driving. The BMW Group's production network will also be further enlarged during the outlook period. Due to these challenges, Group profit before tax is expected to be in line with the previous year's level (2017 adjusted: € 10,6751 million).
The BMW Group and the Daimler Group plan to merge their mobility services business units in a joint venture and strategically grow their combined business going forward. The two companies signed an agreement to this effect in March 2018. Each of the two groups will hold a 50% stake in the joint venture.
Subject to approval by antitrust authorities during the current year, the foundation of the joint venture will give rise to a one-off valuation and earnings impact on the Group Financial Statements of BMWAG, which will result in an adjustment to the outlook, namely that profit before tax at Group level for 2018 will be expected to increase slightly year-on-year. The effect described above has no impact on the EBIT margin of the Automotive segment.
Workforce size at year-end: slight increase expected Based on current forecasts, the size of the BMW Group's workforce is expected to increase only slightly (2017: 129,932 employees). Above all, projects relating to vehicle electrification and autonomous driving, growth in the automobile and motorcycle business and the expansion of financial and mobility services remain the focus of recruiting efforts.
The BMW Group expects a further year-on-year increase in deliveries of BMW, MINI and Rolls-Royce brand vehicles and again aims to occupy a leading position in the global premium segment in 2018. Balanced growth in major sales regions will help to offset volatility in individual markets. Assuming political and economic conditions do not deteriorate, deliveries to customers are forecast to rise slightly to a new high (2017: 2,463,5262 units).
2 Including the joint venture BMW Brilliance Automotive, Ltd., Shenyang
see notes 5 and 6
(2017: 384,124 units).
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
The BMW 6 Series Gran Turismo, the new BMW X3 (both launched in November 2017) and the BMW X2 (available since March 2018) are just three of the vehicles expected to make key contributions to sustained growth. In addition to the extended-wheelbase version of the BMW 5 Series, the BMW X3, which has been produced in China for the local market since the end of the second quarter of 2018, will also provide additional momentum. Later this year, the new BMW X4, the new BMWi8 Roadster (BMWi8 Roadster: fuel consumption in l / 100 km (combined) 2.0 / / CO2 emissions in g / km (combined) 46 / / Electric power consumption in kWh / 100 km (combined) 14.5) as well as the model revisions of the BMW 2 Series Active Tourer and Gran Tourer and the BMWi8 Coupé (BMWi8 Coupé: fuel consumption in 1 / 100 km (combined) 1.8 / / CO2 emissions in g / km (combined) 42 / / Electric power consumption in kWh / 100 km (combined) 14.0) will go on sale. The new BMW 8 Series Coupé will also be launched. The brand's new top model was presented to the public in June. The new BMW X5 will also provide positive impetus towards the end of the year. Model revisions of the MINI Hatch (3- and 5-door) and MINI Convertible should boost demand. The new Rolls-Royce Phantom models were launched in January 2018.
37
Interim Group Management Report Report on Outlook,
Risks and Opportunities Outlook
Interim Group Management Report Report on Outlook,
Risks and Opportunities Outlook
The BMW Group is continuing in its efforts to reduce both fuel consumption and CO2 emissions. Moreover, the percentage of electrified vehicles in the total number of deliveries is expected to increase. Accordingly, CO2 emissions across the vehicle fleet as a whole are expected to decrease slightly during the outlook period, continuing the trend seen in previous years (2017: 122 grams CO2 / km).
:
The disclosures made in the Annual Report 2017 relating to carbon fleet emissions for the year 2017 are based on the NEDC (New European Driving Cycle) testing cycle. As part of the conversion to the new WLTP (Worldwide Harmonized Light Vehicles Test Procedure) testing cycle, all automobile manufacturers are required by law to register all vehicles in their fleet by September 2018. The conversion to the new WLTP test procedure for the BMW Group's fleet is proceeding according to plan and has been largely completed.
In order to improve the comparability of fleet emission values for the 2018 financial year with those of the previous year – with effect from the quarterly report to 30 June 2018 – the BMW Group is therefore reporting a WLTP-adjusted value of 128 g CO2 / km for the new testing cycle for the year 2017. On the basis of the adjusted value, the BMW Group continues to expect CO2 emissions to decrease slightly.
Sales volume growth in the Automotive segment will have a corresponding impact on revenues. Accordingly, a slight increase in segment revenues is forecast for 2018 (2017 adjusted: € 85,742 2 million).
The EBIT margin is again expected to be within a range of 8 to 10% for the Automotive segment (2017 adjusted: 9.2 2%).
Segment RoCE is forecast to be significantly below the previous year's level (2017 adjusted: 77.7 2 %). The decrease is partially attributable to increasing investments in the electrification of the vehicle fleet, digitalisation and the expansion and renewal of the model portfolio. However, the long-term target RoCE of at least 26 % for the Automotive segment will be significantly exceeded.
In view of the introduction of IFRS 16 (Leases) as of 1 January 2019, the future significance of RoCE as a performance indicator, as opposed to an operational management tool, is under review.
Deliveries to customers: slight increase expected The BMW Group expects business in the Motorcycles segment to develop positively in the second half of 2018. The renewal of the product range in the previous year, together with a variety of new models, including some specifically aimed at the urban environment, should all have a positive impact.
Due to the ramp-up situation connected with various model changes in the Motorcycles segment, production was down year-on-year in the first half year of 2018. Lower production output during this phase will also impact the supply of products to the dealer organisation during the current year.
With effect from the first quarter of 2018, the Motorcycles segment is forecast to achieve a slight increase in deliveries (2017: 164,153 units). In the Annual Report 2017, a solid increase was expected.
The segment EBIT margin in 2018 is expected to lie within the target range between 8 and 10% (2017: 9.1%).
The Motorcycles segment RoCE in 2018 is expected to come in at a similar level to the previous year (2017: 34.0%). In the Annual Report 2017, it had been predicted that RoCE would increase slightly. The outlook for segment RoCE has been revised due to the ramp-up situation described above. The long-term target RoCE of 26% for the Motorcycles segment is still expected to be surpassed.
2 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the
Interim Group Financial Statements.
The BMW Group expects the Financial Services segment to continue performing well in 2018. As stated in the Annual Report 2017, the Financial Services segment will require additional equity capital going forward in view of increasing regulatory requirements worldwide. Accordingly, segment RoE is expected to decrease slightly (2017: 18.1%). In this context, with effect from the 2018 financial year, the sustainable target return was changed from its former level of at least 18% to its current level of at least 14%.
4 RoE in the Financial Services segment is calculated as segment profit before taxes, divided by the average amount of equity capital attributable to the Financial Services segment balance sheet.
3 RoCE in the Automotive and Motorcycles segments is measured on the basis of relevant segment profit before financial result and the average amount of capital employed in the segment concerned. Capital employed corresponds to the sum of all current and non-current operational assets, less liabilities that do not incur interest.
Interim Group Management Report Report on Outlook,
Risks and Opportunities Outlook
Business is expected to develop steadily in the financial year 2018, with significant contributions coming from new automobile and motorcycle models as well as the expansion of individual mobility-related services. Due to the challenges described above, Group profit before tax is expected to be in line with that of last year. Automotive segment revenues are set to grow slightly, based on the forecast of higher deliveries to customers. At the same time, fleet carbon dioxide emissions are forecast to decrease slightly. The Group's targets are to be met with a slight increase in the size of the workforce. The Automotive segment's EBIT margin in 2018 is set to remain within the target range of between 8 and 10 %, while its RoCE is forecast to drop significantly. A slight decrease is
also forecast for the RoE in the Financial Services segment. However, both performance indicators will be above their long-term targets of 26 % (RoCE) and 14 % (RoE) respectively. Deliveries to customers by the Motorcycles segment are forecast to show a slight increase, with an EBIT margin within the target range of between 8 and 10 % and RoCE in line with last year's level.
Depending on the political and economic situation and the outcomes of the risks and opportunities described in the Annual Report 2017, actual business performance could differ from current expectations. Trade policy developments in particular are being closely and continually monitored. Any new findings will be promptly taken into account in corporate planning.
| 2017 reported |
2017 adjusted1 |
2018 Outlook2 |
||
|---|---|---|---|---|
| Group | ||||
| Profit before tax | € million | 10,655 | 10,675 | in line with last year's level |
| Workforce at year-end | 129,932 | 129,932 | slight increase | |
| Automotive segment | ||||
| Deliveries to customers3 | units | 2,463,526 | 2,463,526 | slight increase |
| Fleet emissions4 | g CO2 / km | 122 | 1285 | slight decrease |
| Revenues | € million | 88,581 | 85,742 | slight increase |
| EBIT margin | % | 8.9 | 9.2 | between 8 and 10 |
| Return on capital employed | % | 78.6 | 77.7 | significant decrease |
| Motorcycles segment | ||||
| Deliveries to customers | units | 164,153 | 164,153 | slight increase |
| EBIT margin | % | 9.1 | 9.1 | between 8 and 10 |
| Return on capital employed | % | 34.0 | 34.0 | in line with last year's level |
| Financial Services segment | ||||
| Return on equity | % | 18.1 | 18.1 | slight decrease |
1 Prior year financial figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
2 Based on adjusted figures.
3 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units). 4 EU-28.
5 Value based on planned conversion to WLTP
Interim Group Management Report
Report on Outlook, Risks and Opportunities Risks and Opportunities
As a globally operating enterprise, the BMW Group is constantly confronted with a broad range of risks, but also with numerous opportunities. The Group's success is based on making full use of the opportunities that present themselves. In order to achieve growth, profitability, efficiency and continued sustainable activity going forward, the BMW Group must consciously assume a certain amount of risk. There have been no material changes to the overall risk profile compared to that described in the Group Management Report 2017. Further information on risks and opportunities, as well as on the methods employed to manage them can also be found in the "Report on Risks and Opportunities" section of the Annual Report 2017 (pp. 96).
Page 83 Review Report
42
Interim Group Financial Statements
BMW Group Income Statement Statement of Comprehensive
| (unaudited supplementary information) |
||||||
|---|---|---|---|---|---|---|
| Note | 2018 | 2017* | 2018 | 2017* | 2018 | 2017* |
| 7 | 25,023 | 25,765 | 22,192 | 22,165 | 658 | 695 |
| 8 | –19,935 | – 20,230 | –18,300 | –17,712 | – 496 | – 528 |
| 5,088 | 5,535 | 3,892 | 4,453 | 162 | 167 | |
| 9 | – 2,339 | – 2,339 | –1,944 | –1,950 | – 63 | – 64 |
| 10 | 115 | 156 | 120 | 165 | – | 2 |
| 10 | –118 | – 420 | –149 | – 424 | –1 | –1 |
| 2,746 | 2,932 | 1,919 | 2,244 | 98 | 104 | |
| 11 | 182 | 139 | 182 | 139 | – | – |
| 12 | 36 | 46 | 82 | 72 | – | – |
| 12 | – 71 | – 88 | –107 | –112 | –1 | –1 |
| 13 | – 20 | 29 | –14 | 48 | –1 | – |
| 127 | 126 | 143 | 147 | – 2 | –1 | |
| 2,873 | 3,058 | 2,062 | 2,391 | 96 | 103 | |
| 14 | – 784 | – 841 | – 567 | – 650 | – 29 | – 26 |
| 2,089 | 2,217 | 1,495 | 1,741 | 67 | 77 | |
| 2 | – 7 | – | – 7 | – | – | – |
| 2,082 | 2,217 | 1,488 | 1,741 | 67 | 77 | |
| 25 | 20 | 7 | 6 | – | – | |
| 2,057 | 2,197 | 1,481 | 1,735 | 67 | 77 | |
| 15 | 3.13 | 3.34 | ||||
| 15 | 3.14 | 3.35 | ||||
| 15 | – | – | ||||
| 15 | 3.13 | 3.34 | ||||
| Group | (unaudited supplementary information) |
Automotive Motorcycles |
| in € million Note |
2018 | 2017* |
|---|---|---|
| Net profit | 2,082 | 2,217 |
| Remeasurement of the net liability for defined benefit pension plans | 137 | 452 |
| Deferred taxes | –12 | –133 |
| Items not expected to be reclassified to the income statement in the future | 125 | 319 |
| Marketable securities (at fair value through other comprehensive income) | – 30 | 31 |
| Financial instruments used for hedging purposes | – 614 | 2,043 |
| Costs of hedging | –173 | – |
| Other comprehensive income from equity accounted investments | – 35 | 26 |
| Deferred taxes | 258 | – 634 |
| Currency translation foreign operations | 304 | – 747 |
| Items that can be reclassified to the income statement in the future | – 290 | 719 |
| Other comprehensive income for the period after tax 16 |
–165 | 1,038 |
| Total comprehensive income | 1,917 | 3,255 |
| Total comprehensive income attributable to minority interest | 25 | 20 |
| Total comprehensive income attributable to shareholders of BMW AG | 1,892 | 3,235 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
| Eliminations (unaudited supplementary information) |
Other Entities (unaudited supplementary information) |
Financial Services (unaudited supplementary information) |
|||||
|---|---|---|---|---|---|---|---|
| 2017* | 2018 | 2017 | 2018 | 2017 | 2018 | ||
| Revenues | – 4,140 | – 4,969 | 1 | 1 | 7,044 | 7,141 | |
| Cost of sales | 4,119 | 5,078 | – | – | – 6,109 | – 6,217 | |
| Gross profit | – 21 | 109 | 1 | 1 | 935 | 924 | |
| Selling and administrative expenses | 7 | 2 | –1 | – 7 | – 331 | – 327 | |
| Other operating income | – 48 | – 60 | 32 | 32 | 5 | 23 | |
| Other operating expenses | 50 | 64 | – 24 | –19 | – 21 | –13 | |
| Profit/ loss before financial result | –12 | 115 | 8 | 7 | 588 | 607 | |
| Result from equity accounted investments | – | – | – | – | – | – | |
| Interest and similar income | – 310 | – 323 | 279 | 276 | 5 | 1 | |
| Interest and similar expenses | 274 | 310 | – 246 | – 270 | – 3 | – 3 | |
| Other financial result | – | – | –18 | – 5 | –1 | – | |
| Financial result | – 36 | –13 | 15 | 1 | 1 | – 2 | |
| Profit/ loss before tax | – 48 | 102 | 23 | 8 | 589 | 605 | |
| Income taxes | –19 | – 57 | – 3 | – 2 | –143 | –129 | |
| Profit from continuing operations | – 67 | 45 | 20 | 6 | 446 | 476 | |
| Loss from discontinued operations | – | – | – | – | – | – | |
| Net profit/ loss | – 67 | 45 | 20 | 6 | 446 | 476 | |
| Attributable to minority interest | – | – | 1 | – | 13 | 18 | |
| Attributable to shareholders of BMW AG | – 67 | 45 | 19 | 6 | 433 | 458 | |
| Basic earnings per share of common stock in € | |||||||
| Basic earnings per share of preferred stock in € | |||||||
| Dilutive effects | |||||||
| Diluted earnings per share of common stock in € | |||||||
| Diluted earnings per share of preferred stock in € |
44
Interim Group Financial Statements
BMW Group Income Statement Statement of
| Group | Automotive (unaudited supplementary information) |
Motorcycles (unaudited supplementary information) |
|||||
|---|---|---|---|---|---|---|---|
| in € million | Note | 2018 | 2017* | 2018 | 2017* | 2018 | 2017* |
| Revenues | 7 | 47,717 | 49,691 | 41,518 | 42,166 | 1,182 | 1,315 |
| Cost of sales | 8 | – 37,765 | – 39,170 | – 33,959 | – 33,998 | – 888 | – 969 |
| Gross profit | 9,952 | 10,521 | 7,559 | 8,168 | 294 | 346 | |
| Selling and administrative expenses | 9 | – 4,514 | – 4,517 | – 3,754 | – 3,770 | –119 | –117 |
| Other operating income | 10 | 312 | 329 | 320 | 305 | 1 | 2 |
| Other operating expenses | 10 | – 271 | – 580 | – 325 | – 582 | –1 | – 2 |
| Profit/ loss before financial result | 5,479 | 5,753 | 3,800 | 4,121 | 175 | 229 | |
| Result from equity accounted investments | 11 | 405 | 490 | 405 | 490 | – | – |
| Interest and similar income | 12 | 74 | 107 | 163 | 166 | – | – |
| Interest and similar expenses | 12 | –174 | –186 | – 240 | – 234 | –1 | –1 |
| Other financial result | 13 | 254 | 74 | 215 | 133 | – | – |
| Financial result | 559 | 485 | 543 | 555 | –1 | –1 | |
| Profit/ loss before tax | 6,038 | 6,238 | 4,343 | 4,676 | 174 | 228 | |
| Income taxes | 14 | –1,648 | –1,747 | –1,212 | –1,316 | – 52 | – 63 |
| Profit from continuing operations | 4,390 | 4,491 | 3,131 | 3,360 | 122 | 165 | |
| Loss from discontinued operations | 2 | – 7 | – | – 7 | – | – | – |
| Net profit/ loss | 4,383 | 4,491 | 3,124 | 3,360 | 122 | 165 | |
| Attributable to minority interest | 45 | 30 | 13 | 6 | – | – | |
| Attributable to shareholders of BMW AG | 4,338 | 4,461 | 3,111 | 3,354 | 122 | 165 | |
| Basic earnings per share of common stock in € | 15 | 6.60 | 6.79 | ||||
| Basic earnings per share of preferred stock in € | 15 | 6.61 | 6.80 | ||||
| Dilutive effects | 15 | – | – | ||||
| Diluted earnings per share of common stock in € | 15 | 6.60 | 6.79 | ||||
| Diluted earnings per share of preferred stock in € | 15 | 6.61 | 6.80 | ||||
| in € million | Note | 2018 | 2017* |
|---|---|---|---|
| Net profit | 4,383 | 4,491 | |
| Remeasurement of the net liability for defined benefit pension plans | 497 | 911 | |
| Deferred taxes | –113 | – 256 | |
| Items not expected to be reclassified to the income statement in the future | 384 | 655 | |
| Marketable securities (at fair value through other comprehensive income) | –13 | 33 | |
| Financial instruments used for hedging purposes | – 628 | 1,516 | |
| Costs of hedging | – 419 | – | |
| Other comprehensive income from equity accounted investments | – 77 | 28 | |
| Deferred taxes | 360 | – 484 | |
| Currency translation foreign operations | 197 | – 696 | |
| Items that can be reclassified to the income statement in the future | – 580 | 397 | |
| Other comprehensive income for the period after tax | 16 | –196 | 1,052 |
| Total comprehensive income | 4,187 | 5,543 | |
| Total comprehensive income attributable to minority interest | 45 | 30 | |
| Total comprehensive income attributable to shareholders of BMW AG | 4,142 | 5,513 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
| Eliminations (unaudited supplementary information) |
Other Entities (unaudited supplementary information) |
Financial Services (unaudited supplementary information) |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| 2017* | 2018 | 2017 | 2018 | 2017 | 2018 | ||||
| Revenues | – 7,883 | – 8,801 | 3 | 3 | 14,090 | 13,815 | |||
| Cost of sales | 8,060 | 9,092 | – | – | –12,263 | –12,010 | |||
| Gross profit | 177 | 291 | 3 | 3 | 1,827 | 1,805 | |||
| Selling and administrative expenses | 14 | 4 | –13 | –14 | – 631 | – 631 | |||
| Other operating income | – 91 | –100 | 77 | 65 | 36 | 26 | |||
| Other operating expenses | 99 | 117 | – 55 | – 38 | – 40 | – 24 | |||
| Profit/ loss before financial result | 199 | 312 | 12 | 16 | 1,192 | 1,176 | |||
| Result from equity accounted investments | – | – | – | – | – | – | |||
| Interest and similar income | – 619 | – 616 | 554 | 525 | 6 | 2 | |||
| Interest and similar expenses | 551 | 581 | – 497 | – 509 | – 5 | – 5 | |||
| Other financial result | – | – | – 50 | 46 | – 9 | – 7 | |||
| Financial result | – 68 | – 35 | 7 | 62 | – 8 | –10 | |||
| Profit/ loss before tax | 131 | 277 | 19 | 78 | 1,184 | 1,166 | |||
| Income taxes | – 71 | – 73 | –1 | – 24 | – 296 | – 287 | |||
| Profit from continuing operations | 60 | 204 | 18 | 54 | 888 | 879 | |||
| Loss from discontinued operations | – | – | – | – | – | – | |||
| Net profit/ loss | 60 | 204 | 18 | 54 | 888 | 879 | |||
| Attributable to minority interest | – | – | 1 | – | 23 | 32 | |||
| Attributable to shareholders of BMW AG | 60 | 204 | 17 | 54 | 865 | 847 | |||
| Basic earnings per share of common stock in € | |||||||||
| Basic earnings per share of preferred stock in € | |||||||||
| Dilutive effects | |||||||||
| Diluted earnings per share of common stock in € | |||||||||
| Diluted earnings per share of preferred stock in € |
BMW Group Balance Sheet
| Group | Automotive information) |
(unaudited supplementary | Motorcycles (unaudited supplementary information) |
|||||
|---|---|---|---|---|---|---|---|---|
| in € million | Note | 30. 6. 2018 | 1. 1. 20181 | 31.12. 20172 | 30. 6. 2018 | 31.12. 20172 | 30. 6. 2018 | 31.12. 2017 |
| Assets | ||||||||
| Intangible assets | 17 | 9,524 | 9,464 | 9,464 | 9,045 | 8,981 | 65 | 57 |
| Property, plant and equipment | 18 | 18,238 | 18,471 | 18,471 | 17,842 | 18,050 | 367 | 388 |
| Leased products | 19 | 36,781 | 36,257 | 36,257 | – | – | – | – |
| Investments accounted for using the equity method |
20 | 2,863 | 2,769 | 2,769 | 2,863 | 2,769 | – | – |
| Other investments | 20 | 762 | 690 | 690 | 5,033 | 4,985 | – | – |
| Receivables from sales financing | 21 | 49,918 | 48,475 | 48,321 | – | – | – | – |
| Financial assets | 22 | 1,456 | 2,369 | 2,369 | 682 | 1,302 | – | – |
| Deferred tax | 1,954 | 1,965 | 1,993 | 3,305 | 2,857 | – | – | |
| Other assets | 24 | 1,815 | 1,630 | 1,630 | 4,049 | 3,671 | 32 | 32 |
| Non-current assets | 123,311 | 122,090 | 121,964 | 42,819 | 42,615 | 464 | 477 | |
| Inventories | 25 | 15,286 | 12,707 | 12,707 | 14,662 | 12,103 | 599 | 580 |
| Trade receivables | 3,140 | 2,663 | 2,667 | 2,756 | 2,354 | 138 | 160 | |
| Receivables from sales financing | 21 | 32,888 | 32,087 | 32,113 | – | – | – | – |
| Financial assets | 22 | 7,275 | 7,949 | 7,965 | 5,321 | 5,578 | – | – |
| Current tax | 23 | 2,583 | 1,566 | 1,566 | 969 | 714 | – | – |
| Other assets | 24 | 7,987 | 7,485 | 7,485 | 23,518 | 23,124 | 1 | 5 |
| Cash and cash equivalents | 8,597 | 9,039 | 9,039 | 6,435 | 7,157 | 15 | 8 | |
| Assets held for sale | 441 | – | – | 441 | – | – | – | |
| Current assets | 78,197 | 73,496 | 73,542 | 54,102 | 51,030 | 753 | 753 | |
| Total assets | 201,508 | 195,586 | 195,506 | 96,921 | 93,645 | 1,217 | 1,230 | |
| Equity and liab ilities |
||||||||
| Subscribed capital | 26 | 658 | 658 | 658 | ||||
| Capital reserves | 26 | 2,084 | 2,084 | 2,084 | ||||
| Revenue reserves | 26 | 53,094 | 50,993 | 50,815 | ||||
| Accumulated other equity | 26 | – 555 | 37 | 114 | ||||
| Equity attributable | ||||||||
| to shareholders of BMWAG | 26 | 55,281 | 53,772 | 53,671 | ||||
| Minority interest | 26 | 488 | 436 | 436 | ||||
| Equity | 55,769 | 54,208 | 54,107 | 38,249 | 39,361 | – | – | |
| Pension provisions | 27 | 2,709 | 3,252 | 3,252 | 2,269 | 2,405 | 65 | 69 |
| Other provisions | 28 | 5,838 | 5,632 | 5,632 | 5,392 | 5,175 | 91 | 101 |
| Deferred tax | 3,375 | 2,166 | 2,157 | 1,773 | 1,456 | – | – | |
| Financial liabilities | 30 | 58,613 | 53,521 | 53,548 | 854 | 832 | – | – |
| Other liabilities | 31 | 4,665 | 5,045 | 5,045 | 7,363 | 6,506 | 484 | 487 |
| Non-current provisions and liabilities | 75,200 | 69,616 | 69,634 | 17,651 | 16,374 | 640 | 657 | |
| Other provisions | 28 | 6,018 | 6,367 | 6,367 | 5,381 | 5,710 | 105 | 99 |
| Current tax | 29 | 984 | 1,124 | 1,124 | 750 | 874 | – | – |
| Financial liabilities | 30 | 39,020 | 41,097 | 41,100 | 1,164 | 947 | – | – |
| Trade payables | 10,048 | 9,731 | 9,731 | 8,818 | 8,516 | 368 | 355 | |
| Other liabilities | 31 | 14,449 | 13,443 | 13,443 | 24,888 | 21,863 | 104 | 119 |
| Liabilities in conjunction with assets | ||||||||
| held for sale | 20 | – | – | 20 | – | – | – | |
| Current provisions and liabilities | 70,539 | 71,762 | 71,765 | 41,021 | 37,910 | 577 | 573 | |
| Total equity and liabilities | 201,508 | 195,586 | 195,506 | 96,921 | 93,645 | 1,217 | 1,230 |
1 The figures to 1 January 2018 have been adjusted, based on the first-time application of IFRS 15 and IFRS 9, see notes 5 and 6.
2 Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
| (unaudited supplementary information) |
Other Entities (unaudited supplementary information) |
(unaudited supplementary information) |
||||
|---|---|---|---|---|---|---|
| 31.12. 20172 | 30. 6. 2018 | 31.12. 2017 | 30. 6. 2018 | 31.12. 2017 | 30. 6. 2018 | |
| Intangible assets | – | – | 1 | 1 | 425 | 413 |
| Property, plant and equipment Leased products |
– – 8,028 |
– – 7,867 |
– – |
– – |
33 44,285 |
29 44,648 |
| Investments accounted | ||||||
| for using the equity method | – | – | – | – | – | – |
| Other investments | –11,457 | –11,485 | 7,160 | 7,213 | 2 | 1 |
| Receivables from sales financing | – | – | – | – | 48,321 | 49,918 |
| Financial assets | –198 | – 89 | 1,089 | 702 | 176 | 161 |
| –1,436 | –1,840 | 130 | 47 | 442 | 442 | |
| – 31,783 | – 38,012 | 26,628 | 32,166 | 3,082 | 3,580 | |
| Non-current assets | – 52,902 | – 59,293 | 35,008 | 40,129 | 96,766 | 99,192 |
| – | – | – | – | 24 | 25 | |
| Trade receivables | – | – | 1 | 2 | 152 | 244 |
| Receivables from sales financing | – | – | – | – | 32,113 | 32,888 |
| Financial assets | – 307 | –152 | 1,163 | 771 | 1,531 | 1,335 |
| – | – | 797 | 860 | 55 | 754 | |
| – 66,938 | – 66,809 | 45,963 | 45,655 | 5,331 | 5,622 | |
| Cash and cash equivalents | – | – | 18 | 45 | 1,856 | 2,102 |
| Assets held for sale | – | – | – | – | – | – |
| – 67,245 | – 66,961 | 47,942 | 47,333 | 41,062 | 42,970 | |
| –120,147 | –126,254 | 82,950 | 87,462 | 137,828 | 142,162 | |
| Equity and liab | ||||||
| Subscribed capital | ||||||
| Revenue reserves | ||||||
| Accumulated other equity | ||||||
| Equity attributable to shareholders of BMWAG |
||||||
| Minority interest | –18,096 | –18,361 | 18,102 | 21,852 | 14,740 | 14,029 |
| Pension provisions | – | – | 706 | 300 | 72 | 75 |
| – | – | – | – | 356 | 355 | |
| – 3,639 | – 3,592 | 38 | 44 | 4,302 | 5,150 | |
| –198 | – 89 | 35,095 | 40,180 | 17,819 | 17,668 | |
| Financial liabilities | – 30,981 | – 37,422 | 198 | 696 | 28,835 | 33,544 |
| Non-current provisions and liabilities | – 34,818 | – 41,103 | 36,037 | 41,220 | 51,384 | 56,792 |
| Other provisions | – | – | 9 | 9 | 549 | 523 |
| – | – | 17 | 11 | 233 | 223 | |
| Financial liabilities | – 307 | –152 | 15,607 | 11,796 | 24,853 | 26,212 |
| – | – | 11 | 9 | 849 | 853 | |
| – 66,926 | – 66,638 | 13,167 | 12,565 | 45,220 | 43,530 | |
| Liabilities in conjunction with assets | – | – | – | – | – | – |
| Current provisions and liabilities | – 67,233 | – 66,790 | 28,811 | 24,390 | 71,704 | 71,341 |
| –120,147 | –126,254 | 82,950 | 87,462 | 137,828 | 142,162 |
BMW Group Cash Flow Statement
• 39
| Group | |||
|---|---|---|---|
| in € million | 2018 | 2017* | |
| Net profit | 4,383 | 4,491 | |
| Loss from discontinued operations | 7 | – | |
| Depreciation and amortisation of tangible, intangible and investment assets | 2,504 | 2,349 | |
| Change in provisions | – 246 | 164 | |
| Change in leased products and receivables from sales financing | –1,947 | – 3,987 | |
| Change in deferred taxes | 1,322 | 606 | |
| Changes in working capital | – 2,563 | –1,592 | |
| Other | – 788 | –113 | |
| Cash inflow/outflow from operating activities | 2,672 | 1,918 | |
| Total investment in intangible assets and property, plant and equipment | – 2,549 | – 2,403 | |
| Net investment in marketable securities and investment funds | 128 | 132 | |
| Other | 14 | 1 | |
| Cash inflow/outflow from investing activities | – 2,407 | – 2,270 | |
| Cash inflow/outflow from financing activities | – 707 | –123 | |
| Effect of exchange rate on cash and cash equivalents | 25 | –155 | |
| Effect of changes in composition of Group on cash and cash equivalents | – 25 | 65 | |
| Change in cash and cash equivalents | – 442 | – 565 | |
| Cash and cash equivalents as at 1 January | 9,039 | 7,880 | |
| Cash and cash equivalents as at 30 June | 8,597 | 7,315 | |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
| Financial Services (unaudited supplementary information) |
Automotive (unaudited supplementary information) |
|||||||
|---|---|---|---|---|---|---|---|---|
| 2017 | 2018 | 2017* | 2018 | |||||
| Net profit | 888 | 879 | 3,360 | 3,124 | ||||
| Loss from discontinued operations | – | – | – | 7 | ||||
| Depreciation and amortisation of tangible, intangible and investment assets | 18 | 17 | 2,290 | 2,440 | ||||
| Change in provisions | –17 | 10 | –10 | – 213 | ||||
| Change in leased products and receivables from sales financing | – 4,154 | – 2,103 | – | – | ||||
| Change in deferred taxes | 87 | 668 | 646 | 210 | ||||
| Changes in working capital | 115 | – 82 | –1,423 | – 2,509 | ||||
| Other | – 983 | – 2,006 | – 470 | 1,360 | ||||
| Cash inflow/outflow from operating activities | – 4,046 | – 2,617 | 4,393 | 4,419 | ||||
| Total investment in intangible assets and property, plant and equipment | – 4 | – 2 | – 2,363 | – 2,512 | ||||
| Net investment in marketable securities and investment funds | –13 | 138 | 171 | – 40 | ||||
| Other | – | 4 | 5 | 37 | ||||
| Cash inflow/outflow from investing activities | –17 | 140 | – 2,187 | – 2,515 | ||||
| Cash inflow/outflow from financing activities | 3,085 | 2,697 | –1,761 | – 2,600 | ||||
| Effect of exchange rate on cash and cash equivalents | –102 | 26 | 13 | –1 | ||||
| Effect of changes in composition of Group on cash and cash equivalents | 65 | – | – | – 25 | ||||
| Change in cash and cash equivalents | –1,015 | 246 | 458 | – 722 | ||||
| Cash and cash equivalents as at 1 January | 3,046 | 1,856 | 4,794 | 7,157 | ||||
| Cash and cash equivalents as at 30 June | 2,031 | 2,102 | 5,252 | 6,435 | ||||
BMW Group Statement of Changes in Equity
| in € million | Note | Subscribed capital |
Capital reserves |
Revenue reserves |
|
|---|---|---|---|---|---|
| 31 December 2017 (as originally reported) | 26 | 658 | 2,084 | 51,256 | |
| Effect from the first-time application of IFRS 15 | – | – | – 441 | ||
| 31 December 2017 (adjusted according to IFRS 15) | 658 | 2,084 | 50,815 | ||
| Effects from the first-time application of IFRS 9 | – | – | 178 | ||
| 1 January 2018 (adjusted according to IFRS 9) | 658 | 2,084 | 50,993 | ||
| Net profit | – | – | 4,338 | ||
| Other comprehensive income for the period after tax | – | – | 384 | ||
| Comprehensive income at 30 June 2018 | – | – | 4,722 | ||
| Dividend payments | – | – | – 2,630 | ||
| Other changes | – | – | 9 | ||
| 30 June 2018 | 26 | 658 | 2,084 | 53,094 |
| Note | Subscribed capital |
Capital reserves |
Revenue reserves |
|
|---|---|---|---|---|
| 26 | 657 | 2,047 | 44,445 | |
| – | – | – 409 | ||
| 657 | 2,047 | 44,036 | ||
| – | – | 4,461 | ||
| – | – | 655 | ||
| – | – | 5,116 | ||
| – | – | – 2,300 | ||
| – | – | 29 | ||
| 26 | 657 | 2,047 | 46,881 | |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5 to the Interim Group Financial Statements.
| Accumulated other equity | |||||||
|---|---|---|---|---|---|---|---|
| Total | Minority interest |
Equity attributable to shareholders of BMW AG |
Costs of hedging |
Derivative financial instruments |
Securities | Translation differences |
|
| 31 December 2017 (as originally reported) | 54,548 | 436 | 54,112 | – | 1,515 | 93 | –1,494 |
| Effect from the first-time application of IFRS 15 | – 441 | – | – 441 | – | – | – | – |
| 31 December 2017 (adjusted according to IFRS 15) | 54,107 | 436 | 53,671 | – | 1,515 | 93 | –1,494 |
| Effects from the first-time application of IFRS 9 | 101 | – | 101 | 5 | – | – 82 | – |
| 1 January 2018 (adjusted according to IFRS 9) | 54,208 | 436 | 53,772 | 5 | 1,515 | 11 | –1,494 |
| Net profit | 4,383 | 45 | 4,338 | – | – | – | – |
| Other comprehensive income for the period after tax | –196 | – | –196 | – 404 | – 403 | – | 227 |
| Comprehensive income at 30 June 2018 | 4,187 | 45 | 4,142 | – 404 | – 403 | – | 227 |
| Dividend payments | – 2,630 | – | – 2,630 | – | – | – | – |
| Other changes | 4 | 7 | – 3 | – | –12 | – | – |
| 30 June 2018 | 55,769 | 488 | 55,281 | – 399 | 1,100 | 11 | –1,267 |
| Accumulated other equity | |||||||
|---|---|---|---|---|---|---|---|
| Total | Minority interest |
Equity attributable to shareholders of BMW AG |
Costs of hedging |
Derivative financial instruments |
Securities | Translation differences |
|
| 1 January 2017 (as originally reported) | 47,363 | 255 | 47,108 | – | 78 | 52 | –171 |
| Effects from the first-time application of IFRS 15 | – 409 | – | – 409 | – | – | – | – |
| 1 January 2017 (adjusted according to IFRS 15) | 46,954 | 255 | 46,699 | – | 78 | 52 | –171 |
| Net profit* | 4,491 | 30 | 4,461 | – | – | – | – |
| Other comprehensive income for the period after tax | 1,052 | – | 1,052 | – | 1,197 | 31 | – 831 |
| Comprehensive income at 30 June 2017 (adjusted according to IFRS 15) |
5,543 | 30 | 5,513 | – | 1,197 | 31 | – 831 |
| Dividend payments | – 2,300 | – | – 2,300 | – | – | – | – |
| Other changes | – 9 | – 38 | 29 | – | – | – | – |
| 30 June 2017* | 50,188 | 247 | 49,941 | – | 1,275 | 83 | –1,002 |
Notes to the Group Financial Statements
Accounting Principles and Policies
The consolidated financial statements of Bayerische Motoren Werke Aktiengesellschaft (BMW Group Financial Statements or Group Financial Statements) at 31 December 2017 were drawn up in accordance with International Financial Reporting Standards (IFRS), as endorsed by the European Union (EU), and the supplementary requirements of § 315 e (1) of the German Commercial Code (HGB). The Interim Group Financial Statements (Interim Report) at 30 June 2018, which have been prepared in accordance with International Accounting Standard (IAS) 34 (Interim Financial Reporting), have been drawn up using, in all material respects, the same accounting methods as those utilised in the 2017 Group Financial Statements. Changes resulting from the first-time application of IFRS 15 and IFRS 9 are presented in notes 5 and 6. The BMW Group applies the option
see notes 5 and 6
of publishing condensed group financial statements. All Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) which were mandatory at 30 June 2018 have been applied. The Interim Report also complies with German Accounting Standard No. 16 (GAS 16) – Interim Financial Reporting – issued by the German Accounting Standards Committee e. V. (GASC).
Further information regarding the Group's accounting principles and policies is contained in the BMW Group Financial Statements at 31 December 2017.
The Group currency is the euro. All amounts are disclosed in millions of euros (€ million) unless stated otherwise.
The BMW Group and segment income statements are presented using the cost of sales method.
In order to provide a better insight into the net assets, financial position and performance of the BMW Group, and going beyond the requirements of IFRS 8 (Operating Segments), the Group Financial Statements also include balance sheets and income statements for the Automotive, Motorcycles, Financial Services and Other Entities segments. The Group Cash Flow Statement is supplemented by the statements of cash flows for the Automotive and Financial Services segments. Inter-segment transactions relate primarily to internal sales of products,
Interim Group Financial Statements
Notes to the Group Financial Statements Accounting
Principles and Policies
the provision of funds for Group companies and the related interest. These items are eliminated in the relevant "Eliminations" columns. More detailed information regarding the allocation of activities of the BMW Group to segments and a description of the segments is provided in the explanatory notes to segment information in the BMW Group Financial Statements at 31 December 2017.
The Interim Group Financial Statements at 30 June 2018 have been reviewed by the Group auditors, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin.
The BMW Group Financial Statements for the first half-year 2018 include BMW AG and all material subsidiaries over which BMW AG – either directly or indirectly – exercises control. This also includes 54 structured entities used exclusively in conjunction with the BMW Group's asset-backed financing arrangements or as special purpose funds.
The following changes took place in the Group reporting entity during the first six months of 2018:
| Germany | Foreign | Total | |
|---|---|---|---|
| Included at 31 December 2017 |
21 | 187 | 208 |
| Included for the first time in 2018 |
2 | 8 | 10 |
| No longer included in 2018 |
– | 6 | 6 |
| Included at 30 June 2018 |
23 | 189 | 212 |
The BMW Group previously maintained the joint ventures DriveNow GmbH & Co. KG, Munich, and DriveNow Verwaltungs GmbH, Munich, together with Sixt SE, Pullach. DriveNow offers car-sharing services in major German cities and abroad. In January 2018, the BMW Group signed an agreement with Sixt SE for the complete acquisition of the shares in DriveNow.
Following approval by the antitrust authorities and with effect from 9 March 2018, the BMW Group acquired the remaining 50 % of the shares of the DriveNow companies together with their subsidiaries – for a purchase price of € 209 million. The purchase was financed by the transfer of cash funds. The acquisition expands the BMW Group's strategic options for the further development of mobility services.
DriveNow GmbH & Co.KG and DriveNow Vewaltungs GmbH and their foreign subsidiaries DriveNow Austria GmbH, Vienna, DriveNow UK Limited, London, DriveNow Sverige AB, Stockholm, DriveNow Belgium S. p. r. l., Brussels, and DriveNow Italy S. r. l., Milan, were fully consolidated for the first time in the first half-year 2018.
DriveNow's equity prior to the acquisition stood at a negative amount of € 2 million. As a result of the step acquisition, the shares already held by BMW were remeasured to their fair value, giving rise to a gain of € 209 million, which was reported as part of the result on investments, based on a total fair value of € 209 million.
The following table shows the purchase price allocation:
| in € million | Fair values at acquisition date |
|---|---|
| Identified assets | |
| Intangible assets | 111 |
| Trademark rights | 22 |
| Deferred tax assets | 23 |
| Trade receivables | 9 |
| Other receivables | 7 |
| Inventories | 1 |
| Cash and cash equivalents | 5 |
| Identified liab ilities |
|
| Provisions | 16 |
| Trade payables | 5 |
| Other liabilities | 3 |
| Total identified net assets | 154 |
| Goodw ill calculation |
|
| Consideration transferred (purchase price) | 418 |
| Total identified net assets | 154 |
Goodwill 264
Notes to the Group Financial Statements Accounting
Principles and Policies
On 28 March 2018, the BMW Group signed an agreement with the Daimler Group regarding the merger of certain business units that provide mobility services. It is planned to combine and strategically expand the existing on-demand mobility offering in the areas of car sharing, ride-hailing, parking, charging and multi-modality, with the customer able to access an holistic ecosystem of intelligent, seamlessly connected mobility services. The aim is to become a leading provider of innovative mobility services.
In future, the BMW Group and the Daimler Group will each hold a 50 % stake in the newly founded joint venture, comprising both companies' mobility services. The contract has been signed subject to examination and approval by the relevant antitrust agencies. If approved by the antitrust agencies during the current year, the foundation of the joint venture will have a one-off valuation and earnings effect on the BMW Group Financial Statements, which will be recorded primarily by the Automotive segment. The BMW Group expects the joint venture to be established within the next twelve months.
Assets and liabilities totalling € 441 million and € 20 million respectively are reported as discontinued operations at 30 June 2018. These items are disclosed separately in the Group Balance Sheet and allocated to the Automotive segment. The loss after tax from discontinued operations for the period ended 30 June 2018 amounted to € 7 million. This amount is also disclosed separately in the Income Statements for the Group and Segments.
In December 2017, BMWAG, Audi AG, Ingolstadt, and Daimler AG, Stuttgart, signed agreements to sell shares in THERE Holding B. V., Amsterdam, (THERE) to
Robert Bosch Investment Nederland B. V., Boxtel, and to Continental Automotive Holding Netherlands B. V., Maastricht. Each of the parties acquired 5.9 % of the shares, which were sold in equal parts by BMWAG, Audi AG and Daimler AG. The transactions were completed during the first quarter of 2018. The sale did not have a significant impact on the results of operations, financial position and net assets of the BMW Group.
Together with SGL Carbon SE, Wiesbaden, companies of the BMW Group were previously party to joint operations that manufactured carbon fibres and carbon fibre cores used in vehicle production. In November 2017, an agreement was signed with SGL Carbon SE concerning that entity's step-by-step acquisition of the BMW Group's 49 % shareholding. Accordingly, between the beginning of 2018 and the end of 2020 at the latest, SGL Carbon SE will become the sole owner of the current joint operations. As a consequence of the transaction, the joint operations are no longer consolidated in the BMW Group Financial Statements on a proportionate basis with effect from the beginning of the financial year 2018.
The other changes to the Group reporting entity do not have a material impact on the results of operations, financial position or net assets of the Group.
The exchange rates applied for currency translation purposes in accordance with the modified closing rate method, and which have a material impact on the Group Financial Statements, were as follows:
| Closing rate | Average rate | |||||
|---|---|---|---|---|---|---|
| 1 Euro = | 30. 6. 2018 | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
|||
| US-Dollar | 1.17 | 1.20 | 1.21 | 1.08 | ||
| British Pound | 0.88 | 0.89 | 0.88 | 0.86 | ||
| Chinese Renminbi | 7.71 | 7.80 | 7.71 | 7.45 | ||
| Japanese Yen | 128.93 | 134.93 | 131.56 | 121.72 | ||
| Korean Won | 1,298.44 | 1,281.41 | 1,301.92 | 1,235.74 |
Further information regarding foreign currency translation is provided in note 3 to the Group Financial Statements at 31 December 2017.
| Interim Group Financial Statements Notes to the Group Financial Statements Accounting |
04 | Financial reporting rules (a) Standards and Revised Standards significant for the BMW Group and applied for the first time in the first half-year: |
||||
|---|---|---|---|---|---|---|
| Principles and Policies |
Standard / Interpretation | Date of issue by IASB |
Date of mandatory application IASB |
Date of mandatory application EU |
||
| IFRS 15 | Revenue from Contracts with Customers | 28. 5. 2014 11. 9. 2015 12. 4. 2016 |
1.1. 2018 | 1.1. 2018 | ||
| IFRS 9 | Financial Instruments | 24. 7. 2014 | 1.1. 2018 | 1.1. 2018 | ||
| Changes due to the new accounting standards IFRS 15 and IFRS 9 are described in notes 5 and 6. (b) Financial reporting pronouncements issued by the IASB that are significant for the BMW Group, but have not yet been applied: |
see notes 5 and 6 |
|||||
| Standard / Interpretation | Date of issue by IASB |
Date of mandatory application IASB |
Date of mandatory application EU |
|||
| IFRS 16 | Leases | 13.1. 2016 | 1.1. 2019 | 1.1. 2019 |
During the first half-year 2018, there have been no significant changes in the assessment of the impact of IFRS 16 (which has not yet been applied).
For details, please see the comments in the Group Financial Statements at 31 December 2017.
05
Notes to the Group Financial Statements Accounting Principles and
Policies
The new Standard IFRS 15 (Revenue from Contracts with Customers) assimilates all the various existing requirements and Interpretations relating to revenue recognition into a single Standard. It also stipulates uniform revenue recognition principles for all sectors and all categories.
In accordance with the transitional provisions contained in IFRS 15, the BMW Group is applying the new requirements for revenue from contracts with customers in the 2018 financial year using the full retrospective option. For this reason, the opening balance sheet at 1 January 2017, the figures reported for the previous year and the balance sheet at 31 December 2017 have been adjusted and made comparable. The exemption provision, allowing contracts fulfilled prior to 1 January 2017 not to be newly assessed in accordance with IFRS 15, was applied.
Revenue recognition from contracts with customers is based on a five-stage model. Revenues are required to be recognised either over time or at a specific point in time. A major difference to the previous Standard is the increased scope of discretion for estimates and the introduction of thresholds, thus influencing the amount and timing of revenue recognition.
Accounting for buyback arrangements and rights of return for vehicles sold, but which the Financial Services segment will subsequently lease to customers, results in the earlier recognition of intragroup eliminations. The adoption of IFRS 15 results in a retrospective decrease in Group equity at 1 January 2017 amounting to € 498 million, net of deferred tax amounting to € 239 million (31 December 2017: reduction of revenue reserves by € 553 million, net of deferred tax amounting to € 192 million). The lower amount of deferred tax at 31 December 2017 results from the reduction of the US federal corporate tax rate. The earlier date for consolidating intragroup transactions also results in the recognition of assets and liabilities relating to rights of return, causing other current assets and other current liabilities to increase. The changes did not have a significant impact on earnings in the first half-year 2018.
In accordance with IFRS 15, costs incurred for sales promotion measures in the Automotive segment, such as sales support or residual value subsidies, are required to be treated as variable components of consideration and therefore have the effect of reducing revenue. Variable consideration is measured on the basis of the amount of consideration to which the BMW Group expects to be entitled. Some of these costs were previously reported as cost of sales. The change in classification in the income statement results in a decrease in both revenues and cost of sales.
For the financial year 2017, the retrospective reclassification recorded by the Automotive segment amounted to € 2.9 billion, which did not, however, have a significant impact at Group level.
If the sale of products includes a determinable amount for services ("multiple-component contracts"), the related revenues are deferred and recognised as income over time. Variable consideration to be received for multi-component contracts is allocated across all service obligations unless it is directly attributable to the sale of the vehicle. As a result of the change in accounting policy for multi-component contracts with variable consideration components, changes in the allocation of transaction prices result for the Automotive segment in higher amounts being recognised for vehicle sales and a lower level of amounts deferred for service contracts. The shift in the timing of revenue recognition resulted in a retrospective increase in Group revenue reserves at 1 January 2017 of € 89 million, net of deferred taxes of € 38 million (31 December 2017: increase in Group revenue reserves of € 112 million, net of deferred taxes of € 42 million). The changes did not have a significant impact on earnings in the first half-year 2018.
As a result of the retrospective adjustments described above, the Automotive segment EBIT margin increased by 0.4 percentage points to 9.8% for the first half-year 2017 and by 0.3 percentage points to 9.2 % for the full year 2017.
A different accounting treatment may be required if buyback arrangements are in place with customers, resulting in a shift in the timing of revenue recognition. The resulting impact was not significant.
Buyback arrangements between the Automotive and Financial Services segments are not reflected in the internal management system or reporting and therefore, in accordance with IFRS 8, do not result in any changes in the presentation of segment information.
The following tables show the impact on the balance sheets at 1 January 2017 and 31 December 2017, as well as on the income statement, the statement of comprehensive income and the cashflow statement for the financial year 2017:
Principles and Policies
| in € million | As originally reported |
Adjustment IFRS 15 |
Adjusted according to IFRS 15 |
|---|---|---|---|
| Assets | |||
| Total non-current assets | 121,671 | 222 | 121,893 |
| thereof investments accounted for using the equity method | 2,546 | 2 | 2,548 |
| thereof deferred tax | 2,327 | 226 | 2,553 |
| thereof other non-current assets | 1,595 | – 6 | 1,589 |
| Total current assets | 66,864 | 1,509 | 68,373 |
| thereof other current assets | 5,087 | 1,509 | 6,596 |
| Total assets | 188,535 | 1,731 | 190,266 |
| Equity and liab ilities |
|||
| Total equity | 47,363 | – 409 | 46,954 |
| thereof equity attributable to shareholders of BMW AG | 47,108 | – 409 | 46,699 |
| thereof revenue reserves | 44,445 | – 409 | 44,036 |
| Total non-current provisions and liabilities | 73,183 | –100 | 73,083 |
| thereof other non-current provisions | 5,039 | 155 | 5,194 |
| thereof deferred tax | 2,795 | 26 | 2,821 |
| thereof other liabilities | 5,357 | – 281 | 5,076 |
| Total current provisions and liabilities | 67,989 | 2,240 | 70,229 |
| thereof other non-current provisions | 5,879 | 37 | 5,916 |
| thereof other liabilities | 10,198 | 2,203 | 12,401 |
| Total equity and liabilities | 188,535 | 1,731 | 190,266 |
| in € million | As originally reported |
Adjustment IFRS 15 |
Adjusted according to IFRS 15 |
|---|---|---|---|
| Assets | |||
| Total non-current assets | 121,901 | 63 | 121,964 |
| thereof investments accounted for using the equity method | 2,767 | 2 | 2,769 |
| thereof deferred tax | 1,927 | 66 | 1,993 |
| thereof other non-current assets | 1,635 | – 5 | 1,630 |
| Total current assets | 71,582 | 1,960 | 73,542 |
| thereof other current assets | 5,525 | 1,960 | 7,485 |
| Total assets | 193,483 | 2,023 | 195,506 |
| Equity and liab ilities |
|||
| Total equity | 54,548 | – 441 | 54,107 |
| thereof equity attributable to shareholders of BMW AG | 54,112 | – 441 | 53,671 |
| thereof revenue reserves | 51,256 | – 441 | 50,815 |
| Total non-current provisions and liabilities | 69,888 | – 254 | 69,634 |
| thereof other non-current provisions | 5,437 | 195 | 5,632 |
| thereof deferred tax | 2,241 | – 84 | 2,157 |
| thereof other liabilities | 5,410 | – 365 | 5,045 |
| Total current provisions and liabilities | 69,047 | 2,718 | 71,765 |
| thereof other non-current provisions | 6,313 | 54 | 6,367 |
| thereof other liabilities | 10,779 | 2,664 | 13,443 |
| Total equity and liabilities | 193,483 | 2,023 | 195,506 |
• 42
Accounting Principles and Policies
| in € million | As originally reported |
Adjustment IFRS 15 |
Adjusted according to IFRS 15 |
|---|---|---|---|
| Revenues | 49,247 | 444 | 49,691 |
| Cost of sales | – 38,904 | – 266 | – 39,170 |
| Gross profit | 10,343 | 178 | 10,521 |
| Profit / loss before financial result | 5,575 | 178 | 5,753 |
| Profit / loss before tax | 6,060 | 178 | 6,238 |
| Income taxes | –1,697 | – 50 | –1,747 |
| Net profit / loss | 4,363 | 128 | 4,491 |
| Attributable to shareholders of BMW AG | 4,333 | 128 | 4,461 |
| Basic earnings per share of common stock in € | 6.59 | 0.20 | 6.79 |
| Basic earnings per share of preferred stock in € | 6.60 | 0.20 | 6.80 |
| Diluted earnings per share of common stock in € | 6.59 | 0.20 | 6.79 |
| Diluted earnings per share of preferred stock in € | 6.60 | 0.20 | 6.80 |
• 43
| in € million | As originally reported |
Adjustment IFRS 15 |
Adjusted according to IFRS 15 |
|---|---|---|---|
| Net profit | 4,363 | 128 | 4,491 |
| Total comprehensive income | 5,415 | 128 | 5,543 |
| Total comprehensive income attributable to shareholders of BMW AG | 5,385 | 128 | 5,513 |
| in € million | As originally reported |
Adjustment IFRS 15 |
Adjusted according to IFRS 15 |
|---|---|---|---|
| Net profit | 4,363 | 128 | 4,491 |
| Change in provisions | 127 | 37 | 164 |
| Change in deferred taxes | 556 | 50 | 606 |
| Other | 102 | – 215 | –113 |
| Cash inflow/outflow from operating activities | 1,918 | – | 1,918 |
The effects of the first-time application of IFRS 15 on equity are shown in the Statement of Changes in Equity.
59
Policies
The new requirements contained in IFRS 9 (Financial Instruments) relating to the classification and measurement of financial instruments are being applied retrospectively by the BMW Group in the financial year 2018. The available exemption not to adjust comparative information for previous periods has been applied. Accordingly, only the opening balance sheet at 1 January 2018 has been adjusted. Apart from a small number of exceptions, the requirements for hedge accounting are being applied prospectively in the financial year 2018. The one exception to this is hedge accounting for the fair value of a portfolio against interest rate risk, for which the requirements of IAS 39 will continue to be applied.
In accordance with the new requirements of IFRS 9, the BMW Group classifies financial instruments into the following categories: "at amortised cost", "at fair value through other comprehensive income" and "at fair value through profit or loss". All equity instruments held at the date of the adoption of the Standard were classified at fair value through profit or loss.
IFRS 9 introduces a new model for determining impairment based on expected credit losses. In accordance with this model, valuation allowances for expected credit losses are recognised on financial assets classified at amortised cost or at fair value through other comprehensive income. Expected credit losses are updated at each balance sheet date on the basis of available information.
Valuation allowances on receivables from sales financing are determined primarily on the basis of past experience with credit losses, current data on overdue receivables, rating classes and scoring information. Forward-looking information (e. g. forecasts of economic performance indicators) is also taken into account if, based on past experience, such indicators show a substantive correlation with actual credit losses.
The BMW Group applies the general approach described in IFRS 9 to receivables from sales financing that do not result from operating leases. Impairment allowances on these receivables are measured on initial recognition on the basis of the expected 12-month credit loss. If, at subsequent balance sheet dates, the credit loss risk has increased significantly since the date of initial recognition, the impairment allowance is measured on the basis of lifetime expected credit losses. In line with the general approach, an impairment allowance is also recognised for receivables with impaired creditworthiness, measured on the basis of lifetime expected credit losses. The BMW Group generally assumes creditworthiness is impaired if a receivable is more than 90 days overdue.
The BMW Group applies the simplified approach described in IFRS 9 to operating lease receivables and trade receivables, whereby the amount of the impairment allowance of a receivable is measured subsequent to initial recognition on the basis of lifetime expected credit losses.
Cross currency basis spreads are not designated as part of the hedging relationship in the case of interest rate hedges accounted for as fair value hedges. Accordingly, changes in the market value of such instruments are recorded as costs of hedging within accumulated other equity. Amounts recorded in equity are reclassified to the income statement over the term of the hedging relationship.
The time value of option transactions and the interest component of the forward currency contracts are not designated as part of the hedging relationship in the case of currency and commodity hedges accounted for as cash flow hedges. Changes in the market value of such components are recorded as costs of hedging within accumulated other equity. As a result of the application of IFRS 9, most commodity hedging contracts are recognised directly in equity in accordance with hedge accounting rules. Amounts recorded in accumulated other equity are included on initial recognition in the carrying amounts of inventories of raw materials, supplies and goods for resale. In the case of currency hedges, amounts recorded in accumulated other equity are reclassified within profit / loss before financial result at the same time that the hedged item has an earnings impact.
The following table shows the reconciliation of the categories and carrying amounts of financial instruments as well as the impact on Group equity of the first-time application of IFRS 9.
06
Interim Group Financial
• 45
Notes to the Group Financial Statements Accounting Principles and
Policies
| Category | Carrying amount | |||
|---|---|---|---|---|
| in € million | IAS 39 | IFRS 9 | IAS 39 | IFRS 9 |
| Available-for-sale | Fair value through profit or loss | 366 | ||
| Fair value option | 29 | 395 | ||
| Loans and receivables | At amortised cost | 80,434 | 80,562 | |
| Hedge accounting | Hedge accounting | 2,187 | 2,187 | |
| Hedge accounting | Hedge accounting | 814 | 814 | |
| Held for trading | Fair value through profit or loss | 1,340 | 1,340 | |
| Available-for-sale | Fair value through profit or loss | 790 | ||
| Fair value directly through equity | 5,447 | 3,919 | ||
| At amortised cost | 730 | |||
| Loans and receivables | At amortised cost | 112 | 112 | |
| Fair value option | Fair value through profit or loss | 2 | 2 | |
| Loans and receivables | At amortised cost | 248 | 240 | |
| Loans and receivables | At amortised cost | 184 | 184 | |
| Cash and cash equivalents | Cash | At amortised cost | 8,407 | |
| Fair value through profit or loss | 9,039 | 632 | ||
| Trade receivables | Loans and receivables | At amortised cost | 2,667 | 2,663 |
| Other assets | ||||
| Receivables from subsidiaries | Loans and receivables | At amortised cost | 276 | 276 |
| Receivables from companies in which an investment is held |
Loans and receivables | At amortised cost | 1,334 | 1,334 |
| Financial assets Other investments Receivables from sales financing Financial assets Derivative instruments Cash flow hedges Fair value hedges Other derivative instruments Marketable securities and investment funds Loans to third parties Credit card receivables Other Collateral assets Other assets Total financial assets Financial liab ilities Financial liabilities Trade payables Other liabilities Total financial liabilities Total impact on equity |
Cash | At amortised cost | 219 | 219 |
| Available-for-sale | Fair value directly through equity | 97 | 97 | |
| Loans and receivables | At amortised cost | 1,108 | 1,108 | |
| 105,903 | 106,011 | |||
| Other liabilities | At amortised cost | 94,648 | 94,618 | |
| Other liabilities | At amortised cost | 9,731 | 9,731 | |
| Other liabilities | At amortised cost | 6,822 | 6,822 | |
| 111,201 | 111,171 | |||
| Equity effects | Differences through | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Note | Revenue reserves |
Accumulated other equity |
Deferred taxes | change of evaluation measurement |
new measurement category |
|||||||
| Financial assets | ||||||||||||
| Other investments | a) | 76 | – 76 | – | – | – | ||||||
| b) | – | – | – | – | – | |||||||
| Receivables from sales financing | c) | 93 | – | – 35 | 128 | – | ||||||
| Financial assets | ||||||||||||
| Derivative instruments | ||||||||||||
| Cash flow hedges | – | – | – | – | – | |||||||
| Fair value hedges | d) | – 5 | 5 | – | – | – | ||||||
| Other derivative instruments | – | – | – | – | – | |||||||
| Marketable securities and investment funds | e) | 2 | – 2 | – | – | – | ||||||
| f) | – 2 | 2 | – | – | – | |||||||
| g) | – | – 6 | 2 | – | – 8 | |||||||
| Loans to third parties | – | – | – | – | – | |||||||
| b) | – | – | – | – | – | |||||||
| Credit card receivables | c) | – 6 | – | 2 | – 8 | – | ||||||
| – | – | – | – | – | ||||||||
| Cash and cash equivalents | – | – | – | – | – | |||||||
| h) | – | – | – | – | – | |||||||
| Trade receivables | c) | – 3 | – | 1 | – 4 | – | ||||||
| Other assets | ||||||||||||
| Receivables from subsidiaries | – | – | – | – | – | |||||||
| Receivables from companies in which an investment is held |
– | – | – | – | – | |||||||
| Collateral assets | – | – | – | – | – | |||||||
| – | – | – | – | – | ||||||||
| Other assets | – | – | – | – | – | |||||||
| Total financial assets | 155 | – 77 | – 30 | 116 | – 8 | |||||||
| Financial liab | ||||||||||||
| Financial liabilities | d) | 23 | – | 7 | – 30 | – | ||||||
| Trade payables | – | – | – | – | – | |||||||
| Other liabilities | – | – | – | – | – | |||||||
| Total financial liabilities | 23 | – | 7 | – 30 | – | |||||||
| Total impact on equity | 178 | – 77 | ||||||||||
Notes to the Group Financial Statements Accounting
Principles and Policies
The impact of the various changes arising in conjunction with the first-time application of IFRS 9 is explained below:
(e) Specific investments in debt instruments were reclassified to the category at fair value through profit or loss because their contractual cash flows do not solely represent payments of principal and interest on the principal amount outstanding.
(f) Adjustment of the amount and presentation of impairment allowances in accordance with the new requirements of IFRS 9.
The following table shows the adjustments made to impairment allowances in the Group Balance Sheet as a result of the first-time application of IFRS 9.
| in € million | Impairment allowance 31.12. 2017 IAS 39 |
Adjustment to impairment allowance due to IFRS 9 |
Impairment allowances 1.1. 2018 IFRS 9 |
|---|---|---|---|
| Receivables from sales financing | –1,147 | 128 | –1,019 |
| Credit card receivables | –10 | – 8 | –18 |
| Trade receivables | – 56 | – 4 | – 60 |
| Marketable securities and investment funds | – | – 2 | – 2 |
| Total | –1,213 | 114 | –1,099 |
Notes to the Group Financial Statements Notes to the Income
Statement
Revenues by activity comprise the following:
| in € million | 2nd quarter 2018 | 2nd quarter 2017* | 1 January to 30 June 2018 |
1 January to 30 June 2017* |
|---|---|---|---|---|
| Sales of products and related goods | 17,946 | 18,793 | 34,068 | 35,752 |
| Sales of products previously leased to customers | 2,751 | 2,690 | 5,131 | 5,403 |
| Income from lease instalments | 2,410 | 2,475 | 4,791 | 4,967 |
| Interest income on loan financing | 932 | 939 | 1,837 | 1,876 |
| Other income | 984 | 868 | 1,890 | 1,693 |
| Revenues | 25,023 | 25,765 | 47,717 | 49,691 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
An analysis of revenues by segment is shown in the segment information in note 36. Revenues from the sale of products and related goods are generated primarily in the Automotive segment and, to a lesser extent, in the Motorcycles segment. Revenues from the see note 36
sale of products previously leased to customers, income from lease instalments and interest income on loan financing are allocated to the Financial Services segment. Other income relates mainly to the Automotive segment and the Financial Services segment.
Cost of sales relate to the following items:
| in € million | 2nd quarter 2018 | 2nd quarter 2017* | 1 January to 30 June 2018 |
1 January to 30 June 2017* |
|---|---|---|---|---|
| Manufacturing costs | 11,147 | 11,352 | 20,493 | 21,592 |
| Cost of sales relating to financial services business | 5,887 | 5,847 | 11,380 | 11,758 |
| Research and development expenses | 1,322 | 1,113 | 2,610 | 2,298 |
| thereof amortisation of capitalised development costs | 324 | 287 | 656 | 591 |
| Other cost of sales | 1,579 | 1,918 | 3,282 | 3,522 |
| Cost of sales | 19,935 | 20,230 | 37,765 | 39,170 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
Other cost of sales comprises mainly warranty expenses, service contracts, telemetrics and roadside assistance.
Statement
| in € million | 2nd quarter 2018 | 2nd quarter 2017 | |
|---|---|---|---|
| 928 | 815 | 1,736 | 1,589 |
|---|---|---|---|
| 1,411 | 1,524 | 2,778 | 2,928 |
Selling expenses comprise mainly marketing, advertising and sales personnel costs. Administrative expenses comprise mainly personnel and IT costs.
Result from equity accounted investments includes results of the joint ventures BMW Brilliance Automotive Ltd., Shenyang, DriveNow GmbH & Co. KG, Munich, and DriveNow Verwaltungs GmbH, Munich, (up to and including 9 March 2018), the joint venture IONITY Holding GmbH & Co. KG, Munich, and the associated company THERE Holding B. V., Amsterdam.
1 January to 30 June 2018
1 January to 30 June 2017
09
Selling and administrative expenses
These items principally include exchange gains and losses, gains and losses on the disposal of assets, impairment losses, as well as income / expense from the reversal of and allocation to provisions, including provisions for legal risks and other litigation.
| in € million | 2nd quarter 2018 | 2nd quarter 2017 | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
|---|---|---|---|---|
| Interest and similar income | 36 | 46 | 74 | 107 |
| Interest and similar expenses | – 71 | – 88 | –174 | –186 |
| Net interest result | – 35 | – 42 | –100 | – 79 |
| in € million | 2nd quarter 2018 | 2nd quarter 2017 | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
|---|---|---|---|---|
| Result on investments | – 25 | 14 | 203 | 14 |
| Sundry other financial result | 5 | 15 | 51 | 60 |
| Other financial result | – 20 | 29 | 254 | 74 |
The result on investments for the first half-year 2018 comprises mainly fair value measurement gains arising on the acquisition of DriveNow shares. Further information is provided in note 2. see
Taxes on income comprise the following:
Notes to the Group Financial Statements Notes to the Income Statement
| in € million | 2nd quarter 2018 | 2nd quarter 2017* | 1 January to 30 June 2018 |
1 January to 30 June 2017* |
|---|---|---|---|---|
| Current tax expense | – 310 | 697 | 327 | 1,141 |
| Deferred tax expense | 1,094 | 144 | 1,321 | 606 |
| Income taxes | 784 | 841 | 1,648 | 1,747 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
The effective tax rate for the six-month period to 30 June 2018 was 27.3 % (2017: 28.0 %) and corresponds to the best estimate of the weighted average
annual income tax rate for the full year. This tax rate has been applied to the pre-tax profit for the period under report.
The computation of earnings per share is based on the following figures:
| 2nd quarter 2018 | 2nd quarter 2017* | 1 January to 30 June 2018 |
1 January to 30 June 2017* |
||
|---|---|---|---|---|---|
| Profit attributable to shareholders of BMW AG | € million | 2,056.5 | 2,197.0 | 4,337.9 | 4,461.0 |
| Profit attributable to common stock | € million | 1,882.1 | 2,012.2 | 3,970.6 | 4,086.3 |
| Profit attributable to preferred stock | € million | 174.4 | 184.8 | 367.3 | 374.7 |
| Average number of common stock shares in circulation | number | 601,995,196 | 601,995,196 | 601,995,196 | 601,995,196 |
| Average number of preferred stock shares in circulation | number | 55,605,404 | 55,114,404 | 55,605,404 | 55,114,404 |
| Basic earnings per share of common stock | € | 3.13 | 3.34 | 6.60 | 6.79 |
| Basic earnings per share of preferred stock | € | 3.14 | 3.35 | 6.61 | 6.80 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
In computing earnings per share of preferred stock, earnings to cover the additional dividend of € 0.02 per share of preferred stock are spread over the four quarters of the corresponding financial year. Earnings per share of preferred stock are computed on the basis of the number of preferred stock shares entitled to receive a dividend in each of the relevant financial years. As in the previous year, diluted earnings per share correspond to basic earnings per share.
Notes to the Group Financial Statements Notes to the Statement of Comprehensive
Income
16
Other comprehensive income for the period after tax comprises the following:
| in € million | 2nd quarter 2018 | 2nd quarter 2017 | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
|---|---|---|---|---|
| Remeasurement of the net defined benefit liability for pension plans | 137 | 452 | 497 | 911 |
| Deferred taxes | –12 | –133 | –113 | – 256 |
| Items not expected to be reclassified to the income statement in the future | 125 | 319 | 384 | 655 |
| Marketable securities (at fair value through other comprehensive income) | – 30 | 31 | –13 | 33 |
| thereof gains / losses arising in the period under report | –13 | 30 | 15 | 36 |
| thereof reclassifications to the income statement | –17 | 1 | – 28 | – 3 |
| Financial instruments used for hedging purposes | – 614 | 2,043 | – 628 | 1,516 |
| thereof gains / losses arising in the period under report | – 442 | 2,117 | – 308 | 1,434 |
| thereof reclassifications to the income statement | –172 | – 74 | – 320 | 82 |
| Costs of hedging | –173 | – | – 419 | – |
| thereof gains / losses arising in the period under report | – 222 | – | – 499 | – |
| thereof reclassifications to the income statement | 49 | – | 80 | – |
| Other comprehensive income from equity accounted investments | – 35 | 26 | – 77 | 28 |
| Deferred taxes | 258 | – 634 | 360 | – 484 |
| Currency translation foreign operations | 304 | – 747 | 197 | – 696 |
| Items that can be reclassified to the income statement in the future | – 290 | 719 | – 580 | 397 |
| Other comprehensive income for the period after tax | –165 | 1,038 | –196 | 1,052 |
Notes to the Group Financial Statements Notes to the Statement of Comprehensive Income
Deferred taxes on components of other comprehensive income for the second quarter were as follows:
| 2nd quarter 2018 | 2nd quarter 2017 | |||||
|---|---|---|---|---|---|---|
| in € million | Before tax |
Deferred taxes |
After tax |
Before tax |
Deferred taxes |
After tax |
| Remeasurement of the net defined benefit liability for pension plans | 137 | –12 | 125 | 452 | –133 | 319 |
| Marketable securities (at fair value through other comprehensive income) | – 30 | 9 | – 21 | 31 | – | 31 |
| Financial instruments used for hedging purposes | – 614 | 186 | – 428 | 2,043 | – 590 | 1,453 |
| Costs of hedging | –173 | 53 | –120 | – | – | – |
| Other comprehensive income from equity accounted investments | – 35 | 10 | – 25 | 26 | – 44 | –18 |
| Currency translation foreign operations | 304 | – | 304 | – 747 | – | – 747 |
| Other comprehensive income | – 411 | 246 | –165 | 1,805 | – 767 | 1,038 |
Deferred taxes on components of other comprehensive income in the first half-year were as follows:
| 1 January to 30 June 2018 | 1 January to 30 June 2017 | |||||
|---|---|---|---|---|---|---|
| in € million | Before tax |
Deferred taxes |
After tax |
Before tax |
Deferred taxes |
After tax |
| Remeasurement of the net defined benefit liability for pension plans | 497 | –113 | 384 | 911 | – 256 | 655 |
| Marketable securities (at fair value through other comprehensive income) | –13 | 13 | – | 33 | – 2 | 31 |
| Financial instruments used for hedging purposes | – 628 | 199 | – 429 | 1,516 | – 441 | 1,075 |
| Costs of hedging | – 419 | 121 | – 298 | – | – | – |
| Other comprehensive income from equity accounted investments | – 77 | 27 | – 50 | 28 | – 41 | –13 |
| Currency translation foreign operations | 197 | – | 197 | – 696 | – | – 696 |
| Other comprehensive income | – 443 | 247 | –196 | 1,792 | – 740 | 1,052 |
Other comprehensive income relating to equity accounted investments is reported in the Group Statement of Changes in Equity in the columns "Translation differences" with a positive amount of € 30 million (2017: negative amount of € 135 million), "Derivative financial instruments" with a positive amount of € 35 million (2017: positive amount of € 122 million) and "Costs of hedging" with a negative amount of € 142 million (2017: € – million).
68
Interim Group Financial Statements
Notes to the Group Financial Statements Notes to the Balance Sheet
Intangible assets mainly comprise capitalised development costs on vehicle, module and architecture projects as well as subsidies for tool costs, licences, purchased development projects, software and purchased customer lists.
| in € million | 30. 6. 2018 | 31.12. 2017 |
|---|---|---|
| Capitalised development costs | 8,555 | 8,409 |
| Goodwill | 380 | 380 |
| thereof allocated to the Automotive cash-generating unit |
33 | 33 |
| thereof allocated to the Financial Services cash-generating unit |
347 | 347 |
| Other intangible assets | 589 | 675 |
| Intangible assets | 9,524 | 9,464 |
Other intangible assets include a brand-name right amounting to € 41 million (31 December 2017: € 41 million), which is allocated to the Automotive segment and is not subject to scheduled amortisation since its useful life is deemed to be indefinite.
Intangible assets amounting to € 41 million (31 December 2017: € 41 million) are subject to restrictions on title. Intangible assets developed during the first six months of the year as follows:
| in € million | 2018 | 2017 |
|---|---|---|
| Capitalised development costs | ||
| Additions | 802 | 943 |
| Amortisation | 656 | 591 |
| Other intangible assets | ||
| Additions | 33 | 27 |
| Amortisation | 97 | 96 |
As in the previous year, there was no requirement to recognise impairment losses or reversals of impairment losses on intangible assets.
Property, plant and equipment developed during the first six months as follows:
| in € million | 2018 | 2017 |
|---|---|---|
| Additions | 1,547 | 1,433 |
| Depreciation | 1,701 | 1,662 |
| Disposals | 9 | 8 |
No impairment losses were recognised during the first half-year 2018.
Purchase commitments for property, plant and equipment totalled € 4,817 million (31 December 2017: € 4,137 million).
Interim Group Financial Statements Notes to the Group
19
Leased products developed during the first six months of the year as follows:
| in € million | 2018 | 2017 |
|---|---|---|
| Additions | 8,459 | 8,908 |
| Depreciation | 1,756 | 1,701 |
| Disposals | 6,535 | 7,370 |
Investments accounted for using the equity method comprise the joint ventures BMW Brilliance Automotive Ltd., Shenyang, and IONITY Holding GmbH & Co.KG, Munich, as well as the BMW Group's interests in the associated company THERE Holding B. V., Amsterdam.
Other investments relate to investments in nonconsolidated subsidiaries, joints ventures, joint operations and associated companies, participations and non-current marketable securities.
Receivables from sales financing totalling € 82,806 million (31 December 2017: € 80,434 million) include credit financing for retail customers and dealerships and finance leases.
Financial assets comprise:
| in € million | 30. 6. 2018 | 31.12. 2017 |
|---|---|---|
| Marketable securities and investment funds |
5,296 | 5,447 |
| Derivative instruments | 2,947 | 4,341 |
| Credit card receivables | 234 | 248 |
| Loans to third parties | 34 | 114 |
| Other | 220 | 184 |
| Financial assets | 8,731 | 10,334 |
Income tax assets totalling € 2,583 million (31 December 2017: € 1,566 million) include € 318 million (31 December 2017: € 364 million), which is expected to be settled after more than twelve months. Depending on the timing of proceedings, such claims may also be settled at an earlier date.
Other assets comprise:
| in € million | 30. 6. 2018 | 31.12. 2017* |
|---|---|---|
| Return right assets for future leased products |
2,499 | 1,962 |
| Prepayments | 2,142 | 2,018 |
| Receivables from companies in which an investment is held |
1,610 | 1,334 |
| Other taxes | 1,166 | 1,537 |
| Expected reimbursement claims | 890 | 847 |
| Collateral assets | 300 | 316 |
| Receivables from subsidiaries | 257 | 276 |
| Sundry other assets | 938 | 825 |
| Other assets | 9,802 | 9,115 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
Inventories comprise the following:
| in € million | 30. 6. 2018 | 31.12. 2017 |
|---|---|---|
| Finished goods and goods for resale | 12,852 | 10,436 |
| Work in progress, unbilled contracts | 1,074 | 1,125 |
| Raw materials and supplies | 1,360 | 1,146 |
| Inventories | 15,286 | 12,707 |
Interim Group Financial Statements
Notes to the Balance Sheet
The Group Statement of Changes in Equity is shown on pages 50 and 51.
The number of shares of common stock issued by BMWAG at 30 June 2018 was 601,995,196 shares, each with a par value of € 1, unchanged from 31 December 2017. The number of shares of preferred stock at that date was 55,605,404 shares, each with a par value of € 1, unchanged from 31 December 2017. Unlike the common stock, no voting rights are attached to the preferred stock. Subscribed capital therefore stood at € 658 million, unchanged from 31 December 2017. All of the Company's stock is issued to bearer. Preferred stock bears an additional dividend of € 0.02 per share.
To date, 1,345,617 shares of preferred stock have been issued to employees. BMWAG is authorised to issue 5 million shares of non-voting preferred stock amounting to nominal € 5.0 million prior to 14 May 2019. As a result, 3.7 million authorised shares and Authorised Capital amounting to € 3.7 million remained available for issue at the end of the reporting period. No treasury shares were held at 30 June 2018.
Capital reserves include premiums arising from the issue of shares and were unchanged from 31 December 2017 at € 2,084 million.
Revenue reserves comprise the post-acquisition and non-distributed earnings of consolidated companies. In addition, remeasurements of the net defined benefit obligation for pension plans are also presented in revenue reserves.
During the first half of 2018, BMW AG paid the dividend for the financial year 2017 amounting to € 2,408 million for common stock and € 222 million for preferred stock.
Accumulated other equity comprises all amounts recognised directly in equity resulting from the translation of the financial statements of foreign subsidiaries, changes in the fair value of derivative financial instruments and marketable securities, costs of hedging and the related deferred taxes.
Further information regarding the transition effects recognised in equity on the first-time application of IFRS 9 and IFRS 15 is provided in notes 5 and 6.
see pages 50 and 51
Pension provisions stood at € 2,709 million (31 December 2017: € 3,252 million). The remeasurement of the net liability reduced pension provisions in the first half-year 2018 by € 497 million.
Other provisions consist of the following:
| in € million | 30. 6. 2018 | 31.12. 2017* |
|---|---|---|
| Statutory and non-statutory warranty obligations, product guarantees |
4,656 | 5,074 |
| Obligations for personnel and social expenses |
3,009 | 2,782 |
| Other obligations for ongoing operational expenses |
1,831 | 1,620 |
| Other obligations | 2,360 | 2,523 |
| Other provisions | 11,856 | 11,999 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
Provisions for other obligations for ongoing operational expenses included other provisions for expected payment for bonuses and other price deductions.
Income tax liabilities totalling € 984 million (31 December 2017: € 1,124 million) include € 71 million (31 December 2017: € 68 million), which is expected to be settled after more than twelve months. Depending on the timing of proceedings, some liabilities may be settled earlier than this.
Current income tax liabilities comprise € 161 million (31 December 2017: € 332 million) for taxes payable and € 823 million (31 December 2017: € 792 million) for tax provisions.
30
Financial liabilities of the BMW Group comprise the following:
Interim Group Financial Statements Notes to the Group Financial Statements
| in € million | 30. 6. 2018 | 31.12. 2017 |
|---|---|---|
| Bonds | 49,731 | 44,880 |
| Asset backed financing transactions | 17,298 | 16,855 |
| Liabilities from customer deposits (banking) | 13,772 | 13,572 |
| Liabilities to banks | 13,030 | 12,658 |
| Commercial paper | 1,354 | 4,461 |
| Derivative instruments | 1,336 | 1,090 |
| Other | 1,112 | 1,132 |
| Financial liabilities | 97,633 | 94,648 |
Other liabilities comprise the following items:
| in € million | 30. 6. 2018 | 31.12. 2017* |
|---|---|---|
| Deferred income | 6,943 | 6,665 |
| Refund liabilities for future leased products | 3,461 | 2,807 |
| Other taxes | 1,059 | 935 |
| Deposits received | 863 | 856 |
| Payables to other companies in which an investment is held |
750 | 744 |
| Advance payments from customers | 664 | 1,056 |
| Social security | 103 | 98 |
| Payables to subsidiaries | 81 | 129 |
| Sundry | 5,190 | 5,198 |
| Other liabilities | 19,114 | 18,488 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
Sundry other liabilities include mainly bonuses for services already performed as well as sales promotions, commission payables and credit balances on customers' accounts.
Deferred income includes liabilities for service contracts amounting to € 3,621 million (31 December 2017: € 3,658 million).
Financial Statements Notes to the Group
Interim Group
Financial Statements Other Disclosures
The following contingent liabilities existed at the balance sheet date:
| in € million | 30. 6. 2018 | 31.12. 2017 |
|---|---|---|
| Investment subsidies | 282 | 399 |
| Litigation | 179 | 204 |
| Performance guarantees | 13 | 10 |
| Other | 430 | 203 |
| Contingent liabilities | 904 | 816 |
Other contingent liabilities comprise mainly risks relating to taxes and customs duties.
The BMW Group determines its best estimate of contingent liabilities on the basis of the information available at the date of preparation of the Group Financial Statements. This assessment may change over time and is adjusted regularly on the basis of new information and circumstances. Some of the risks are insured.
In June 2016, Germany's competition authority conducted searches at various carmakers and suppliers,
A description of the accounting treatment and measurement of derivative financial instruments and the allocation of recognised financial instruments to different measurement levels is provided in note 6 of the Interim Group Financial Statements at 30 June 2018 and in notes 4 and 37 of the Group Financial Statements at 31 December 2017. note 6 including BMW AG, as part of an investigation into the purchase of steel. The investigations have not yet been completed. More extensive disclosures pursuant to IAS 37.86 cannot be provided at present.
In July 2017, cartel allegations against five German car manufacturers appeared in the press. Internal investigations were initiated by the BMW Group and have not yet been completed. In October 2017, the European Commission began an inspection at BMW Group. A number of class actions were brought in the USA and Canada. Possible risks for the BMW Group cannot be quantified at present; further disclosures pursuant to IAS 37.86 cannot be provided at present.
Regulatory authorities have ordered the BMW Group to recall various vehicle models that are fitted with airbags supplied by the Takata group of companies. Provision for the costs involved has been recognised within warranty provisions. In addition to the risks already covered by warranty provisions, it cannot be ruled out that further BMW Group vehicles will be affected by future recall actions. Further disclosures pursuant to IAS 37.86 cannot be provided at present.
Amounts are discounted at 30 June 2018 on the basis of the following interest rates:
| ISO Code | |||||
|---|---|---|---|---|---|
| in % | EUR | USD | GBP | JPY | CNY |
| Interest rate for six months | – 0.32 | 2.53 | 0.85 | – 0.20 | 4.92 |
| Interest rate for one year | – 0.25 | 2.58 | 0.88 | 0.02 | 3.99 |
| Interest rate for five years | 0.26 | 2.86 | 1.30 | 0.11 | 4.02 |
| Interest rate for ten years | 0.89 | 2.90 | 1.53 | 0.29 | 4.16 |
see
Interest rates taken from interest rate curves were adjusted, where necessary, to take account of the credit quality and risk of the underlying financial instrument.
Notes to the Group
The following table shows the amounts allocated to each measurement level at the end of the reporting period:
Financial Statements Other Disclosures
| 30. 6. 2018 | ||||||
|---|---|---|---|---|---|---|
| in € million | Level hierarchy in accordance with IFRS 13 | |||||
| Level 1 | Level 2 | Level 3 | ||||
| Marketable securities, investment funds and collateral receivables | 4,667 | – | – | |||
| Other investments | 235 | – | 207 | |||
| Cash equivalents | – | 715 | – | |||
| Loans to third parties | – | – | 1 | |||
| Derivative instruments (assets) | ||||||
| Interest rate risks | – | 1,279 | – | |||
| Currency risks | – | 1,335 | – | |||
| Raw materials price risks | – | 329 | – | |||
| Other risks | – | – | 4 | |||
| Derivative instruments (liabilities) | ||||||
| Interest rate risks | – | 891 | – | |||
| Currency risks | – | 315 | – | |||
| Raw materials price risks | – | 130 | – | |||
| 31.12. 2017 | |||||
|---|---|---|---|---|---|
| Level hierarchy in accordance with IFRS 13 | |||||
| in € million | Level 1 | Level 2 | Level 3 | ||
| Marketable securities, investment funds and collateral receivables – available-for-sale | 5,544 | – | – | ||
| Other investments – available-for-sale / fair value option | 284 | – | 105 | ||
| Cash equivalents | – | – | – | ||
| Loans to third parties | – | – | 2 | ||
| Derivative instruments (assets) | |||||
| Interest rate risks | – | 1,797 | – | ||
| Currency risks | – | 2,008 | – | ||
| Raw materials price risks | – | 534 | – | ||
| Other risks | – | – | 2 | ||
| Derivative instruments (liabilities) | |||||
| Interest rate risks | – | 778 | – | ||
| Currency risks | – | 221 | – | ||
| Raw materials price risks | – | 91 | – | ||
The allocation to measurement levels at 30 June 2018 takes account of the reclassifications of financial instruments made in conjunction with the first-time application of IFRS 9 see note 6. There were no reclassifications within the level hierarchy either in the financial year 2017 or in the first six months of 2018.
see
note 6
74
Interim Group Financial Statements Notes to the Group
Financial Statements Other Disclosures
Where the fair value was required for a financial instrument for disclosure purposes, the discounted cash flow method was used, taking account of the BMW Group's own default risk; for this reason, the fair values calculated can be allocated to Level 2.
Financial instruments recognised at fair value for which no market price is available are allocated to Level 3. Fair values are determined in accordance with the following table:
| in € million | Fair value 30. 6. 2018 |
Valuation method | Input Parameter |
|---|---|---|---|
| Unquoted equity instruments | 207 | Last financing round | Price per share |
| Milestone analysis (quantitative and qualitative factors) |
Company performance | ||
| Contractual rights by share class | |||
| Convertible bonds | 1 | Last financing round | Price per share |
| Milestone analysis (quantitative and qualitative factors) |
Company performance | ||
| Contractual rights by share class | |||
| Options on unquoted equity instruments | 4 | Last financing round | Price per share |
| Milestone analysis (quantitative and qualitative factors) |
Company performance | ||
| Consideration of exercise price | Contractual rights by share class | ||
| Exercise price |
Level 3 financial assets relate mainly to investments in a private equity fund. The private equity companies are valued on the basis of their net asset value which is determined using relevant information that is not available in the public domain. The fund manager assesses the underlying individual companies in accordance with the guidelines for international private equity and venture capital valuations (IPEV). A detailed listing and quantification of potential sensitivities of the input parameters is not considered meaningful in view of the valuation methodology applied. An increase in input parameters would normally also lead to a similar increase in valuation.
Notes to the Group Financial Statements Other Disclosures
| in € million | Unquoted equity instruments |
Convertible bonds | Options on unquoted equity instruments |
Financial Instru ments Level 3 |
|---|---|---|---|---|
| 1. January 2018 | 111* | 2 | 2 | 115 |
| Additions | 66 | – | – | 66 |
| Disposals | – 2 | –1 | – | – 3 |
| Gains (+)/ losses (–) recognised in accumulated other equity | – | – | – | – |
| Gains (+)/ losses (–) recognised in the income statement | 26 | – | 2 | 28 |
| Currency translation differences | 6 | – | – | 6 |
| 30 June 2018 | 207 | 1 | 4 | 212 |
* Opening balance adjusted due to first-time application of IFRS 9.
| in € million | Unquoted equity instruments |
Convertible bonds | Options on unquoted equity instruments |
Financial Instru ments Level 3 |
|---|---|---|---|---|
| 1. January 2017 | – | – | – | – |
| Additions | 103 | 2 | – | 105 |
| Disposals | – | – | – | – |
| Gains (+)/ losses (–) recognised in accumulated other equity | 8 | – | – | 8 |
| Gains (+)/ losses (–) recognised in the income statement | – | – | 3 | 3 |
| Currency translation differences | – 6 | – | –1 | – 7 |
| 31 December 2017 | 105 | 2 | 2 | 109 |
In the case of financial instruments held by the BMW Group which are not measured at fair value, the carrying amounts of such instruments correspond as a general rule to fair values. The following items are the main exceptions to this general rule:
| 30. 6. 2018 | 31.12. 2017 | ||||
|---|---|---|---|---|---|
| in € million | Fair value | Carrying amount | Fair value | Carrying amount | |
| Receivables from sales financing | 86,590 | 82,806 | 83,853 | 80,434 | |
| Bonds | 50,159 | 49,731 | 45,566 | 44,880 |
Notes to the Group Financial Statements Other Disclosures
34
Transactions of Group entities with related parties arise exclusively in the normal course of business of each of the parties concerned and are conducted at normal market conditions.
A significant proportion of the BMW Group's transactions with related parties relates to the joint venture BMW Brilliance Automotive Ltd., Shenyang.
| Supplies and services performed |
Supplies and services received |
Receivables | Payables | |||||
|---|---|---|---|---|---|---|---|---|
| in € million | 2nd quarter 2018 |
2nd quarter 2017 |
2nd quarter 2018 |
2nd quarter 2017 |
30. 6. 2018 | 31.12. 2017 | 30. 6. 2018 | 31.12. 2017 |
| BMW Brilliance Automotive Ltd. | 1,892 | 1,454 | 22 | 18 | 1,431 | 1,333 | 747 | 739 |
| Supplies and services performed |
Supplies and services received |
Receivables | Payables | |||||
| in € million | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
1 January to 30 June 2018 |
1 January to 30 June 2017 |
30. 6. 2018 | 31.12. 2017 | 30. 6. 2018 | 31.12. 2017 |
| BMW Brilliance Automotive Ltd. | 3,471 | 2,769 | 41 | 32 | 1,431 | 1,333 | 747 | 739 |
Business relationships of the BMW Group with other associated companies and joint ventures as well as with non-consolidated subsidiaries are small in scale.
Stefan Quandt, Germany, is a shareholder and Deputy Chairman of the Supervisory Board of BMWAG. He is also the sole shareholder and Chairman of the Supervisory Board of DELTON AG, Bad Homburg v. d. H., which, via its subsidiaries, performed logistics-related services for the BMW Group during the first halfyear 2018. In addition, companies of the DELTON Group acquired vehicles from the BMW Group by way of leasing.
Stefan Quandt, Germany, is also the indirect majority shareholder of SOLARWATT GmbH, Dresden. Cooperation arrangements are in place between BMWAG and SOLARWATT GmbH, Dresden, within the field of electric mobility. The focus of this collaboration is on providing complete photovoltaic solutions for rooftop systems and carports to BMWi customers. SOLARWATT GmbH, Dresden, leased vehicles from the BMW Group during the first six months of 2018.
Susanne Klatten, Germany, is a shareholder and member of the Supervisory Board of BMWAG and also a shareholder and Deputy Chairwoman of the Supervisory Board of ALTANA AG, Wesel. ALTANA AG, Wesel, acquired vehicles from the BMW Group during the first six months of 2018 by way of leasing.
Susanne Klatten, Germany, is also the sole shareholder and Chairwoman of the Supervisory Board of UnternehmerTUM GmbH, Garching. During the first six months of 2018, the BMW Group bought in services from UnternehmerTUM GmbH, Garching, primarily in the form of consultancy and workshop services.
In addition, Susanne Klatten, Germany, and Stefan Quandt, Germany, are indirectly sole shareholders of Entrust Datacard Corp., Shakopee, Minnesota. Stefan Quandt is also a member of the supervisory board of this entity. Entrust Datacard Corp., Shakopee, Minnesota, leased vehicles from the BMW Group during the first half-year 2018.
Seen from the perspective of BMW Group entities, the volume of transactions with the above-mentioned entities was as follows:
Notes to the Group Financial Statements Other Disclosures
Interim Group Financial Statements
| Supplies and services performed |
Supplies and services received |
Receivables | Payables | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| in € thousand | 2nd quarter 2018 |
2nd quarter 2017 |
2nd quarter 2018 |
2nd quarter 2017 |
30. 6. 2018 | 31.12. 2017 | 30. 6. 2018 | 31.12. 2017 | ||
| DELTON AG | 881 | 861 | 5,751 | 6,952 | 46 | 94 | 2,178 | 4,464 | ||
| SOLARWATT GmbH | 7 | 63 | – | – | – | 5 | 1 | – | ||
| ALTANA AG | 512 | 507 | – | – | 199 | 360 | – | 36 | ||
| UnternehmerTUM GmbH | 54 | 32 | 440 | 414 | 54 | – | 406 | 255 | ||
| Entrust Datacard Corp. | 35 | 28 | – | – | 4 | 5 | – | – |
| Supplies and services performed |
Supplies and services received |
Receivables | Payables | |||||
|---|---|---|---|---|---|---|---|---|
| in € thousand | 1 January to 30 June 2018 |
1 January to 30 June 2017 |
1 January to 30 June 2018 |
1 January to 30 June 2017 |
30. 6. 2018 | 31.12. 2017 | 30. 6. 2018 | 31.12. 2017 |
| DELTON AG | 1,774 | 1,717 | 11,546 | 17,358 | 46 | 94 | 2,178 | 4,464 |
| SOLARWATT GmbH | 13 | 154 | 1 | – | – | 5 | 1 | – |
| ALTANA AG | 1,019 | 1,022 | – | – | 199 | 360 | – | 36 |
| UnternehmerTUM GmbH | 54 | 32 | 558 | 582 | 54 | – | 406 | 255 |
| Entrust Datacard Corp. | 60 | 57 | – | – | 4 | 5 | – | – |
Apart from vehicle leasing and credit financing contracts concluded at normal market conditions, companies of the BMW Group have not entered into any contracts with members of the Board of Management or Supervisory Board of BMWAG. The same applies to close members of the families of those persons.
BMW Trust e. V., Munich, manages fund assets relating to pension obligations on a trustee basis and manages the accrued entitlements relating to pre-retirement parttime working arrangements in Germany and is therefore a related party of the BMW Group in accordance with IAS 24. This entity has no assets of its own. It had no income or expenses during the period under report. BMWAG bears expenses on an immaterial scale and performs services for BMW Trust e. V., Munich.
No events have occurred after the balance sheet date with a particular significance for the results of operations, financial position or net assets of the BMW Group.
78
Interim Group Financial Statements Notes to the Group
Segment Information
For information on the basis used for identifying and managing reportable segments, please refer to the Group Financial Statements at 31 December 2017.
Due to the management system, reported segment results and asset values are based on different performance measures. Details are provided in note 43 of the Group Financial Statements of BMWAG at 31 December 2017.
Segment information is prepared in conformity with the accounting policies used to prepare and present the Interim Group Financial Statements. Exceptions to this general principle include the treatment of inter-segment warranties, the earnings impact of which is allocated to the Automotive and Financial Services segments on the basis used internally to manage the business. In addition, intragroup repurchase agreements between the Automotive and Financial Services segments pursuant to IFRS 15, impairment allowances on intragroup receivables and changes in the value of consolidated other investments pursuant to IFRS 9 are also excluded.
Segment information by operating segment for the second quarter is as follows:
| Automotive | Motorcycles | Financial Services | |||||
|---|---|---|---|---|---|---|---|
| in € million | 2018 | 2017* | 2018 | 2017* | 2018 | 2017 | |
| Segment information by operating segment |
|||||||
| External revenues | 17,667 | 18,434 | 659 | 694 | 6,697 | 6,636 | |
| Inter-segment revenues | 4,525 | 3,731 | –1 | 1 | 444 | 408 | |
| Total revenues | 22,192 | 22,165 | 658 | 695 | 7,141 | 7,044 | |
| Segment result | 1,919 | 2,244 | 98 | 104 | 605 | 589 | |
| Result from equity accounted investments | 182 | 139 | – | – | – | – | |
| Capital expenditure on non-current assets | 1,046 | 1,333 | 20 | 27 | 6,184 | 6,030 | |
| Depreciation and amortisation on non-current assets | 1,190 | 1,129 | 22 | 21 | 2,543 | 2,462 |
Segment information by operating segment for the first half-year is as follows:
| Automotive | Motorcycles | Financial Services | ||||
|---|---|---|---|---|---|---|
| in € million | 2018 | 2017* | 2018 | 2017* | 2018 | 2017 |
| Segment information by operating segment |
||||||
| External revenues | 33,580 | 35,092 | 1,183 | 1,314 | 12,953 | 13,284 |
| Inter-segment revenues | 7,938 | 7,074 | –1 | 1 | 862 | 806 |
| Total revenues | 41,518 | 42,166 | 1,182 | 1,315 | 13,815 | 14,090 |
| Segment result | 3,800 | 4,121 | 175 | 229 | 1,166 | 1,184 |
| Result from equity accounted investments | 405 | 490 | – | – | – | – |
| Capital expenditure on non-current assets | 2,344 | 2,363 | 34 | 36 | 11,649 | 12,064 |
| Depreciation and amortisation on non-current assets | 2,390 | 2,290 | 46 | 41 | 4,985 | 4,784 |
| Automotive | Motorcycles | Financial Services | |||||
|---|---|---|---|---|---|---|---|
| in € million | 30. 6. 2018 | 31.12. 2017* | 30. 6. 2018 | 31.12. 2017 | 30. 6. 2018 | 31.12. 2017 | |
| Segment assets | 11,582 | 11,223 | 604 | 618 | 14,029 | 14,740 | |
| Investments accounted for using the equity method | 2,863 | 2,769 | – | – | – | – |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
Financial Statements
| Group | Reconciliation to Group figures | Other Entities | ||||
|---|---|---|---|---|---|---|
| 2017* | 2018 | 2017* | 2018 | 2017 | 2018 | |
| Segment information by operating segment |
||||||
| External revenues | 25,765 | 25,023 | – | – | 1 | – |
| Inter-segment revenues | – | – | – 4,140 | – 4,969 | – | 1 |
| Total revenues | 25,765 | 25,023 | – 4,140 | – 4,969 | 1 | 1 |
| Segment result | 3,058 | 2,873 | 98 | 243 | 23 | 8 |
| Result from equity accounted investments | 139 | 182 | – | – | – | – |
| Capital expenditure on non-current assets | 5,746 | 5,537 | –1,644 | –1,713 | – | – |
| Depreciation and amortisation on non-current assets | 2,086 | 2,086 | –1,526 | –1,669 | – | – |
| Group | Reconciliation to Group figures | Other Entities | ||||
|---|---|---|---|---|---|---|
| 2017* | 2018 | 2017* | 2018 | 2017 | 2018 | |
| Segment information by operating segment |
||||||
| External revenues | 49,691 | 47,717 | – | – | 1 | 1 |
| Inter-segment revenues | – | – | – 7,883 | – 8,801 | 2 | 2 |
| Total revenues | 49,691 | 47,717 | – 7,883 | – 8,801 | 3 | 3 |
| Segment result | 6,238 | 6,038 | 685 | 819 | 19 | 78 |
| Result from equity accounted investments | 490 | 405 | – | – | – | – |
| Capital expenditure on non-current assets | 11,311 | 10,841 | – 3,152 | – 3,186 | – | – |
| Depreciation and amortisation on non-current assets | 4,050 | 4,210 | – 3,065 | – 3,211 | – | – |
| Group | Reconciliation to Group figures | Other Entities | ||||
|---|---|---|---|---|---|---|
| 31.12. 2017* | 30. 6. 2018 | 31.12. 2017* | 30. 6. 2018 | 31.12. 2017 | 30. 6. 2018 | |
| Segment assets | 195,506 | 201,508 | 93,804 | 95,668 | 75,121 | 79,625 |
| Investments accounted for using the equity method | 2,769 | 2,863 | – | – | – | – |
Other Information
Notes to the Group Financial Statements Segment Information
| in € million | 2018 | 2017* |
|---|---|---|
| Reconciliation of segment result | ||
| Total for reportable segments | 2,630 | 2,960 |
| Financial result of Automotive segment and Motorcycles segment | 141 | 146 |
| Elimination of inter-segment items | 102 | – 48 |
| Group profit before tax | 2,873 | 3,058 |
| Reconciliation of capital expenditure on non-current assets Total for reportable segments |
7,250 | 7,390 |
| Elimination of inter-segment items | –1,713 | –1,644 |
| Total Group capital expenditure on non-current assets | 5,537 | 5,746 |
| Reconciliation of depreciation and amortisation on non-current assets | ||
| Total for reportable segments | 3,755 | 3,612 |
| Elimination of inter-segment items | –1,669 | –1,526 |
| Total Group depreciation and amortisation on non-current assets | 2,086 | 2,086 |
Segment figures for the first half-year can be reconciled to the corresponding Group figures as follows:
| in € million | 2018 | 2017* |
|---|---|---|
| Reconciliation of segment result | ||
| Total for reportable segments | 5,219 | 5,553 |
| Financial result of Automotive segment and Motorcycles segment | 542 | 554 |
| Elimination of inter-segment items | 277 | 131 |
| Group profit before tax | 6,038 | 6,238 |
| Reconciliation of capital expenditure on non-current assets | ||
| Total for reportable segments | 14,027 | 14,463 |
| Elimination of inter-segment items | – 3,186 | – 3,152 |
| Total Group capital expenditure on non-current assets | 10,841 | 11,311 |
| Reconciliation of depreciation and amortisation on non-current assets | ||
| Total for reportable segments | 7,421 | 7,115 |
| Elimination of inter-segment items | – 3,211 | – 3,065 |
| Total Group depreciation and amortisation on non-current assets | 4,210 | 4,050 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
81
Other Information
Segment figures can be reconciled to the corresponding Group figures as follows:
Notes to the Group Financial Statements Segment Information
| in € million | 30. 6. 2018 | 31.12. 2017* |
|---|---|---|
| Reconciliation of segment assets | ||
| Total for reportable segments | 105,840 | 101,702 |
| Non-operating assets – Other Entities segment | 7,837 | 7,829 |
| Total liabilities – Financial Services segment | 128,133 | 123,088 |
| Non-operating assets – Automotive and Motorcycles segments | 47,284 | 47,973 |
| Liabilities of Automotive and Motorcycles segments not subject to interest | 38,668 | 35,061 |
| Elimination of inter-segment items | –126,254 | –120,147 |
| Total Group assets | 201,508 | 195,506 |
*Prior year figures adjusted due to first-time application of IFRS 15, see note 5.
Munich, 24 July 2018
Bayerische Motoren Werke Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Markus Duesmann
Klaus Fröhlich Pieter Nota
Dr. Nicolas Peter Peter Schwarzenbauer
Oliver Zipse
Other Information
Responsibility Statement by the Company's Legal Representatives
To the best of our knowledge, and in accordance with the applicable principles for interim financial reporting, the Interim Group Financial Statements give a true and fair view of the net assets, financial position and results of operation of the Group in accordance with German principles of proper accounting, and the Interim Group Management Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Munich, 24 July 2018
Bayerische Motoren Werke Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Markus Duesmann
Klaus Fröhlich Pieter Nota
Dr. Nicolas Peter Peter Schwarzenbauer
Oliver Zipse
Other Information
We have reviewed the condensed interim consolidated financial statements of Bayerische Motoren Werke Aktiengesellschaft, Munich – comprising the income statement for group and the statement of comprehensive income for group, the balance sheet for group, the condensed cash flow statement for group, the group statement of changes in equity and selected explanatory notes, – together with the interim group management report of Bayerische Motoren Werke Aktiengesellschaft, Munich, for the period from 1 January to 30 June 2018, that are part of the semi-annual according to § 115 WpHG ("Wertpapierhandelsgesetz": "German Securities Trading Act"). The preparation of the condensed interim consolidated financial statements in accordance with International Accounting Standard IAS 34 "Interim Financial Reporting" as adopted by the EU, and of the interim group management report in accordance with the requirements of the WpHG applicable to interim group management reports, is the responsibility of the Company's management. Our responsibility is to issue a report on the condensed interim consolidated financial statements and on the interim group management report based on our review.
We performed our review of the condensed interim consolidated financial statements and the interim group management report in accordance with the German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with a certain level of assurance, that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the EU, and that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports. A review is limited primarily to inquiries of company employees and analytical assessments and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot issue an auditor's report.
Based on our review, no matters have come to our attention that cause us to presume that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the EU, or that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports.
Munich, 1 August 2018
Wirtschaftsprüfungsgesellschaft
Sailer Feege Wirtschaftsprüfer Wirtschaftsprüfer
Page 85 Financial Calendar
Page 86 Contacts
Other Information
Financial Calendar
7 November 2018 Quarterly Report to 30 September 2018
20 March 2019 Annual Report 2018
20 March 2019 Annual Accounts Press Conference
21 March 2019 Analyst and Investor Conference
7 May 2019 Quarterly Report to 31 March 2019
16 May 2019 Annual General Meeting
1 August 2019 Quarterly Report to 30 June 2019
6 November 2019 Quarterly Report to 30 September 2019 Other Information
Contacts
Telephone + 49 89 382-2 45 44 + 49 89 382-2 41 18 Fax + 49 89 382-2 44 18 E-mail [email protected]
Telephone + 49 89 382-3 16 84 + 49 89 382-2 53 87 Fax + 49 89 382-1 46 61 E-mail [email protected]
Further information about the BMW Group is available online at www.bmwgroup.com. Investor Relations information is available directly at www.bmwgroup.com/ir.
Information about the various BMW Group brands is available at www.bmw.com, www.mini.com and www.rolls-roycemotorcars.com.
This version of the Annual Report is a translation from the German version. Only the original German version is binding.
Bayerische Motoren Werke Aktiengesellschaft 80788 Munich Germany Telephone +49 89 382-0
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