Quarterly Report • Aug 3, 2017
Quarterly Report
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• 01
| 2nd quarter 2017 | 2nd quarter 2016 | Change in % | ||
|---|---|---|---|---|
| Group | ||||
| Profit before tax | € million | 3,055 | 2,798 | 9.2 |
| Workforce1 (at 30 June 2017/31 December 2016) |
127,680 | 124,729 | 2.4 | |
| Automotive segment | ||||
| Sales volume2 | units | 633,582 | 605,534 | 4.6 |
| Revenues | € million | 22,976 | 22,872 | 0.5 |
| EBIT margin3 | % (change in %pts) | 9.7 | 9.5 | 0.2 |
| Motorcycles segment | ||||
| Sales volume | units | 52,753 | 46,966 | 12.3 |
| EBIT margin3 | % (change in %pts) | 14.9 | 15.9 | –1.0 |
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 96,794 units, 2016: 71,801 units).
3 Profit before financial result as a percentage of segment revenues.
• 02
| 2nd quarter 2017 | 2nd quarter 2016 | Change in % | ||
|---|---|---|---|---|
| Automotive segment | ||||
| Sales volume | ||||
| BMW1 | units | 534,585 | 507,814 | 5.3 |
| MINI | units | 98,155 | 96,587 | 1.6 |
| Rolls-Royce | units | 842 | 1,133 | – 25.7 |
| Total1 | 633,582 | 605,534 | 4.6 | |
| Production volume | ||||
| BMW2 | units | 517,791 | 529,800 | – 2.3 |
| MINI | units | 95,962 | 102,648 | – 6.5 |
| Rolls-Royce | units | 782 | 1,102 | – 29.0 |
| Total2 | 614,535 | 633,550 | – 3.0 | |
| Motorcycles segment | ||||
| Production volume | units | 51,086 | 44,105 | 15.8 |
| Financial Services segment | ||||
| New contracts with retail customers | 468,603 | 460,718 | 1.7 | |
| Operating cash flow Automotive segment | € million | 1,767 | 2,905 | – 39.2 |
| Revenues | € million | 25,799 | 25,014 | 3.1 |
| Automotive | € million | 22,976 | 22,872 | 0.5 |
| Motorcycles | € million | 696 | 617 | 12.8 |
| Financial Services | € million | 7,044 | 6,505 | 8.3 |
| Other Entities | € million | 1 | 2 | – |
| Eliminations | € million | – 4,918 | – 4,982 | 1.3 |
| Profit before financial result (EBIT) | € million | 2,929 | 2,725 | 7.5 |
| Automotive | € million | 2,238 | 2,178 | 2.8 |
| Motorcycles | € million | 104 | 98 | 6.1 |
| Financial Services | € million | 588 | 529 | 11.2 |
| Other Entities | € million | 8 | 12 | – 33.3 |
| Eliminations | € million | – 9 | – 92 | – |
| Profit before tax | € million | 3,055 | 2,798 | 9.2 |
| Automotive | € million | 2,385 | 2,277 | 4.7 |
| Motorcycles | € million | 103 | 97 | 6.2 |
| Financial Services | € million | 589 | 503 | 17.1 |
| Other Entities | € million | 23 | 46 | – 50.0 |
| Eliminations | € million | – 45 | –125 | 64.0 |
| Income taxes | € million | – 841 | – 849 | 0.9 |
| Net profit | € million | 2,214 | 1,949 | 13.6 |
| Earnings per share3 | € | 3.34 / 3.35 | 2.95 / 2.96 | 13.2 / 13.2 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 96,794 units, 2016: 71,801 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 84,883 units, 2016: 74,575 units). 3 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.
• 03
| 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % | ||
|---|---|---|---|---|
| Group | ||||
| Profit before tax | € million | 6,060 | 5,166 | 17.3 |
| Workforce1 (at 30 June 2017/31 December 2016) |
127,680 | 124,729 | 2.4 | |
| Automotive segment | ||||
| Sales volume2 | units | 1,220,819 | 1,163,139 | 5.0 |
| Revenues | € million | 43,668 | 41,686 | 4.8 |
| EBIT margin3 | % (change in %pts) | 9.4 | 9.5 | – 0.1 |
| Motorcycles segment | ||||
| Sales volume | units | 88,389 | 80,754 | 9.5 |
| EBIT margin3 | % (change in %pts) | 17.4 | 16.0 | 1.4 |
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 186,966 units, 2016: 153,701 units). 3 Profit before financial result as a percentage of segment revenues.
• 04
| 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % | ||
|---|---|---|---|---|
| Automotive segment | ||||
| Sales volume | ||||
| BMW1 | units | 1,038,030 | 986,557 | 5.2 |
| MINI | units | 181,214 | 174,898 | 3.6 |
| Rolls-Royce | units | 1,575 | 1,684 | – 6.5 |
| Total1 | 1,220,819 | 1,163,139 | 5.0 | |
| Production volume | ||||
| BMW2 | units | 1,066,966 | 1,020,349 | 4.6 |
| MINI | units | 193,861 | 191,705 | 1.1 |
| Rolls-Royce | units | 1,637 | 1,803 | – 9.2 |
| Total2 | 1,262,464 | 1,213,857 | 4.0 | |
| Motorcycles segment | ||||
| Production volume | units | 105,552 | 84,385 | 25.1 |
| Financial Services segment | ||||
| New contracts with retail customers | 934,237 | 874,090 | 6.9 | |
| Operating cash flow Automotive segment | € million | 4,393 | 4,124 | 6.5 |
| Revenues | € million | 49,247 | 45,867 | 7.4 |
| Automotive | € million | 43,668 | 41,686 | 4.8 |
| Motorcycles | € million | 1,319 | 1,199 | 10.0 |
| Financial Services | € million | 14,090 | 12,537 | 12.4 |
| Other Entities | € million | 3 | 3 | – |
| Eliminations | € million | – 9,833 | – 9,558 | – 2.9 |
| Profit before financial result (EBIT) | € million | 5,575 | 5,182 | 7.6 |
| Automotive | € million | 4,109 | 3,941 | 4.3 |
| Motorcycles | € million | 229 | 192 | 19.3 |
| Financial Services | € million | 1,192 | 1,120 | 6.4 |
| Other Entities | € million | 12 | 23 | – 47.8 |
| Eliminations | € million | 33 | – 94 | – |
| Profit before tax | € million | 6,060 | 5,166 | 17.3 |
| Automotive | € million | 4,664 | 4,011 | 16.3 |
| Motorcycles | € million | 228 | 191 | 19.4 |
| Financial Services | € million | 1,184 | 1,073 | 10.3 |
| Other Entities | € million | 19 | 44 | – 56.8 |
| Eliminations | € million | – 35 | –153 | 77.1 |
| Income taxes | € million | –1,697 | –1,576 | – 7.7 |
| Net profit | € million | 4,363 | 3,590 | 21.5 |
| Earnings per share3 | € | 6.59 / 6.60 | 5.44 / 5.45 | 21.1 / 21.1 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 186,966 units, 2016: 153,701 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 183,598 units, 2016: 131,686 units).
3 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.
The positive sales trend recorded by the Automotive segment during the first three months of 2017 continued throughout the second quarter. In both the quarter and half-year periods, the BMW Group set new sales volume records. During the second quarter alone, 633,582* BMW, MINI and Rolls-Royce brand vehicles were delivered to customers worldwide (2016: 605,534 units*; + 4.6 %), while in the period from January to June 2017 deliveries of the Group's three brands rose by 5.0% to 1,220,819* units (2016: 1,163,139* units).
BMW Group sales volume of automobiles*
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (second quarter 2017: 96,794, 2016: 71,801 units; 1 January to 30 June 2017: 186,966, 2016: 153,701 units).
The Motorcycles segment also set new sales volume records for the two reporting periods, with secondquarter sales up significantly by 12.3% to 52,753 units (2016: 46,966 units) and six-month sales rising to 88,389 units (2016: 80,754 units; +9.5%).
The Financial Services segment concluded a total of 468,603 new leasing and financing contracts with retail customers worldwide during the second quarter (2016: 460,718 contracts; + 1.7%). As a result, the sixmonth figure climbed by 6.9% to 934,237 contracts (2016: 874,090 contracts).
The BMW Group continued to perform successfully during the period under report, achieving new highs for Group revenues and earnings in both the second quarter and the first half of 2017, despite fierce competition, volatile markets and higher expenditure for research and development, marketing, personnel and IT projects.
Group revenues rose primarily due to the higher sales volume of automobiles and motorcycles and increased contract portfolio at Financial Services.
BMW Group revenues
• 06
Overall, revenues increased by € 785 million to € 25,799 million for the second quarter (2016: € 25,014 million; +3.1%) and by € 3,380 million to € 49,247 million for the six-month period (2016: € 45,867 million; +7.4%).
Profit before financial result (EBIT) grew by a solid 7.5% to € 2,929 million in the second quarter (2016: € 2,725 million) and was also up year-on-year for the six-month period, coming in at € 5,575 million (2016: € 5,182 million; + 7.6%).
Second-quarter profit before tax climbed by € 257 million to € 3,055 million (2016: € 2,798 million; + 9.2%).
Due in particular to the positive result from equity accounted investments recorded in the first quarter 2017, the pre-tax result for the six-month period rose significantly by 17.3 % to € 6,060 million (2016: € 5,166 million).
At 30 June 2017, the BMW Group employed 127,680 people worldwide (31 December 2016: 124,729; +2.4%). The need for skilled workers and IT specialists remains high, particularly due to the trend towards digitalisation, electrification and autonomous driving.
Vehicle sales volumes reach new high
Group profit at highest level
€6,060 million +17.3 %
Group profit before tax
During the first half of 2017, the number of new vehicle registrations worldwide rose 2.0% compared to one year earlier. However, developments on the major international markets varied widely. Significant growth in Japan and parts of Europe contrasted with market contraction in other areas, in particular the USA.
New registrations in Europe rose by 4.5% during the first six months of the year, with nearly all European automobile markets contributing to the positive development. Growth rates in Germany (3.1%) and France (3.0%) were below the European average. Italy (8.6%) and Spain (7.0%) reported the biggest increases in new registrations during the first half of 2017. In the UK, the number of new registrations for the sixmonth period were down for the first time in several years (– 1.3%).
The strong growth of the automobile market in the USA of recent years appears to be over, at least for the time being. The number of new vehicles registered during the first six months of 2017 dropped by 2.1% compared with the same period in 2016.
In China, demand for automobiles increased slightly compared to the previous year, with new registrations rising by 1.4%.
The Japanese automobile market performed strongly, with a 9.4 % increase in new registrations for the period from January to June 2017.
The Brazilian and Russian markets developed positively during the first half of 2017. While in Brazil the number of new vehicle registrations between January and June increased by 5.0%, figures in Russia rose sharply by 12.2% during the same period.
Interim Group Management Report Report on Economic Position
General Economic Environment Automotive Segment
Developments on motorcycle markets in the 250 cc plus segment presented a varied picture during the first half of 2017. Worldwide, new registrations of motorcycles were down by 1.0%. In Europe, the trend was generally positive and, with 2.9% growth, the markets picked up slightly. The German market, however, recorded a 7.6% drop in new registrations. Other major European motorcycle markets, however, all surpassed the previous year's figures (Italy + 11.6%, Spain +4.8%, France + 8.3 %). After a weak performance in 2016, the US market contracted by a further 5.2 %.
In Europe, the European Central Bank (ECB) continued its expansionary policy during the second quarter 2017, despite improving growth rates, positive signals from the job market and a higher inflation rate.
Following the parliamentary elections held in June 2017, the picture for the UK economy was mixed. While the job market held up well, economic growth lost momentum. In view of these factors, the Bank of England maintained its course and continued its expansionary policy. At 2.6%, the inflation rate in June was once again significantly higher than the target rate of 2.0%.
Sound economic momentum and good job market figures prompted the US Federal Reserve to raise its benchmark interest rate to a range of 1.00 to 1.25%.
China's economy grew again in the second quarter, boosted by retail trade and the service sector. The Chinese central bank reacted to the sharp rise in credit volumes by raising money-market interest rates.
The Japanese economy continued to grow during the second quarter, with a weak yen supporting exports. With inflation at well below 2.0%, the Japanese central bank sees no reason to end its expansionary policy.
Selling prices for pre-owned premium vehicles on international markets developed during the second quarter 2017 within the normal historical fluctuation range. Values stabilised in North America in the second quarter, with the slight downward trend from the first quarter levelling off. Despite discussions of possible bans on diesel vehicles, prices of pre-owned vehicles in Europe remained stable overall. Prices of pre-owned vehicles also remained broadly stable in Asia.
The BMW Group remained on course with its automobile business, achieving new sales volume records for both the quarter and the six-month period. In total, the BMW Group delivered 633,582 1 BMW, MINI and Rolls-Royce brand vehicles to customers worldwide in the period from April to June (2016: 605,534 1 units; + 4.6%), comprising 534,585 1 BMW (2016: 507,814 1 units; + 5,3 %), 98,155 MINI (2016: 96,587 units; + 1.6 %) and 842 Rolls-Royce brand vehicles (2016: 1,133 units; – 25.7%).
From January to June 2017, deliveries of the three Group brands in the period increased by 5.0 % to 1,220,819 2 units (2016: 1,163,139 2 units), comprising 1,038,030 2 BMW (2016: 986,557 2 units; + 5.2%), 181,214 MINI (2016: 174,898 units; + 3.6%) and 1,575 Rolls-Royce brand vehicles (2016: 1,684 units; – 6.5%).
Sales in Asia were particularly strong, with doubledigit growth rates achieved. In total, 215,748 1 BMW, MINI and Rolls-Royce brand vehicles were delivered to customers in Asia during the second quarter (2016: 178,364 1 units; +21.0%). For the six-month period sales rose by 15.0% to 415,888 2 units (2016: 361,568 2 units). In China, sales of the BMW Group's three brands
during the second quarter totalled 150,614 1 units (2016: 120,650 1 units; + 24.8%). The number of vehicles sold on the Chinese mainland during the sixmonth period grew by 18.5% (293,572 2 units; 2016: 247,817 2 units).
Deliveries in Europe during the second quarter totalled 287,210 units, in line with the previous year (2016: 286,150 units; + 0.4 %). Over the six-month period, the BMW Group recorded a slight increase (+ 2.2 %) across the region to 555,206 units (2016: 543,270 units). Second-quarter deliveries in Germany, at 76,982 units, fell short of the previous year's high level (2016: 81,408 units; – 5.4 %). From January to June vehicle sales were slightly down compared to the previous year's high level (144,414 units; 2016: 148,057 units; – 2.5 %). The UK automobile market was influenced during the second quarter amongst others by the start of Brexit negotiations, which contributed to increased uncertainty. Deliveries to customers during the three-month period fell slightly by 1.6 % to 62,540 units (2016: 63,551 units). Due to the sales volume growth recorded in the first quarter, a slight increase of 2.3 % was achieved for the sixmonth period (125,544 units; 2016: 122,720 units).
| 2nd quarter 2017 | 2nd quarter 2016 | Change in % | ||
|---|---|---|---|---|
| Sales volume1, 3 | units | 633,582 | 605,534 | 4.6 |
| Production4 | units | 614,535 | 633,550 | – 3.0 |
| Revenues3 | € million | 22,976 | 22,872 | 0.5 |
| Profit before financial result (EBIT) | € million | 2,238 | 2,178 | 2.8 |
| Profit before tax | € million | 2,385 | 2,277 | 4.7 |
| EBIT margin3, 5 | % (change in %pts) | 9.7 | 9.5 | 0.2 |
| 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % | ||
|---|---|---|---|---|
| Sales volume2, 3 | units | 1,220,819 | 1,163,139 | 5.0 |
| Production6 | units | 1,262,464 | 1,213,857 | 4.0 |
| Revenues3 | € million | 43,668 | 41,686 | 4.8 |
| Profit before financial result (EBIT) | € million | 4,109 | 3,941 | 4.3 |
| Profit before tax | € million | 4,664 | 4,011 | 16.3 |
| EBIT margin3, 5 | % (change in %pts) | 9.4 | 9.5 | – 0.1 |
| Workforce (at 30 June 2017/31 December 2016) | 115,522 | 112,869 | 2.4 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 96,794 units, 2016: 71,801 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 186,966 units, 2016: 153,701 units).
3 Key performance indicators reported on during the year.
4 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 84,883 units, 2016: 74,575 units).
5 Profit before financial result as percentage of Automotive segment revenues. 6 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 183,598 units, 2016: 131,686 units). Interim Group Management Report Report on Economic Position General Economic Environment
Automotive Segment
Within an overall contracting market, deliveries to customers in the Americas during the second quarter fell by 6.2 % to 115,292 units (2016: 122,853 units). During the first six months of 2017, the BMW Group delivered 217,530 units to customers in the region
(2016: 223,098 units; – 2.5 %). In the USA, too, second-quarter sales were down by 8.1 % for the quarter to 89,616 units (2016: 97,501 units) and by 4.1 % to 171,785 units for the six-month period (2016: 179,102 units).
| in units | 2nd quarter 2017 | 2nd quarter 2016 | Change in % | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % |
|---|---|---|---|---|---|---|
| Europe | 287,210 | 286,150 | 0.4 | 555,206 | 543,270 | 2.2 |
| thereof Germany | 76,982 | 81,408 | – 5.4 | 144,414 | 148,057 | – 2.5 |
| thereof UK | 62,540 | 63,551 | –1.6 | 125,544 | 122,720 | 2.3 |
| Americas | 115,292 | 122,853 | – 6.2 | 217,530 | 223,098 | – 2.5 |
| thereof USA | 89,616 | 97,501 | – 8.1 | 171,785 | 179,102 | – 4.1 |
| Asia | 215,7481 | 178,3641 | 21.0 | 415,8882 | 361,5682 | 15.0 |
| thereof China | 150,6141 | 120,6501 | 24.8 | 293,5722 | 247,8172 | 18.5 |
| Other markets | 15,332 | 18,167 | –15.6 | 32,195 | 35,203 | – 8.5 |
| Total | 633,5821 | 605,5341 | 4.6 | 1,220,8192 | 1,163,1392 | 5.0 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 96,794 units, 2016: 71,801 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 186,966 units, 2016: 153,701 units).
The BMW brand enjoyed its best sales volume performance, both for the quarter and six-month period. Important contributions were made in particular by the BMW X-family models and the sedan versions of the new BMW 5 and 7 Series.
The BMW 1 Series recorded a solid increase in the first half of 2017, with deliveries rising to 91,802 units (2016: 86,198 units; +6.5%). Customers took delivery of a total of 91,848 units of the BMW 2 Series during the period under report (2016: 97,949 units; –6.2%). Sales figures for the 3 Series fell slightly by 2.1% to 207,692 units (2016: 212,180 units). In total, 166,353 units of the BMW 5 Series were sold worldwide (2016: 169,398 units), whereby the slight decrease (– 1.8%) was mainly due to the fact that the 5 Series Touring and, in China, the extended-wheelbase 5 Series were not launched until June. Sales of the new BMW 7 Series during the first six months of 2017 jumped by more than a quarter to 32,290 units (2016: 25,453 units; +26.9%).
The BMW X-family remained extremely popular during the first half of 2017, with a combined total of 357,496 units of the five X models sold worldwide (2016: 305,084; + 17.2%). Deliveries of the BMW X1 surged by almost a half to 136,749 units (2016: 94,156 units; +45.2%). Even though the X3 has reached the end of its model life cycle, it nevertheless achieved a solid year-on-year increase with 81,607 units sold (2016: 77,486 units; + 5.3%). Deliveries of the BMW X5 totalled 89,958 units, a significant increase (+ 10.6%) over the previous year (2016: 81,351 units).
• 11
| in units | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % |
|---|---|---|---|
| BMW 1 Series | 91,802 | 86,198 | 6.5 |
| BMW 2 Series | 91,848 | 97,949 | – 6.2 |
| BMW 3 Series | 207,692 | 212,180 | – 2.1 |
| BMW 4 Series | 68,646 | 69,430 | –1.1 |
| BMW 5 Series | 166,353 | 169,398 | –1.8 |
| BMW 6 Series | 4,703 | 6,896 | – 31.8 |
| BMW 7 Series | 32,290 | 25,453 | 26.9 |
| BMW X1 | 136,749 | 94,156 | 45.2 |
| BMW X3 | 81,607 | 77,486 | 5.3 |
| BMW X4 | 28,087 | 30,075 | – 6.6 |
| BMW X5 | 89,958 | 81,351 | 10.6 |
| BMW X6 | 21,095 | 22,016 | – 4.2 |
| BMW Z4 | 1,261 | 2,941 | – 57.1 |
| BMW i | 15,939 | 11,028 | 44.5 |
| BMW total | 1,038,030 | 986,557 | 5.2 |
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 186,966 units, 2016: 153,701 units).
The new MINI family of vehicles provided a strong boost to sales during the first half of 2017. A new all-time high was recorded for a three-month period. The MINI brand also recorded its best sales volume performance for the first half of a year (181,214 units; 2016: 174,898 units; + 3.6 %). Sales of the MINI Convertible during the first six months
of the year were nearly a third higher year-on-year (18,699 units; 2016: 14,354 units; + 30.3 %). The MINI Countryman, which has been available since mid-February, recorded a sales volume of 34,423 units (2016: 32,500 units; + 5.9 %). With 97,820 units delivered to customers, sales of MINI 3- and 5-door models matched their previous year's performance (2016: 98,546 units; – 0.7 %).
| in units | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % |
|---|---|---|---|
| MINI Hatch (3- and 5-door) | 97,820 | 98,546 | – 0.7 |
| MINI Convertible | 18,699 | 14,354 | 30.3 |
| MINI Clubman | 29,867 | 27,511 | 8.6 |
| MINI Countryman / Paceman | 34,828 | 34,487 | 1.0 |
| MINI total | 181,214 | 174,898 | 3.6 |
Interim Group Management Report Report on Economic Position General Economic Environment
Automotive Segment
Rolls-Royce Motor Cars sold 1,575 vehicles worldwide during the first six months of the year (2016: 1,684 units; – 6.5 %). The decrease was mainly influenced by ongoing political uncertainty in the Middle East and market contraction in the USA.
| in units | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % |
|---|---|---|---|
| Phantom | 79 | 176 | – 55.1 |
| Ghost | 505 | 489 | 3.3 |
| Wraith /Dawn | 991 | 1,019 | – 2.7 |
| Rolls-Royce total | 1,575 | 1,684 | – 6.5 |
Deliveries of BMWi and iPerformance models developed well during the first six months of 2017 and made a positive contribution to the overall strong segment performance. The number of electrified BMW brand vehicles sold increased by some three quarters to 41,875 units (2016: 23,681 units; + 76.8%). The BMWi3 enjoyed strong demand throughout the first half of the
year, with deliveries to customers up by more than a half to 14,825 units (2016: 9,341 units; + 58.7%). Sales figures for BMW plug-in hybrid models sold under the "iPerformance" brand name more than doubled to 25,936 units (2016: 12,647 units). BMW is therefore leader in the premium segment for plug-in hybrid vehicles. The MINI Countryman has also been available as a plug-in hybrid version since the end of June, with 698 units sold up to the end of the reporting period.
| in units | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % |
|---|---|---|---|
| BMW i | 15,939 | 11,034 | 44.5 |
| BMW iPerformance | 25,936 | 12,647 | – |
| MINI ELECTRIC | 698 | – | – |
| Total | 42,573 | 23,681 | 79.8 |
Between April and June 2017, 614,535 1 BMW, MINI and Rolls-Royce brand vehicles rolled off the assembly lines of the BMW Group's production network (2016: 633,550 1 units; – 3.0 %), comprising 517,791 1 BMW (2016: 529,800 1 units; – 2.3 %), 95,962 MINI (2016: 102,648 units; – 6.5 %) and 782 Rolls-Royce brand vehicles (2016: 1,102 units; – 29.0 %). A total of 1,262,464 2 units of the Group's three brands were produced during the first six months of the year (2016: 1,213,857 2 units; + 4.0 %), comprising 1,066,966 2 BMW (2016: 1,020,349 2 units; + 4.6 %), 193,861 MINI (2016: 191,705 units; + 1.1 %) and 1,637 Rolls-Royce brand vehicles (2016: 1,803 units; – 9.2 %).
At € 22,976 million, revenues recorded by the Automotive segment during the second quarter of 2017 were at a similarly high level to the previous year (2016: € 22,872 million; + 0.5%). Compared to the increase in deliveries, revenue growth was held back due to the high sales dynamic in the Chinese joint venture BBA. Segment revenues for the period from January to June increased slightly by 4.8% to € 43,668 million (2016: € 41,686 million).
The earnings performance was mainly driven by cost of sales, which increased at a lower rate than revenues over the half year period, and decreased in the second quarter.
Second-quarter EBIT amounted to € 2,238 million (2016: € 2,178 million; + 2.8 %). The Automotive segment's EBIT margin improved by 0.2 percentage points to 9.7 % (2016: 9.5 %). Six-month EBIT increased by 4.3 % to € 4,109 million (2016: € 3,941 million), leading to an EBIT margin for the period from January to June of 9.4 % (2016: 9.5 %). The values for both the quarter and the six-month period therefore lie within the upper half of the 8 to 10 % target range. Profit before tax recorded by the Automotive segment for both the three-month period (€ 2,385 million; 2016: € 2,277 million; + 4.7 %) and the six-month period (€ 4,664 million; 2016: € 4,011 million; + 16.3 %) was therefore up on the previous year. Profit before tax for the six-month period benefited in particular from the positive financial result recorded in the first quarter of 2017.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 84,883 units, 2016: 74,575 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 183,598 units, 2016: 131,686 units).
The Automotive segment employed a workforce of 115,522 at the end of the first half of the year (31 December 2016: 112,869 employees), slightly up on the level at the end of the previous financial year (+ 2.4 %).
Report on Economic Position
Motorcycles Segment Financial Services Segment
The number of units delivered by the Motorcycles segment worldwide in the second quarter of 2017 rose significantly (+ 12.3%) to 52,753 units (2016: 46,966 units). Deliveries for the six-month period amounted to 88,389 units (2016: 80,754 units; + 9.5%). These figures represent the best quarterly and six-month sales volume performances in BMW Motorrad's history.
The BMW Group sold 58,617 units (2016: 51,930 units; + 12.9%) in Europe during the first six months of the year. The number of motorcycles sold in Germany increased by 4.9% to 14,461 units (2016: 13,792 units). At 9,447 units, the figure for France was more than one fifth up on the previous year (2016: 7,790 units; + 21.3%). Significant growth was also achieved in Italy, where motorcycle sales rose by 15.0 % to 9,099 units (2016: 7,912 units). Despite an extremely competitive and contracting US market, the BMW Group achieved 3.8% sales volume growth year-on-year (7,157 units; 2016: 6,897 units).
Motorcycles Segment at a glance
• 15
In the second quarter 2017, the BMW Group manufactured 51,086 motorcycles at its four production sites worldwide (2016: 44,105 units; + 15.8%). A total of 105,552 motorcycles rolled off production lines (2016: 84,385 units; + 25.1 %) during the first six months of the current year. The significant increase in motorcycle production was largely due to the higher number of model production starts compared to the previous year.
The Motorcycles segment continued to reap the benefits of sales volume growth in the second quarter of 2017. In addition, business with optional equipment also made an important earnings contribution. Second-quarter revenues rose by 12.8 % to € 696 million (2016: € 617 million), generating segment EBIT of € 104 million (2016: € 98 million; + 6.1 %) with an EBIT margin of 14.9 % (2016: 15.9 %; – 1.0 percentage points). Profit before tax went up by € 6 million to € 103 million (2016: € 97 million; + 6.2 %). Segment revenues for the six-month period were also significantly higher with a 10.0 % year-on-year increase (€ 1,319 million; 2016: € 1,199 million). The segment recorded an EBIT margin of 17.4 % (2016: 16.0 %; + 1.4 percentage points) with an EBIT of € 229 million (2016: € 192 million; + 19.3 %). Profit before tax for the first half of 2017 rose sharply to € 228 million (2016: € 191 million; + 19.4 %).
At 30 June 2017, the BMW Group employed 3,449 people working to implement the strategy and expansion of the product portfolio in the Motorcycles segment (31 December 2016: 3,351 employees; + 2.9%).
| 2nd quarter 2017 | 2nd quarter 2016 | Change in % | ||
|---|---|---|---|---|
| Sales volume* | units | 52,753 | 46,966 | 12.3 |
| Production | units | 51,086 | 44,105 | 15.8 |
| Revenues | € million | 696 | 617 | 12.8 |
| Profit before financial result (EBIT) | € million | 104 | 98 | 6.1 |
| Profit before tax | € million | 103 | 97 | 6.2 |
| EBIT margin* | % (change in %pts) | 14.9 | 15.9 | –1.0 |
| 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % | ||
|---|---|---|---|---|
| Sales volume* | units | 88,389 | 80,754 | 9.5 |
| Production | units | 105,552 | 84,385 | 25.1 |
| Revenues | € million | 1,319 | 1,199 | 10.0 |
| Profit before financial result (EBIT) | € million | 229 | 192 | 19.3 |
| Profit before tax | € million | 228 | 191 | 19.4 |
| EBIT margin* | % (change in %pts) | 17.4 | 16.0 | 1.4 |
| Workforce (at 30 June 2017/31 December 2016) | 3,449 | 3,351 | 2.9 |
*Key performance indicators reported on during the year.
Business in the Financial Services segment developed positively in the reporting period. In total, 468,603 new credit financing and leasing contracts were concluded with retail customers during the period from April to June 2017, representing a 1.7% increase on the same quarter one year earlier (2016: 460,718 contracts). The number of new leasing contracts signed in the second quarter was 6.8% down year-on-year, whereas the number of new credit financing contracts grew by 6.1%.
The number of new contracts entered into with retail customers over the six-month period amounted to 934,237, exceeding the previous year's number by 6.9 % (2016: 874,090 contracts). Overall, leasing accounted for 31.1% (31 December 2016: 34.2%) and credit financing for 68.9% (31 December 2016: 65.8%) of new business in the first half of 2017.
The number of credit financing and leasing contracts for pre-owned BMW and MINI brand vehicles during the six-month period rose significantly. A total of 201,812 new contracts were signed during the sixmonth period (2016: 177,506 contracts; + 13.7%).
The total volume of new credit financing and leasing contracts concluded with retail customers during the period from January to June 2017 increased by a solid 9.1 % to € 28,745 million (2016: € 26,353 million).
In total, 4,882,433 contracts were in place with retail customers at 30 June 2017 (31 December 2016: 4,703,417 contracts; + 3.8 %). Business in the Asia / Pacific region continued to grow and was reflected in a 9.4 % increase in the contract portfolio compared to 31 December 2016. The Europe / Middle East / Africa region (+ 5.4 %) and the EU Bank 1 region (+ 2.8 %) also recorded further growth. The portfolio of contracts with retail customers in the Americas region was at a level similar to that recorded at the end of the previous financial year (+ 0.2 %).
Due in particular to growth in China, some 47.6% 2 of new BMW Group vehicles were either leased or financed by the Financial Services segment in the first half of 2017 (2016: 47.4% 2 ; + 0.2 percentage points).
In balance sheet terms, business volume 3 amounted to € 123,138 million at 30 June 2017, similar to the level recorded at the end of the previous financial year (31 December 2016: € 123,394 million; – 0.2%).
| 2nd quarter 2017 | 2nd quarter 2016 | Change in % | ||
|---|---|---|---|---|
| New contracts with retail customers | 468,603 | 460,718 | 1.7 | |
| Revenues | € million | 7,044 | 6,505 | 8.3 |
| Profit before financial result (EBIT) | € million | 588 | 529 | 11.2 |
| Profit before tax | € million | 589 | 503 | 17.1 |
| 1 January to 30 June 2017 |
1 January to 30 June 2016 |
Change in % | ||
|---|---|---|---|---|
| New contracts with retail customers | 934,237 | 874,090 | 6.9 | |
| Revenues | € million | 14,090 | 12,537 | 12.4 |
| Profit before financial result (EBIT) | € million | 1,192 | 1,120 | 6.4 |
| Profit before tax | € million | 1,184 | 1,073 | 10.3 |
| Workforce (at 30 June 2017/31 December 2016) | 8,593 | 8,394 | 2.4 | |
| 30. 6. 2017 | 31. 12. 2016 | Change in % | ||
| Business volume in balance sheet terms3 | € million | 123,138 | 123,394 | – 0.2 |
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 Leased products and Receivables from sales financing (current and non-current) of the Financial Services segment balance sheet.
Interim Group Management Report
Segment
In the fleet management business, the BMW Group – operating under the brand name "Alphabet" – is one of Europe's leading leasing and full-service providers. Alphabet offers leasing and financing arrangements as well as other specific services to commercial customers. A portfolio of 657,788 fleet leasing contracts was in place at 30 June 2017 (31 December 2016: 644,420 contracts; + 2.1%).
New business in the multi-brand financing business in the six-month period was up by 5.7% to 84,373 contracts (2016: 79,787 contracts). The total portfolio amounted to 484,521 contracts at 30 June 2017 (31 December 2016: 466,436 contracts; + 3.9%).
The total volume of dealership financing stood at € 18,301 million at 30 June 2017, in line with the level reported at the end of the previous financial year (31 December 2016: € 18,307 million).
Deposit-taking provides an important source of refinancing for the Financial Services segment. Banking deposits at 30 June 2017 amounted to € 13,439 million, in line with the level reported at the end of the previous financial year (31 December 2016: € 13,512 million; – 0.5%).
The number of new insurance contracts signed during the first half of the year increased by 5.6% to 662,633 contracts (2016: 627,503 contracts). At 30 June 2017, a total of 3,529,645 brokered insurance contracts was in place (31 December 2016: 3,411,872 contracts; + 3.5%).
The Financial Services segment benefited from the positive trend in business volumes during the reporting period. Segment revenues totalled € 7,044 million for the second quarter of 2017 (2016: € 6,505 million; + 8.3 %) and € 14,090 million (2016: € 12,537 million) for the six-month period (+ 12.4 %). Profit before tax improved significantly (+ 17.1 %) to € 589 million (2016: € 503 million) for the second quarter, and by 10.3 % to € 1,184 million for the period from January to June (2016: € 1,073 million).
The Financial Services segment's growth is also reflected in the size of its workforce, which comprised 8,593 people worldwide at 30 June 2017 (31 December 2016: 8,394 employees), a 2.4% increase over the six-month period.
In the first half of 2017, the BMW Group recorded growth in revenues, sales volume and profit before tax year-on-year. The number of BMW, MINI and Rolls-Royce brand vehicles delivered to customers rose by a solid 5.0 % to 1,220,819 units. The figure
Results of operations
includes 186,966 units (2016: 153,701 units) from the joint venture BMW Brilliance Automotive Ltd., Shenyang.
At the end of the reporting period, the BMW Group's workforce comprised 127,680 employees (31 December 2016: 124,729 employees).
Profit before tax for the six-month period was significantly higher than one year earlier, mainly due to sales volume growth, the financial result development and higher allocation in the previous year to warranty provisions relating to vehicle recalls. The pre-tax return on sales was slightly higher than the previous year.
| in € million | 2017 | 2016 | Change in % |
|---|---|---|---|
| Revenues | 25,799 | 25,014 | 3.1 |
| Cost of sales | – 20,267 | –19,957 | 1.6 |
| Gross profit | 5,532 | 5,057 | 9.4 |
| Selling and administrative expenses | – 2,339 | – 2,287 | 2.3 |
| Other operating income and expenses | – 264 | – 45 | – |
| Profit before financial result | 2,929 | 2,725 | 7.5 |
| Financial result | 126 | 73 | 72.6 |
| Profit before tax | 3,055 | 2,798 | 9.2 |
| Income taxes | – 841 | – 849 | – 0.9 |
| Net profit | 2,214 | 1,949 | 13.6 |
| Earnings per share of common stock in € | 3.33 | 2.95 | 12.9 |
| Earnings per share of preferred stock in € | 3.34 | 2.96 | 12.8 |
| in % | 2017 | 2016 | Change |
| Pre-tax return on sales1 | 11.8 | 11.2 | 0.6 |
| Post-tax return on sales2 | 8.6 | 7.8 | 0.8 |
| Gross margin3 | 21.4 | 20.2 | 1.2 |
| Selling and administrative expenses as a percentage of revenues | 9.1 | 9.1 | – |
1 Group profit before tax as a percentage of Group revenues.
2 Group net profit as a percentage of Group revenues.
3 Gross profit as a percentage of Group revenues.
Interim Group Management Report
Report on Economic Position
Results of Operations, Financial Position and Net Assets
Revenues generated during the first half of 2017 totalled € 49,247 million, representing a solid yearon-year increase of € 3,380 million. Second-quarter revenues were slightly higher than one year earlier. The main drivers of revenue growth were the increased sales of automobiles and motorcycles, the growth of the Financial Services contract portfolio and the sale of returned leasing vehicles. Slightly positive currency factors also contributed to the increase in revenue. Currency impact was mainly due to changes in the average exchange rates of the Russian ruble, the US dollar and the South African rand.
Mainly as a result of volume and portfolio factors, Group cost of sales rose moderately for the six-month period and slightly for the three-month period under report. The significant rise in cost of sales in the Financial Services business also contributed, with costs for the six-month period increasing by € 1,608 million to € 11,758 million. The rise was mainly due to the portfolio development and the sale of returned leasing vehicles in the terminations business. The warranty expense development had a mitigating effect, with the previous year impacted by an allocation to the warranty provision relating to vehicle recalls.
| in € million | 2017 | 2016 | Change in % |
|---|---|---|---|
| Revenues | 49,247 | 45,867 | 7.4 |
| Cost of sales | – 38,904 | – 36,330 | 7.1 |
| Gross profit | 10,343 | 9,537 | 8.5 |
| Selling and administrative expenses | – 4,517 | – 4,275 | 5.7 |
| Other operating income and expenses | – 251 | – 80 | – |
| Profit before financial result | 5,575 | 5,182 | 7.6 |
| Financial result | 485 | –16 | – |
| Profit before tax | 6,060 | 5,166 | 17.3 |
| Income taxes | –1,697 | –1,576 | 7.7 |
| Net profit | 4,363 | 3,590 | 21.5 |
| Earnings per share of common stock in € | 6.59 | 5.44 | 21.1 |
| Earnings per share of preferred stock in € | 6.60 | 5.45 | 21.1 |
| in % | 2017 | 2016 | Change |
| Pre-tax return on sales1 | 12.3 | 11.3 | 1.0 |
| Post-tax return on sales2 | 8.9 | 7.8 | 1.1 |
| Gross margin3 | 21.0 | 20.8 | 0.2 |
| Selling and administrative expenses as a percentage of revenues | 9.2 | 9.3 | – 0.1 |
| Effective tax rate4 | 28.0 | 30.5 | – 2.5 |
1 Group profit before tax as a percentage of Group revenues.
2 Group net profit as a percentage of Group revenues.
3 Gross profit as a percentage of Group revenues. 4 Income tax expenses as a percentage of Group profit before tax.
Research and development expenses for the six-month period totalled € 2,298 million (2016: € 2,026 million), significantly up on the previous year due to the current product offensive. Total research and development expenditure – comprising research costs, non-capitalised development costs, capitalised development
costs (excluding amortisation thereon) and advance payments – amounted to € 2,650 million in the first half of the year (2016: € 2,102 million). The increase compared to the previous half-year was mainly due to a higher level of capitalised development costs in conjunction with the launch of new models and modules.
| in % | 2017 | 2016 | Change |
|---|---|---|---|
| Research and development expenses as a percentage of revenues | 4.3 | 4.2 | 0.1 |
| Research and development expenditure ratio1 | 5.2 | 4.5 | 0.7 |
| Capitalisation rate2 | 38.0 | 35.0 | 3.0 |
| in % | 2017 | 2016 | Change |
|---|---|---|---|
| Research and development expenses as a percentage of revenues | 4.7 | 4.4 | 0.3 |
| Research and development expenditure ratio1 | 5.4 | 4.6 | 0.8 |
| Capitalisation rate2 | 35.6 | 32.7 | 2.9 |
1 Research and development expenditure as a percentage of Group revenues. 2 Capitalised development costs as a percentage of research and development expenditure.
Gross profit in the first half of 2017 amounted to € 10,343 million. The solid rise of € 806 million compared to the first half of 2016 reflected increased sales of vehicles, higher business volumes in the Financial Services segment and the higher allocation to warranty provisions in the previous year due to vehicle recalls.
Selling and administrative expenses for the six-month period rose by € 242 million to € 4,517 million. This moderate increase mainly reflects the larger workforce and higher marketing and IT expenses.
Depreciation and amortisation on property, plant and equipment and intangible assets recorded in cost of sales and in selling and administrative costs totalled € 2,349 million (2016: € 2,381 million) over the six-month period and € 1,159 million (2016: € 1,194 million) in the second quarter.
Other operating income and expenses deteriorated significantly, resulting in a net negative amount of € 251 million (2016: – € 80 million), with higher allocations to provisions for legal risks contributing to the year-on-year change.
Profit before financial result (EBIT) for the six-month period amounted to € 5,575 million (2016: € 5,182 million). The improvement was largely due to the higher gross profit, which was offset, however, by increased selling and administrative expenses and other operating expenses.
Interim Group Management Report
Report on Economic Position Results of Operations,
Financial Position and Net Assets
Compared to the first half of 2016, the financial result improved by € 501 million to € 485 million, mainly due to the result from equity accounted investments. Thanks to a € 183 million positive effect following the sale of 15% of the shares in HERE International B. V., Amsterdam, by THERE Holding B. V., Amsterdam, and a higher earnings contribution from BMW Brilliance Automotive Ltd, Shenyang, due to higher sales volumes, the result from equity accounted investments improved by € 292 million to € 490 million. In addition, other financial result improved by € 102 million to € 74 million, mostly due to net gains on interest rate and currency derivatives. In addition, in contrast to the previous year, the result on investments for the first half of 2017 includes no impairment losses on other financial assets. Furthermore, the net interest result improved by € 107 million to a net expense of € 79 million due to higher interest income and lower interest and similar expenses compared to the previous
year. The second-quarter financial result improved significantly by € 53 million to € 126 million year-onyear. This positive development was mainly due to lower interest and similar expenses, reflecting the fact that the prior-year figure included higher expenses for discounting non-current provisions.
As well as higher business volumes, the significantly improved financial result in particular had a positive impact, leading to a significant increase in profit before tax for the six-month period to € 6,060 million (2016: € 5,166 million).
Income tax expense for the six-month period went up moderately to € 1,697 million (2016: € 1,576 million).
Net profit reported for both the first half of 2017 and the second quarter 2017 was significantly higher yearon-year.
| in € million | 2017 | 2016 | Change in % | Currency adjusted change* in % |
|---|---|---|---|---|
| Automotive | 22,976 | 22,872 | 0.5 | 0.4 |
| Motorcycles | 696 | 617 | 12.8 | 13.2 |
| Financial Services | 7,044 | 6,505 | 8.3 | 8.7 |
| Other Entities | 1 | 2 | – 50.0 | 15.4 |
| Eliminations | – 4,918 | – 4,982 | –1.3 | – |
| Group | 25,799 | 25,014 | 3.1 | 2.9 |
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
| in € million | 2017 | 2016 | Change in % |
|---|---|---|---|
| Automotive | 2,385 | 2,277 | 4.7 |
| Motorcycles | 103 | 97 | 6.2 |
| Financial Services | 589 | 503 | 17.1 |
| Other Entities | 23 | 46 | – 50.0 |
| Eliminations | – 45 | –125 | – 64 |
| Group | 3,055 | 2,798 | 9.2 |
Automotive segment revenues grew slightly in the first half of 2017. The gross profit margin came in at a similar level to the previous year. Segment revenues for the second quarter of 2017 were also on a par with the previous year's period. As a result of strong sales volume growth at the Chinese joint venture BMW Brilliance Automotive Ltd., Shenyang, second-quarter revenue growth was reduced.
Cost of sales rose slightly compared to the first half of 2016, but fell slightly compared to the second quarter of 2016. The previous year's second-quarter cost of sales was adversely affected by an allocation to the warranty provision related to vehicle recalls.
Selling and administrative expenses went up by € 205 million to € 3,770 million for the six-month period, due amongst others to higher costs for personnel and marketing as well as for IT projects.
The net amount of other operating income and expenses for the six-month period deteriorated by € 206 million (2016: – € 71 million), with higher allocations to provisions for legal risks contributing to the year-on-year change.
As a result of the factors described above, segment profit before financial result was slightly higher compared to the previous year, at € 4,109 million (2016: € 3,941 million) for the first half of 2017 and € 2,238 million (2016: € 2,178 million) for the second quarter. The positive impact from the volume increase was offset amongst others by the increase in other operating expenses and in selling and administrative expenses.
Overall, the Automotive segment's pre-tax profit was significantly higher for the six-month period and slightly higher for the second quarter.
| in € million | 2017 | 2016 | Change in % | Currency adjusted change* in % |
|---|---|---|---|---|
| Automotive | 43,668 | 41,686 | 4.8 | 4.2 |
| Motorcycles | 1,319 | 1,199 | 10.0 | 8.7 |
| Financial Services | 14,090 | 12,537 | 12.4 | 11.5 |
| Other Entities | 3 | 3 | – | 14.8 |
| Eliminations | – 9,833 | – 9,558 | 2.9 | – |
| Group | 49,247 | 45,867 | 7.4 | 6.9 |
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
| in € million | 2017 | 2016 | Change in % |
|---|---|---|---|
| Automotive | 4,664 | 4,011 | 16.3 |
| Motorcycles | 228 | 191 | 19.4 |
| Financial Services | 1,184 | 1,073 | 10.3 |
| Other Entities | 19 | 44 | – 56.8 |
| Eliminations | – 35 | –153 | – 77.1 |
| Group | 6,060 | 5,166 | 17.3 |
Results of Operations, Financial Position and Net Assets
The Motorcycles segment recorded a significant increase in revenues compared to the first half of 2016, mainly reflecting year-on-year volume growth. Higher sales of optional equipment, spare parts and extras as well as improved pricing also contributed to the positive result.
Cost of sales rose significantly compared to the first half-year 2016 due to production costs.
Profit before tax, which is influenced by seasonal factors, increased significantly over the six-month period, with a solid increase in the second quarter.
| in % | 2017 | 2016 | Change |
|---|---|---|---|
| Automotive | |||
| Gross margin | 19.4 | 18.0 | 1.4 |
| Selling and administrative expenses as a percentage of revenues | 8.5 | 8.4 | 0.1 |
| EBIT margin* | 9.7 | 9.5 | 0.2 |
| Motorcycles | |||
| Gross margin | 24.0 | 25.1 | –1.1 |
| EBIT margin* | 14.9 | 15.9 | –1.0 |
| in % | 2017 | 2016 | Change |
|---|---|---|---|
| Automotive | |||
| Gross margin | 18.7 | 18.2 | 0.5 |
| Selling and administrative expenses as a percentage of revenues | 8.6 | 8.6 | – |
| EBIT margin* | 9.4 | 9.5 | – 0.1 |
| Motorcycles | |||
| Gross margin | 26.2 | 25.9 | 0.3 |
| EBIT margin* | 17.4 | 16.0 | 1.4 |
*Profit before financial result as a percentage of revenues.
Financial Services segment revenues grew significantly compared to the first half of 2016 and solidly compared to the second quarter of 2016, due to the positive business development and the sale of returned leasing vehicles in the terminations business. In addition, the risk profile remained at a historically favourable level during both the six-month period and the second quarter.
Selling and administrative expenses within the segment increased by a moderate € 40 million to € 631 million compared to the first half of 2016, mainly due to the larger workforce, higher volume-driven operational cost and increased project costs.
Larger business volumes as well as lower other operating expenses contributed to a significant improvement in profit before tax reported by the Financial Services segment for both the six-month period and the second quarter.
• 27
The consolidated cash flow statements for the Group as well as for the Automotive and Financial Services segments show the sources and applications of cash flows for the first six months of 2017 and 2016. Cash flows are classified according to 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. Cash flows from investing and financing activities are based on actual payments and receipts.
| in € million | 2017 | 2016 | Change |
|---|---|---|---|
| Cash inflow/outflow from operating activities | 1,918 | 1,212 | 706 |
| Cash inflow/outflow from investing activities | – 2,270 | –1,969 | – 301 |
| Cash inflow/outflow from financing activities | –123 | 1,821 | –1,944 |
| Effect of exchange rate and changes in composition of Group | – 90 | – 6 | – 84 |
| Change in cash and cash equivalents | – 565 | 1,058 | –1,623 |
Cash flows from operating activities in the first half of 2017 were effected by the higher net profit and the lower increase in working capital.
Increased cash outflows for investing activities at Group level were mainly driven by higher levels of investment in intangible assets and property, plant and equipment. Lower investments in other investments had a mitigating effect.
The change in cash flows from financing activities was mainly due to settlement of current other financial liabilities.
Free cash flow for the Automotive segment in the first half of the year was as follows:
| in € million | 2017 | 2016 | Change |
|---|---|---|---|
| Cash inflow/outflow from operating activities | 4,393 | 4,124 | 269 |
| Cash inflow/outflow from investing activities | – 2,187 | – 1,461 | – 726 |
| Net investment in marketable securities and investment funds | –171 | – 141 | – 30 |
| Free cash flow Automotive segment | 2,035 | 2,522 | – 487 |
The higher cash inflow from operating activities was mainly due to the higher net profit and a lower increase in working capital, offset in part by changes in provisions.
The higher cash outflow for investing activities mainly reflects increased investments for intangible assets and property, plant and equipment.
28
Interim Group Management Report
Report on Economic Position
Results of Operations, Financial Position and Net Assets
| Net financial assets of the Automotive segment com | |
|---|---|
| prise the following: |
| in € million | 30. 6. 2017 | 31.12. 2016 | Change |
|---|---|---|---|
| Cash and cash equivalents | 5,252 | 4,794 | 458 |
| Marketable securities and investment funds | 4,053 | 4,147 | – 94 |
| Intragroup net financial assets | 11,165 | 12,077 | – 912 |
| Financial assets | 20,470 | 21,018 | – 548 |
| Less: external financial liabilities* | –1,590 | –1,498 | – 92 |
| Net financial assets Automotive segment | 18,880 | 19,520 | – 640 |
*Excluding derivative financial instruments.
Cash flows from operating and investing activities in the Financial Services segment developed in the first half of the year as follows:
| in € million | 2017 | 2016 | Change |
|---|---|---|---|
| Cash inflow/outflow from operating activities | – 4,046 | – 4,174 | 128 |
| Cash inflow/outflow from investing activities | – 17 | 20 | – 37 |
| Net | – 4,063 | – 4,154 | 91 |
Cash outflows from operating activities in the Financial Services segment were driven mainly by the increase in receivables from sales financing.
The BMW Group uses a broadly diversified range of funding sources to finance its operating activities. Funds raised are used almost exclusively to finance the BMW Group's Financial Services business. Further details regarding the principles and objectives of financial management are contained in the Group Financial Statements of BMWAG at 31 December 2016.
During the period from January to June 2017, BMW Group entities issued euro benchmark bonds with a volume of € 3.8 billion as well as EMTN private placements in various currencies with a total volume of € 3.2 billion and a promissory note of € 50 million. The BMW Group also issued US dollar bonds amounting to US\$ 2.2 billion in a private placement on the US market.
Bonds denominated in Indian rupees, Korean won, Canadian dollars and British pounds were issued with a total volume of € 0.8 billion. In addition, five ABS transactions with a volume of € 3.1 billion were issued in Japan, Canada, China, Germany and the USA. In addition, the Group regularly issues commercial paper as well as using deposit-taking by the Group's banking subsidiaries as a further source of refinancing.
• 28
| Group | |||||
|---|---|---|---|---|---|
| in € million | 30. 6. 2017 | 31.12. 2016 | Change in % | Currency adjusted change* in % |
Proportion of balance sheet total in % |
| Assets | |||||
| Intangible assets | 8,477 | 8,157 | 3.9 | 4.1 | 4.5 |
| Property, plant and equipment | 17,448 | 17,960 | – 2.9 | –1.5 | 9.2 |
| Leased products | 36,192 | 37,789 | – 4.2 | – 0.5 | 19.2 |
| Investments accounted for using the equity method | 3,020 | 2,546 | 18.6 | 18.6 | 1.6 |
| Other investments | 529 | 560 | – 5.5 | – 5.0 | 0.3 |
| Receivables from sales financing | 79,692 | 78,260 | 1.8 | 5.7 | 42.3 |
| Financial assets | 10,086 | 9,770 | 3.2 | 3.9 | 5.3 |
| Deferred and current tax | 3,563 | 4,265 | –16.5 | – 9.1 | 1.9 |
| Inventories | 13,133 | 11,841 | 10.9 | 13.5 | 7.0 |
| Trade receivables | 2,717 | 2,825 | – 3.8 | 0.5 | 1.4 |
| Other assets | 6,420 | 6,682 | – 3.9 | – 2.2 | 3.4 |
| Cash and cash equivalents | 7,315 | 7,880 | – 7.2 | – 4.9 | 3.9 |
| Total assets | 188,592 | 188,535 | – | 3.1 | 100.0 |
| Equity and liab ilities |
|||||
| Equity | 50,470 | 47,363 | 6.6 | 8.7 | 26.8 |
| Pension provisions | 3,164 | 4,587 | – 31.0 | – 29.9 | 1.7 |
| Other provisions | 11,201 | 10,918 | 2.6 | 5.8 | 5.9 |
| Deferred and current tax | 4,311 | 3,869 | 11.4 | 28.3 | 2.3 |
| Financial liabilities | 95,051 | 97,731 | – 2.7 | 0.5 | 50.4 |
| Trade payables | 8,358 | 8,512 | –1.8 | – 0.1 | 4.4 |
| Other liabilities | 16,037 | 15,555 | 3.1 | 6.9 | 8.5 |
| Total equity and liabilities | 188,592 | 188,535 | – | 3.1 | 100.0 |
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
Due to currency factors, the balance sheet total of the BMW Group remained at a similar level to that reported in the Group Financial Statements for the financial year 2016.
Business volume growth in the Financial Services segment is mainly reflected in the slightly higher level of receivables from sales financing. Negative currency effects due to the weakening of certain currencies against the euro – particularly the US dollar, the Chinese renminbi and the British pound – offset the effect of higher business volumes in the Financial Services segment. A total of 643,940 new credit financing contracts were signed during the six-month period ended 30 June 2017. As a result, the total credit financing portfolio grew to 3,189,619 contracts, 5.5 % up on the level recorded at 31 December 2016. Leased products decreased slightly, however. Adjusted for currency factors, they were at a similar level to the previous year.
Inventories were significantly higher than at the end of the financial year 2016. The increase was mainly due to finished goods, reflecting general business growth and stocking-up in the various markets in conjunction with the launch of new vehicle models.
Cash and cash equivalents decreased moderately compared to 31 December 2016. Group liquidity nevertheless remained at a solid level.
Interim Group Management Report Report on Economic Position
Results of Operations, Financial Position and Net Assets Report on Outlook, Risks and Opportuni-
ties Outlook
Group equity rose by € 3,107 million to € 50,470 million. Equity increase was mainly driven by the net profit attributable to shareholders of BMWAG amounting to € 4,333 million, net fair value gains on derivative financial instruments amounting to € 1,516 million
and the positive impact of remeasurements of the net defined benefit liability for pension plans amounting to € 911 million, mainly due to higher interest rates and the lower rate of inflation in Germany. By contrast, the dividend payment reduced equity by € 2,300 million.
| in % | 30. 6. 2017 | 31.12. 2016 | Change |
|---|---|---|---|
| Group | 26.8 | 25.1 | 1.7 |
| Automotive | 42.9 | 41.3 | 1.6 |
| Financial Services | 8.1 | 8.0 | 0.1 |
*Equity capital as a percentage of the balance sheet total.
Pension provisions decreased significantly compared to the end of the financial year 2016, due to higher interest rates and the lower inflation rate in Germany. A transfer from plan assets for pre-retirement parttime working arrangements to plan assets for pension plans brought about a further reduction in pension provisions and a slight increase in other provisions.
Financial liabilities fell slightly compared to the end of 2016. The increase in bonds was more than offset by the decrease in liabilities for asset-backed financing arrangements, commercial paper and derivatives. Financial liabilities were also impacted by negative currency factors.
Overall, the earnings performance, financial position and net assets position of the BMW Group continued to develop positively during the second quarter of 2017.
Further information on transactions with related parties can be found in note 32 to the Interim Group Financial Statements. see note 32
BMW Group continues successful course
Profitability expected within target corridor
Global economy offers favourable conditions, despite uncertainties
The report on outlook, risks and opportunities describes the expected development of the BMW Group, including the associated material risks and opportunities, from a Group management perspective. It contains forward-looking assertions and is based on expectations and assessments which are subject to uncertainty. As a result, actual outcomes, including those due to political and economic developments, could differ– either positively or negatively – from the expectations described below. Further information is provided in the Annual Report 2016 (Outlook, pp. 82ff., Risks and Opportunities, pp. 88ff.).
Based on the forecasts of the International Monetary Fund, the global economy is expected to grow by around 3.5% in 2017.
The eurozone economy performed better than expected during the first half of the year. Some of the uncertainties that were a cause for concern at the beginning of the year, such as the outcome of elections in the Netherlands and France, have subsided. Economic growth in Europe is currently forecast at 1.9% for the full year 2017. The unemployment rate in the eurozone continues to sink, which should encourage consumer spending and support growth. With inflation expected at 1.6% and therefore below the target figure, the European Central Bank is unlikely to raise interest levels for the time being. This should provide a boost to consumer spending and investments.
The German economy is again forecast to perform well this year, with current predictions at 1.8 % growth. The growth has a broad basis, with domestic spending, investments and exports all making positive contributions.
The French economy is predicted to grow by 1.5 % this year, the current trend being mainly driven by investments in the private sector. These investments could create the conditions required for further economic recovery over the coming months.
Interim Group Management Report Report on Outlook,
Risks and Opportunities Outlook
Consumer spending in Italy remains robust, making it likely that economic recovery will continue with a forecast growth rate of 1.2% in 2017. A solution to the problems that have plagued the Italian banking sector in the past could further improve the economic outlook.
The economy in Spain is predicted to grow by 3.0% this year. The country is profiting from positive trends in the service sector, particularly a strong performance in tourism. At the same time, consumer spending is being boosted by the rapidly falling unemployment rate.
In the UK, there are increasing signs of an economic slowdown. The devaluation of the British pound in the wake of last year's referendum is driving inflation upwards and dampening domestic demand. Increasing uncertainties regarding the future terms for leaving the European Union are discouraging investment. Economic growth in the UK is expected at 1.6%.
Gross domestic product (GDP) in the USA is forecast to grow by 2.2% in 2017. Hopes of government stimulus measures have not yet come to fruition and higher interest rates have driven up the cost of investment. Nevertheless, the construction and industrial production sectors are both performing well.
The Chinese economy is forecast to grow by 6.6% this year. Policymakers in China are currently focused on reining in exceptionally high credit growth. The goal is to foster stability in the finance sector and slow down rising property prices. The pace of growth in China is therefore predicted to slow down in the medium term.
In Japan, the economy continues to recover and growth is expected to run at 1.3% for the full year, primarily driven by a weaker Japanese yen, leading to higher exports and increased production.
With an expected growth rate of 7.2 % for 2017, the Indian economy is one of the fastest growing worldwide. The implementation of a number of long-planned reforms is providing the opportunity to boost efficiency in the Indian economy and maintain economic momentum in the medium term.
The Russian economy is set to return to positive growth in the current year. GDP in Russia is expected to grow by 1.3 %. Brazil's economic recovery, however, is likely to be significantly slower, with economic output expected to increase by only 0.4 % during the full year.
The price of Brent crude oil averaged around 53 US dollars per barrel between January and May. In June, however, the oil price dropped below the 50 US dollar mark, negatively impacted by high inventories, higher production figures in the USA and increased OPEC exports. For these reasons, oil prices are unlikely to rise significantly in the foreseeable future.
Current political developments and increasing risks could jeopardise the economic outlook. Possible trade conflicts, the current development in the UK with EU exit negotiations, increasing consumer debt in China, as well as the political situation in the Middle East represent the greatest risks to global growth.
At present, automobile markets worldwide are expected to grow by 1.6% to around 87.5 million units in 2017. Apart from China, growth is likely to be driven primarily by demand from Japan and continental Europe. However, the forecast vehicle registration trend in the USA and UK could have a dampening impact on the global automobile market.
In Europe, favourable economic conditions should provide momentum for automobile markets, with the latest forecasts predicting growth of 1.6% to 15.4 million units for the year. With an expected 1.4% increase in new registrations to 3.4 million units, Germany lies somewhat below the European average. The same applies to France, where growth is set to run at 1.4% to 2.0 million units. Markets in both Italy (1.98 million units; + 6.8%) and Spain (1.2 million units; + 4.6%) are forecast to grow more strongly. In the UK, Brexit and an increase in motor vehicle tax are likely to dampen the automobile market and a 5.5% drop to 2.5 million units is expected for the full year.
In the USA, the automobile market probably reached a peak in the previous year, with the consequence that a 2.6% decline to 17.1 million units is seen as a realistic outcome for 2017.
In China, growth is forecast to slow to 4.9%, at a total of 25.3 million units, after the market grew faster than expected the previous year.
In Japan, the relatively good economy is also having a positive effect on the automobile market. New registrations are developing positively, with growth expected at around 2.6% to 4.9 million units.
Economic recovery in Russia and Brazil is also likely to be reflected in the performance of their respective automobile markets. In Russia, new registrations are expected to grow by 8.0% to reach 1.4 million units. In Brazil registrations are set to rise by 4.6% to 1.8 million new vehicles.
The world's motorcycle markets in the 250 cc plus class are forecast to remain at the previous year's level in 2017. In Europe, the positive trend is expected to continue in the major markets, such as France, Italy and Spain. The forecast for the motorcycles market in Germany and the USA is for volumes to be slightly below the previous year.
The ECB is expected to continue its expansionary monetary policy in the eurozone for the remainder of the year, albeit on a less intensive scale. Faced with rising inflation and weaker growth prospects in conjunction with Brexit negotiations, the Bank of England is expected to maintain its cautious approach and leave its monetary policies largely unchanged. If the US economy continues to perform positively, the Federal Reserve could raise the benchmark interest rate further in the course of the year. China is expected to continue the process of transforming its economy. The expectation is that the government and central bank will support this process with economic and monetary measures. The Japanese central bank is likely to maintain its expansionary monetary approach.
Pre-owned vehicle prices in North America are set to fall slightly over the year, while prices in the premium segment in Asia are expected to remain stable. A similar situation prevails in continental Europe. In the UK, the pre-owned market is expected to come under pressure. Further developments there will also depend on the progress of Brexit negotiations.
Competition on international automobile markets is expected to remain intense throughout the current year. The formal start of exit negotiations between the EU and the UK is also a source of uncertainty with respect to future political and economic developments. In the USA, the new administration's course of action remains uncertain. Political risks are also arising in the Middle East. Further information is provided in the Report on Risks and Opportunities in the Annual Report 2016.
Nevertheless, the BMW Group plans to pursue its growth course in 2017. New vehicles, such as the BMW 5 Series and MINI Countryman introduced in spring and motorcycles such as the new R NineT Pure and Racer models, as well as attractive services, should contribute to earnings growth. Important investments in future-oriented projects, including vehicle electrification, digitalisation and the expansion of the production network, will offset the general positive trend in the second half of the year, however. Overall, Group profit before tax is expected to increase slightly year-on-year (2016: € 9,665 million).
Based on current forecasts, the BMW Group's workforce is again expected to grow slightly in 2017 (2016: 124,729 employees). The growth is mainly driven by projects aimed at securing the Group's future, increased demand for automobiles and motorcycles and the expansion of financial and mobility services.
Deliveries to customers: slight increase expected The BMW Group expects positive sales volume growth to continue in 2017 and again aims to occupy a leading position with its brands in the global premium segment. A strong presence in the major sales regions of Europe, Asia and the Americas is an essential element to balance volatilities and political uncertainties in individual markets. Assuming economic conditions do not deteriorate, deliveries to customers are forecast to rise slightly to a new high (2016: 2,367,603 1 units).
joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200
units).
1 Including the
Important contributions to the targeted sales growth are expected primarily from new models. The all-new BMW 5 Series Sedan was launched in mid-February 2017, followed by the BMW 5 Series iPerformance and M Performance models in March. The new extended-wheelbase version of the BMW 5 Series Sedan has been available to customers in China since the end of June. The new BMW 5 Series Touring model was launched during the same month. The model revisions of the BMW 4 Series as well as the BMW M4 Coupé and Convertible were launched in March. The second generation of the highly successful MINI Countryman model became available in February. At mid-year, two further versions were added to this highly successful model, namely the sporty John Cooper Works version and a plug-in hybrid model. Model revisions of the BMW 1 Series, BMW 2 Series Convertible and the 2 Series Coupé have been on sale since July. The new BMW 6 Series Gran Turismo and the new BMW X3 are set to follow in autumn.
The BMW Group is continuing its efforts to reduce vehicle-fuel consumption and carbon dioxide emissions across its fleet of vehicles. According to forecasts, fleet emissions will drop slightly during the outlook period, thus continuing the downward trend seen in previous years (2016: 124 grams CO2 / km).
Automotive segment revenues are expected to grow solidly during the outlook period (2016: € 86,424 million). In the Annual Report 2016, only a slight increase in segment revenues had been forecast. The original forecast from the beginning of the year has been revised upwards mainly due to positive translation effects.
An EBIT margin (profit before financial result as a percentage of Automotive Segment revenues) within a range of 8 to 10% (2016: 8.9%) remains the target for the Automotive segment.
Segment RoCE is forecast to be at the previous year's level (2016: 74.3%). In the Annual Report 2016, the Group had expected RoCE to decrease slightly. The development is due to an improvement in capital employed. The long-term target RoCE of at least 26% for the Automotive segment will be significantly exceeded.
Deliveries to customers: significant increase expected The positive trend in the Motorcycles segment observed during the year to date is expected to continue throughout 2017. The new R NineT Pure and R NineT Racer models unveiled at various international motor shows in autumn 2016 have been available to customers since March 2017. Likewise, the new G 310 R and the updated version of the R 1200 GS have been on the market since March. The revised version of the S 1000 RR has been on sale since January. Updated versions of the S 1000 R and the K 1600 GT were introduced in February. The model revisions of the luxury K 1600 GTL and the R NineT Urban G / S were launched in June. The new K 1600 B will follow in the summer, with the G 310 GS expected in the autumn. The broader product range should appeal to new customer groups and provide further momentum for sales volume growth. Overall, deliveries of BMW motorcycles to customers are forecast to increase significantly year-on-year (2016: 145,032 units).
With effect from the financial year 2017, EBIT margin also serves as a key performance indicator for the Motorcycles segment. Accordingly, segment performance will also be managed based on EBIT margin going forward. Further information is available in the description of the Group management system within the section "General Information on the BMW Group" in the Annual Report 2016. A target range of 8 to 10% has also been set for the Motorcycles segment. The EBIT margin for the Motorcycles segment is expected to lie within this range in 2017 (2016: 9.0%).
Segment RoCE is forecast to increase slightly in 2017 and the long-term target RoCE of 26% will be exceeded (2016: 33.0%). The improvement in RoCE is due amongst others to the expected growth in earnings. In the Annual Report 2016, RoCE was forecast to be in line with the previous year.
*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.
Risks and Opportunities Outlook
According to forecasts, the Financial Services segment should continue its successful performance in 2017. It is expected, however, that regulatory requirements for equity capital will be tightened and that the favourable risk situation of the previous year will return to a normal level. The segment RoE is therefore expected to decrease slightly year-on-year (2016: 21.2%). The target of at least 18% is nevertheless expected to be exceeded again.
*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.
Business is expected to develop positively in the financial year 2017. The introduction of numerous new automobile and motorcycle models, as well as the expansion of services around individual mobility give reason to expect further profitable growth during the current year.
Despite the challenges previously described, Group profit before tax is forecast to grow slightly. Based on the forecast of a slight increase in deliveries to customers as well as positive translation effects, Automotive segment revenues are expected to grow solidly. At the same time, a slight decrease in fleet carbon dioxide emissions is expected. The stipulated targets are to be supported by a slight increase in the workforce. The Automotive segment's EBIT margin in 2017 is expected to remain within the target range of between 8 and 10%, while its RoCE is forecast to remain at the previous year's level. A slight decline is forecast for the RoE in the Financial Services segment. Both performance indicators are expected to be above their long-term targets of 26% (RoCE) and 18% (RoE) respectively. Motorcycles segment deliveries to customers are expected to rise significantly in the forecast period, with the EBIT margin within the target range of between 8 and 10% and RoCE slightly up on the previous year.
Depending on the political and economic situation and the outcomes of the risks and opportunities described in the Annual Report 2016, actual business performance could, however, differ from current expectations.
• 30
| 2016 | 2017 Outlook | ||
|---|---|---|---|
| Group | |||
| Profit before tax | € million | 9,665 | slight increase |
| Workforce at year-end | 124,729 | slight increase | |
| Automotive segment | |||
| Sales volume1 | units | 2,367,603 | slight increase |
| Fleet emissions2 | g CO2 / km | 124 | slight decrease |
| Revenues | € million | 86,424 | solid increase |
| EBIT margin | % | 8.9 | between 8 and 10 |
| Return on capital employed | % | 74.3 | At previous year's level |
| Motorcycles segment | |||
| Sales volume | units | 145,032 | significant increase |
| EBIT margin | % | 9.0 | between 8 and 10 |
| Return on capital employed | % | 33.0 | slight increase |
| Financial Services segment | |||
| Return on equity | % | 21.2 | slight decrease |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units). 2 EU-28.
Report on Outlook, Risks and Opportunities Risks and Opportunities
Interim Group Management Report
BMWAG Stock and Capital Markets
As a globally operating enterprise, the BMW Group is confronted with a broad range of risks and opportunities. Making full use of the opportunities that present themselves is the basis for the Group's success. In order to achieve growth, profitability, greater efficiency and sustainable future business, the Group consciously takes risks.
Current issues such as the progress of Brexit negotiations, further political developments with regard to diesel engines, such as possible driving bans in inner cities, and tightening of regulations regarding vehicle emissions and safety will be closely monitored and if necessary promptly included in the planning.
In July 2017, media outlets reported allegations of anti-competitive practices amongst German automotive manufacturers. According to a report of the German Press Agency dpa, the European Commission is currently investigating evidence in its possession. To date, the BMW Group has not been contacted by the European Commission in this regard. Nor is the BMW Group aware of any formal investigation by the European Commission against the Company on such matter. The Group has nevertheless launched an internal investigation in order to clarify the facts.
During the period under report and in light of these circumstances, there have been no material changes to the overall risk profile as described in the Group Management Report 2016.
Further information on risks and opportunities, and on the methods employed to manage them, can also be found in the "Report on risks and opportunities" section of the Annual Report 2016 (pp. 88ff.).
BMW shares below previous year's level
Earnings per share of common stock increase to € 6.59 (+ 21.1%) in first half-year
Stock markets were largely stable during the second quarter of 2017. The outcome of presidential and parliamentary elections in France in particular, which signalled a more pro-European political agenda, gave the markets a boost. In the latter part of the quarter, the trend towards greater price stability was even more evident.
The German stock index (DAX) closed at 12,325 points on 30 June 2017, similar to the level recorded at the beginning of the second quarter. Compared to the end of 2016, when it stood at 11,481 points, the index has gained 7.4 %. A new all-time high of 12,889 points was recorded on 19 June 2017. The benchmark index weakened slightly towards the end of the quarter as a result of profit-taking and amid expectations that the European Central Bank will move towards tighter monetary policies.
The Prime Automobile sector index was broadly stable during the first half of 2017 and finished the reporting period at 1,472 points, 2.3% lower than at 31 December 2016 and 5.3% below the level of 31 March 2017. Political and economic uncertainties in particular have influenced the performance of automobile stocks.
BMW common stock was also impacted by the general trend affecting automobile stocks, closing at € 81.28 on 30 June 2017, 8.4% down on the market price at the end of 2016. Compared to the end of the previous quarter, this represents a decline of 4.9%. BMW preferred stock followed the trend and finished the second quarter at € 72.18, 2.2% down on the price at the end of the first quarter. Compared to the final day of trading in 2016, BMW preferred stock fell by 0.7%.
The US dollar weakened against the euro during the second quarter. At 1.14 US dollars to the euro at the end of the reporting period, it finished 7.5% down on its closing rate at the end of the previous year (31 December 2016: 1.06 US dollars to the euro).
BMWAG Stock and Capital Markets
(Index: 31. 03. 2017 = 100)
Source: Reuters.
40
Page 42 Income Statement
42
Interim Group Financial Statements
BMW Group Income Statement Statement of Comprehensive
Income
Income Statements for Group and Segments for the period from 1 April to 30 June • 32
| Group | Automotive (unaudited supplementary information) |
Motorcycles (unaudited supplementary information) |
|||||
|---|---|---|---|---|---|---|---|
| in € million | Note | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
| Revenues | 5 | 25,799 | 25,014 | 22,976 | 22,872 | 696 | 617 |
| Cost of sales | 6 | – 20,267 | – 19,957 | –18,529 | – 18,757 | – 529 | – 462 |
| Gross profit | 5,532 | 5,057 | 4,447 | 4,115 | 167 | 155 | |
| Selling and administrative expenses | 7 | – 2,339 | – 2,287 | –1,950 | – 1,914 | – 64 | – 65 |
| Other operating income | 8 | 156 | 149 | 165 | 131 | 2 | 4 |
| Other operating expenses | 8 | – 420 | – 194 | – 424 | – 154 | –1 | 4 |
| Profit/ loss before financial result | 2,929 | 2,725 | 2,238 | 2,178 | 104 | 98 | |
| Result from equity accounted investments | 9 | 139 | 127 | 139 | 127 | – | – |
| Interest and similar income | 10 | 46 | 38 | 72 | 55 | – | – |
| Interest and similar expenses | 10 | – 88 | – 141 | –112 | – 172 | –1 | – 1 |
| Other financial result | 11 | 29 | 49 | 48 | 89 | – | – |
| Financial result | 126 | 73 | 147 | 99 | –1 | – 1 | |
| Profit/ loss before tax | 3,055 | 2,798 | 2,385 | 2,277 | 103 | 97 | |
| Income taxes | 12 | – 841 | – 849 | – 649 | – 696 | – 26 | – 28 |
| Net profit/ loss | 2,214 | 1,949 | 1,736 | 1,581 | 77 | 69 | |
| Attributable to minority interest | 20 | 8 | 6 | 4 | – | – | |
| Attributable to shareholders of BMW AG | 2,194 | 1,941 | 1,730 | 1,577 | 77 | 69 | |
| Basic earnings per share of common stock in € | 13 | 3.33 | 2.95 | ||||
| Basic earnings per share of preferred stock in € | 13 | 3.34 | 2.96 | ||||
| Dilutive effects | 13 | – | – | ||||
| Diluted earnings per share of common stock in € | 13 | 3.33 | 2.95 | ||||
| Diluted earnings per share of preferred stock in € | 13 | 3.34 | 2.96 |
Statement of Comprehensive Income for Group for the period from 1 April to 30 June • 33
| in € million | Note | 2017 | 2016 |
|---|---|---|---|
| Net profit | 2,214 | 1,949 | |
| Remeasurement of the net liability for defined benefit pension plans | 452 | – 1,035 | |
| Deferred taxes | –133 | 336 | |
| Items not expected to be reclassified to the income statement in the future | 319 | – 699 | |
| Available-for-sale securities | 31 | 54 | |
| Financial instruments used for hedging purposes | 2,043 | – 108 | |
| Other comprehensive income from equity accounted investments | 26 | 19 | |
| Deferred taxes | – 634 | 12 | |
| Currency translation foreign operations | – 747 | 44 | |
| Items expected to be reclassified to the income statement in the future | 719 | 21 | |
| Other comprehensive income for the period after tax | 14 | 1,038 | – 678 |
| Total comprehensive income | 3,252 | 1,271 | |
| Total comprehensive income attributable to minority interest | 20 | 8 | |
| Total comprehensive income attributable to shareholders of BMW AG | 3,232 | 1,263 | |
| Eliminations (unaudited supplementary information) |
Other Entities (unaudited supplementary information) |
Financial Services (unaudited supplementary information) |
||||
|---|---|---|---|---|---|---|
| 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | |
| Revenues | – 4,982 | – 4,918 | 2 | 1 | 6,505 | 7,044 |
| Cost of sales | 4,881 | 4,900 | – | – | – 5,619 | – 6,109 |
| Gross profit | – 101 | –18 | 2 | 1 | 886 | 935 |
| Selling and administrative expenses | 7 | 7 | – 7 | –1 | – 308 | – 331 |
| Other operating income | – 16 | – 48 | 25 | 32 | 5 | 5 |
| Other operating expenses | 18 | 50 | – 8 | – 24 | – 54 | – 21 |
| Profit/ loss before financial result | – 92 | – 9 | 12 | 8 | 529 | 588 |
| Result from equity accounted investments | – | – | – | – | – | – |
| Interest and similar income | – 338 | – 310 | 320 | 279 | 1 | 5 |
| Interest and similar expenses | 305 | 274 | – 254 | – 246 | – 19 | – 3 |
| Other financial result | – | – | – 32 | –18 | – 8 | –1 |
| Financial result | – 33 | – 36 | 34 | 15 | – 26 | 1 |
| Profit/ loss before tax | – 125 | – 45 | 46 | 23 | 503 | 589 |
| Income taxes | 16 | – 20 | – 15 | – 3 | – 126 | –143 |
| Net profit/ loss | – 109 | – 65 | 31 | 20 | 377 | 446 |
| Attributable to minority interest | – | – | – | 1 | 4 | 13 |
| Attributable to shareholders of BMW AG | – 109 | – 65 | 31 | 19 | 373 | 433 |
| 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 Comprehensive Income
Income Statements for Group and Segments for the period from 1 January to 30 June • 34
| Group | Automotive (unaudited supplementary information) |
Motorcycles (unaudited supplementary information) |
|||||
|---|---|---|---|---|---|---|---|
| in € million | Note | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
| Revenues | 5 | 49,247 | 45,867 | 43,668 | 41,686 | 1,319 | 1,199 |
| Cost of sales | 6 | – 38,904 | – 36,330 | – 35,512 | – 34,109 | – 973 | – 889 |
| Gross profit | 10,343 | 9,537 | 8,156 | 7,577 | 346 | 310 | |
| Selling and administrative expenses | 7 | – 4,517 | – 4,275 | – 3,770 | – 3,565 | –117 | – 120 |
| Other operating income | 8 | 329 | 362 | 305 | 312 | 2 | 4 |
| Other operating expenses | 8 | – 580 | – 442 | – 582 | – 383 | – 2 | – 2 |
| Profit/ loss before financial result | 5,575 | 5,182 | 4,109 | 3,941 | 229 | 192 | |
| Result from equity accounted investments | 9 | 490 | 198 | 490 | 198 | – | – |
| Interest and similar income | 10 | 107 | 73 | 166 | 147 | – | – |
| Interest and similar expenses | 10 | –186 | – 259 | – 234 | – 349 | –1 | – 1 |
| Other financial result | 11 | 74 | – 28 | 133 | 74 | – | – |
| Financial result | 485 | – 16 | 555 | 70 | –1 | – 1 | |
| Profit/ loss before tax | 6,060 | 5,166 | 4,664 | 4,011 | 228 | 191 | |
| Income taxes | 12 | –1,697 | – 1,576 | –1,313 | – 1,250 | – 63 | – 58 |
| Net profit/ loss | 4,363 | 3,590 | 3,351 | 2,761 | 165 | 133 | |
| Attributable to minority interest | 30 | 18 | 6 | 3 | – | – | |
| Attributable to shareholders of BMW AG | 4,333 | 3,572 | 3,345 | 2,758 | 165 | 133 | |
| Basic earnings per share of common stock in € | 13 | 6.59 | 5.44 | ||||
| Basic earnings per share of preferred stock in € | 13 | 6.60 | 5.45 | ||||
| Dilutive effects | 13 | – | – | ||||
| Diluted earnings per share of common stock in € | 13 | 6.59 | 5.44 | ||||
| Diluted earnings per share of preferred stock in € |
Statement of Comprehensive Income for Group for the period from 1 January to 30 June • 35
| in € million | Note | 2017 | 2016 |
|---|---|---|---|
| Net profit | 4,363 | 3,590 | |
| Remeasurement of the net liability for defined benefit pension plans | 911 | – 2,088 | |
| Deferred taxes | – 256 | 667 | |
| Items not expected to be reclassified to the income statement in the future | 655 | – 1,421 | |
| Available-for-sale securities | 33 | 102 | |
| Financial instruments used for hedging purposes | 1,516 | 2,057 | |
| Other comprehensive income from equity accounted investments | 28 | 73 | |
| Deferred taxes | – 484 | – 741 | |
| Currency translation foreign operations | – 696 | – 401 | |
| Items expected to be reclassified to the income statement in the future | 397 | 1,090 | |
| Other comprehensive income for the period after tax | 14 | 1,052 | – 331 |
| Total comprehensive income | 5,415 | 3,259 | |
| Total comprehensive income attributable to minority interest | 30 | 18 | |
| Total comprehensive income attributable to shareholders of BMW AG | 5,385 | 3,241 | |
| Eliminations (unaudited supplementary information) |
Other Entities (unaudited supplementary information) |
Financial Services (unaudited supplementary information) |
||||
|---|---|---|---|---|---|---|
| 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | |
| Revenues | – 9,558 | – 9,833 | 3 | 3 | 12,537 | 14,090 |
| Cost of sales | 9,445 | 9,844 | – | – | – 10,777 | –12,263 |
| Gross profit | – 113 | 11 | 3 | 3 | 1,760 | 1,827 |
| Selling and administrative expenses | 13 | 14 | – 12 | –13 | – 591 | – 631 |
| Other operating income | – 32 | – 91 | 68 | 77 | 10 | 36 |
| Other operating expenses | 38 | 99 | – 36 | – 55 | – 59 | – 40 |
| Profit/ loss before financial result | – 94 | 33 | 23 | 12 | 1,120 | 1,192 |
| Result from equity accounted investments | – | – | – | – | – | – |
| Interest and similar income | – 697 | – 619 | 621 | 554 | 2 | 6 |
| Interest and similar expenses | 638 | 551 | – 527 | – 497 | – 20 | – 5 |
| Other financial result | – | – | – 73 | – 50 | – 29 | – 9 |
| Financial result | – 59 | – 68 | 21 | 7 | – 47 | – 8 |
| Profit/ loss before tax | – 153 | – 35 | 44 | 19 | 1,073 | 1,184 |
| Income taxes | 26 | – 24 | – 14 | –1 | – 280 | – 296 |
| Net profit/ loss | – 127 | – 59 | 30 | 18 | 793 | 888 |
| Attributable to minority interest | – | – | – | 1 | 15 | 23 |
| Attributable to shareholders of BMW AG | – 127 | – 59 | 30 | 17 | 778 | 865 |
| 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 (unaudited supplementary information) Motorcycles (unaudited supplementary information) in € million Note 30. 6. 2017 31.12. 2016 30. 6. 2017 31.12. 2016 30. 6. 2017 31.12. 2016 30. 6. 2017 31.12. 2016 30. 6. 2017 31.12. 2016 30. 6. 2017 31.12. 2016 Assets Assets Intangible assets 15 8,477 8,157 7,994 7,705 45 46 437 405 1 1 – – Intangible assets Property, plant and equipment 16 17,448 17,960 17,060 17,566 360 365 28 29 – – – – Property, plant and equipment Leased products 17 36,192 37,789 – – – – 43,446 45,134 – – – 7,254 – 7,345 Leased products Investments accounted for using the equity method 18 3,020 2,546 3,020 2,546 – – – – – – – – Investments accounted for using the equity method Other investments 18 529 560 5,289 5,195 – – 3 3 6,945 6,585 –11,708 –11,223 Other investments Receivables from sales financing 19 49,375 48,032 – – – – 49,375 48,032 – – – – Receivables from sales financing Financial assets 20 2,626 2,705 1,405 1,287 – – 190 221 1,240 1,780 – 209 – 583 Financial assets Deferred tax 21 1,846 2,327 3,901 4,310 – – 427 389 208 263 – 2,690 – 2,635 Deferred tax Other assets 22 1,558 1,595 3,613 4,043 27 28 3,082 3,093 26,709 27,120 – 31,873 – 32,689 Other assets Non-current assets 121,071 121,671 42,282 42,652 432 439 96,988 97,306 35,103 35,749 – 53,734 – 54,475 Non-current assets Inventories 23 13,133 11,841 12,610 11,344 518 492 5 5 – – – – Inventories Trade receivables 2,717 2,825 2,384 2,502 162 144 168 178 3 1 – – Trade receivables Receivables from sales financing 19 30,317 30,228 – – – – 30,317 30,228 – – – – Receivables from sales financing Financial assets 20 7,460 7,065 5,105 4,862 – – 1,561 1,504 1,095 1,329 – 301 – 630 Financial assets Current tax 21 1,717 1,938 920 1,000 – – 156 44 641 894 – – Current tax Other assets 22 4,862 5,087 21,876 21,561 7 2 5,334 5,417 46,563 44,782 – 68,918 – 66,675 Other assets Cash and cash equivalents 7,315 7,880 5,252 4,794 5 – 2,031 3,046 27 40 – – Cash and cash equivalents Current assets 67,521 66,864 48,147 46,063 692 638 39,572 40,422 48,329 47,046 – 69,219 – 67,305 Current assets Total assets 188,592 188,535 90,429 88,715 1,124 1,077 136,560 137,728 83,432 82,795 –122,953 –121,780 Total assets Equity and liabilities Equity and liabilities Subscribed capital 24 657 657 Subscribed capital Capital reserves 24 2,047 2,047 Capital reserves Revenue reserves 24 47,163 44,445 Revenue reserves Accumulated other equity 24 356 – 41 Accumulated other equity Equity attributable to shareholders of BMWAG 24 50,223 47,108 Equity attributable to shareholders of BMWAG Minority interest 24 247 255 Minority interest Equity 50,470 47,363 38,820 36,624 – – 11,088 11,049 17,932 16,744 –17,370 –17,054 Equity Pension provisions 25 3,164 4,587 1,846 2,911 44 83 81 77 1,193 1,516 – – Pension provisions Other provisions 26 5,724 5,039 5,259 4,570 113 103 352 353 – 13 – – Other provisions Deferred tax 27 3,327 2,795 1,649 740 – – 6,413 6,755 44 48 – 4,779 – 4,748 Deferred tax Financial liabilities 28 55,328 55,405 1,376 1,942 – – 15,217 17,718 38,944 36,328 – 209 – 583 Financial liabilities Other liabilities 29 5,095 5,357 6,365 6,530 461 442 28,743 29,413 601 601 – 31,075 – 31,629 Other liabilities Non-current provisions and liabilities 72,638 73,183 16,495 16,693 618 628 50,806 54,316 40,782 38,506 – 36,063 – 36,960 Non-current provisions and liabilities Other provisions 26 5,477 5,879 4,858 5,187 98 90 512 599 9 3 – – Other provisions Current tax 27 984 1,074 716 770 – – 256 255 12 49 – – Current tax Financial liabilities 28 39,723 42,326 826 1,481 – – 27,072 27,368 12,126 14,107 – 301 – 630 Financial liabilities Trade payables 8,358 8,512 7,226 7,483 322 303 800 702 10 24 – – Trade payables Other liabilities 29 10,942 10,198 21,488 20,477 86 56 46,026 43,439 12,561 13,362 – 69,219 – 67,136 Other liabilities Current provisions and liabilities 65,484 67,989 35,114 35,398 506 449 74,666 72,363 24,718 27,545 – 69,520 – 67,766 Current provisions and liabilities Total equity and liabilities 188,592 188,535 90,429 88,715 1,124 1,077 136,560 137,728 83,432 82,795 –122,953 –121,780 Total equity and liabilities
| Eliminations (unaudited supplementary information) |
Other Entities (unaudited supplementary information) |
Financial Services (unaudited supplementary information) |
||||
|---|---|---|---|---|---|---|
| 31.12. 2016 | 30. 6. 2017 | 31.12. 2016 | 30. 6. 2017 | 31.12. 2016 | 30. 6. 2017 | |
| Assets | ||||||
| Intangible assets | – | – | 1 | 1 | 405 | 437 |
| Property, plant and equipment | – | – | – | – | 29 | 28 |
| Leased products Investments accounted for using the equity method |
– 7,345 | – 7,254 | – | – | 45,134 | 43,446 |
| Other investments | – –11,223 |
– –11,708 |
– 6,585 |
– 6,945 |
– 3 |
– 3 |
| Receivables from sales financing | – | – | – | – | 48,032 | 49,375 |
| Financial assets | – 583 | – 209 | 1,780 | 1,240 | 221 | 190 |
| Deferred tax | – 2,635 | – 2,690 | 263 | 208 | 389 | 427 |
| Other assets | – 32,689 | – 31,873 | 27,120 | 26,709 | 3,093 | 3,082 |
| Non-current assets | – 54,475 | – 53,734 | 35,749 | 35,103 | 97,306 | 96,988 |
| Inventories | – | – | – | – | 5 | 5 |
| Trade receivables | – | – | 1 | 3 | 178 | 168 |
| Receivables from sales financing | – | – | – | – | 30,228 | 30,317 |
| Financial assets | – 630 | – 301 | 1,329 | 1,095 | 1,504 | 1,561 |
| Current tax | – | – | 894 | 641 | 44 | 156 |
| Other assets | – 66,675 | – 68,918 | 44,782 | 46,563 | 5,417 | 5,334 |
| Cash and cash equivalents | – | – | 40 | 27 | 3,046 | 2,031 |
| Current assets | – 67,305 | – 69,219 | 47,046 | 48,329 | 40,422 | 39,572 |
| Total assets | –121,780 | –122,953 | 82,795 | 83,432 | 137,728 | 136,560 |
| Equity and liab ilities |
||||||
| Subscribed capital | ||||||
| Capital reserves | ||||||
| Revenue reserves | ||||||
| Accumulated other equity | ||||||
| Equity attributable to shareholders of BMWAG | ||||||
| Minority interest | ||||||
| –17,054 | –17,370 | 16,744 | 17,932 | 11,049 | 11,088 | |
| Pension provisions | – | – | 1,516 | 1,193 | 77 | 81 |
| Other provisions | – | – | 13 | – | 353 | 352 |
| Deferred tax | – 4,748 | – 4,779 | 48 | 44 | 6,755 | 6,413 |
| Financial liabilities | – 583 | – 209 | 36,328 | 38,944 | 17,718 | 15,217 |
| Other liabilities | – 31,629 | – 31,075 | 601 | 601 | 29,413 | 28,743 |
| Non-current provisions and liabilities | – 36,960 | – 36,063 | 38,506 | 40,782 | 54,316 | 50,806 |
| Other provisions | – | – | 3 | 9 | 599 | 512 |
| Current tax | – | – | 49 | 12 | 255 | 256 |
| Financial liabilities | – 630 | – 301 | 14,107 | 12,126 | 27,368 | 27,072 |
| Trade payables | – | – | 24 | 10 | 702 | 800 |
| Other liabilities | – 67,136 | – 69,219 | 13,362 | 12,561 | 43,439 | 46,026 |
| Current provisions and liabilities | – 67,766 | – 69,520 | 27,545 | 24,718 | 72,363 | 74,666 |
| Total equity and liabilities | –121,780 | –122,953 | 82,795 | 83,432 | 137,728 | 136,560 |
BMW Group Cash Flow Statement
• 36
| Group | ||
|---|---|---|
| in € million | 2017 | 2016 |
| Net profit | 4,363 | 3,590 |
| Depreciation and amortisation of tangible, intangible and investment assets | 2,349 | 2,441 |
| Change in provisions | 127 | 595 |
| Change in leased products and receivables from sales financing | – 3,987 | – 4,220 |
| Change in deferred taxes | 556 | 871 |
| Changes in working capital | –1,592 | – 2,239 |
| Other | 102 | 174 |
| Cash inflow/outflow from operating activities | 1,918 | 1,212 |
| Investment in intangible assets and property, plant and equipment | – 2,403 | – 1,730 |
| Net investment in marketable securities and investment funds | 132 | – 71 |
| Other | 1 | – 168 |
| Cash inflow/outflow from investing activities | – 2,270 | – 1,969 |
| Cash inflow/outflow from financing activities | –123 | 1,821 |
| Effect of exchange rate on cash and cash equivalents | –155 | – 48 |
| Effect of changes in composition of Group on cash and cash equivalents | 65 | 42 |
| Change in cash and cash equivalents | – 565 | 1,058 |
| Cash and cash equivalents as at 1 January | 7,880 | 6,122 |
| Cash and cash equivalents as at 30 June | 7,315 | 7,180 |
| 2016 | 2017 | 2016 | 2017 | |
|---|---|---|---|---|
| 793 | 888 | 2,761 | 3,351 | |
| 14 | 18 | 2,398 | 2,290 | |
| 147 | –17 | 590 | – 51 | |
| – 4,426 | – 4,154 | – | – | |
| 85 | 87 | 706 | 655 | |
| 62 | 115 | – 2,312 | –1,423 | |
| – 849 | – 983 | – 19 | – 429 | |
| – 4,174 | – 4,046 | 4,124 | 4,393 | |
| – 1 | – 4 | – 1,705 | – 2,363 | |
| 21 | – 13 | 141 | 171 | |
| – | – | 103 | 5 | |
| 20 | – 17 | – 1,461 | – 2,187 | |
| 4,183 | 3,085 | – 1,093 | –1,761 | |
| – 13 | –102 | – 16 | 13 | |
| 12 | 65 | 30 | – | |
| 28 | –1,015 | 1,584 | 458 | |
| 1,359 1,387 |
Financial Services (unaudited supplementary information) 3,046 2,031 |
3,952 5,536 |
Automotive (unaudited supplementary information) 4,794 5,252 |
| Note | Subscribed capital |
Capital reserves |
Revenue reserves |
|
|---|---|---|---|---|
| 24 | 657 | 2,047 | 44,445 | |
| – | – | 655 | ||
| – | – | 4,988 | ||
| – | – | 30 | ||
| 24 | 657 | 2,047 | 47,163 | |
| – – |
– – |
– 2,300 4,333 |
| in € million | Note | Subscribed capital |
Capital reserves |
Revenue reserves |
|
|---|---|---|---|---|---|
| 1 January 2016 | 24 | 657 | 2,027 | 41,027 | |
| Dividends paid | – | – | – 2,102 | ||
| Net profit | – | – | 3,572 | ||
| Other comprehensive income for the period after tax | – | – | –1,421 | ||
| Comprehensive income to 30 June 2016 | – | – | 2,151 | ||
| Other changes | – | – | –10 | ||
| 30 June 2016 | 24 | 657 | 2,027 | 41,066 |
| Accumulated other equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Total | Minority interest |
Equity attributable to shareholders of BMW AG |
Derivative financial instruments |
Securities | Translation differences |
||||
| 1 January 2017 | 47,363 | 255 | 47,108 | 78 | 52 | –171 | |||
| Dividends paid | – 2,300 | – | – 2,300 | – | – | – | |||
| Net profit | 4,363 | 30 | 4,333 | – | – | – | |||
| Other comprehensive income for the period after tax | 1,052 | – | 1,052 | 1,197 | 31 | – 831 | |||
| Comprehensive income to 30 June 2017 | 5,415 | 30 | 5,385 | 1,197 | 31 | – 831 | |||
| Other changes | – 8 | – 38 | 30 | – | – | – | |||
| 30 June 2017 | 50,470 | 247 | 50,223 | 1,275 | 83 | –1,002 | |||
| Accumulated other equity | ||||||||
|---|---|---|---|---|---|---|---|---|
| Total | Minority interest |
Equity attributable to shareholders of BMW AG |
Derivative financial instruments |
Securities | Translation differences |
|||
| 1 January 2016 | 42,764 | 234 | 42,530 | –1,337 | 24 | 132 | ||
| Dividends paid | – 2,102 | – | – 2,102 | – | – | – | ||
| Net profit | 3,590 | 18 | 3,572 | – | – | – | ||
| Other comprehensive income for the period after tax | – 331 | – | – 331 | 1,499 | 76 | – 485 | ||
| Comprehensive income to 30 June 2016 | 3,259 | 18 | 3,241 | 1,499 | 76 | – 485 | ||
| Other changes | – 34 | – 24 | –10 | – | – | – | ||
| 30 June 2016 | 43,887 | 228 | 43,659 | 162 | 100 | – 353 |
Notes to the Group Financial Statements
Accounting Principles and Policies
The consolidated financial statements of Bayerische Motoren Werke Aktiengesellschaft (BMWAG Group Financial Statements or Group Financial Statements) at 31 December 2016 were drawn up in accordance with International Financial Reporting Standards (IFRS), as endorsed by the European Union (EU), and the supplementary requirements of § 315 a (1) of the German Commercial Code (HGB). The Interim Group Financial Statements (Interim Report) at 30 June 2017, 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 2016 Group Financial Statements. The BMW Group applies the option of publishing condensed group financial statements. All Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) which were mandatory at 30 June 2017 have been applied. The Interim Report also complies with German Accounting Standard No. 16 (GAS 16) – Interim Financial Reporting – issued by the Accounting Standards Committee of Germany (ASCG).
Further information regarding the Group's accounting principles and policies is contained in the Group Financial Statements of BMWAG at 31 December 2016.
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 statements of cash flows for the Automotive and Financial Services segments. Inter-segment transactions relate primarily to internal sales of products, the provision of funds for Group companies and the related interest. These items are eliminated in the respective "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 Group Financial Statements of BMWAG for the year ended 31 December 2016.
The Interim Group Financial Statements at 30 June 2017 have been reviewed by the Group auditors, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin.
The Interim Group Financial Statements at 30 June 2017 include BMWAG, all material subsidiaries including one special purpose securities fund and 41 structured entities, over which BMWAG – either directly or indirectly – exercises control. The structured entities are used exclusively in conjunction with the BMW Group's asset-backed financing arrangements. In addition, three joint operations are consolidated proportionately.
The following changes took place in the Group reporting entity during the first six months of 2017:
| Germany | Foreign | Total | |
|---|---|---|---|
| Included at 31 December 2016 |
21 | 178 | 199 |
| Included for the first time in 2017 |
– | 8 | 8 |
| No longer included in 2017 |
– | 4 | 4 |
| Included at 30 June 2017 |
21 | 182 | 203 |
Herald International Financial Leasing Co.,Ltd., Tianjin, BMWi Ventures Fund SCS SICAV-RAIF, Senningerberg, and BiV Carry I SCS SICAV, Senningerberg, were consolidated for the first time in the first half of 2017.
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.
In December 2016, THERE Holding B. V., Amsterdam, signed contracts relating to the sale of shares in HERE International B. V., Amsterdam: 15% were sold to Intel Holdings B. V., Schiphol-Rijk, and 10% to a consortium comprising NavInfo Co.Ltd., Beijing, Tencent Holdings Ltd., Shenzhen, and GIC Private Ltd., Singapore. The transaction with Intel Holdings B. V., Schiphol-Rijk, was completed on 31 January 2017. Closure of the transaction with the consortium is subject to approval by the relevant authorities.
The transaction with Intel Holdings B. V., Schiphol-Rijk, resulted in a loss of control, as defined by IFRS 10, at the level of THERE Holding B. V., Amsterdam. Since THERE Holding B. V., Amsterdam, still exerts a significant influence over HERE International B. V., Amsterdam, the latter is now included in the financial statements of THERE Holding B. V., Amsterdam, as an associated company, accounted for using the equity method. The loss of control and the subsequent deconsolidation of HERE International B. V., Amsterdam, and its subsidiaries led to a positive earnings effect at the level of THERE Holding B. V., Amsterdam. The BMW Group portion amounted to € 183 million, which was recognised in the result from equity accounted investments.
The sale of shares had no effect on the BMW Group's shareholding in THERE Holding B. V., Amsterdam.
Policies Notes to the Income Statement
The exchange rates applied for currency translation
purposes in accordance with the modified closing rate method, and which had a material impact on the Group Financial Statements, were as follows:
| Closing rate | Average rate | |||
|---|---|---|---|---|
| 30.6. 2017 | 31.12. 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|
| US Dollar | 1.14 | 1.06 | 1.08 | 1.12 |
| British Pound | 0.88 | 0.85 | 0.86 | 0.78 |
| Chinese Renminbi | 7.74 | 7.34 | 7.45 | 7.30 |
| Russian Ruble | 67.59 | 64.49 | 62.78 | 78.31 |
| Korean Won | 1,304.68 | 1,274.34 | 1,235.74 | 1,319.14 |
For further information regarding foreign currency translation, please refer to note 3 of the Group Financial Statements of BMWAG for the year ended 31 December 2016. see note 3
Compared to the comments provided in the Group Financial Statements of BMWAG at 31 December 2016, the following additional information can now be provided with respect to the impact of IFRS 9:
In conjunction with the implementation of the new impairment model in the Financial Services segment, simulations have been run for subsidiaries and additional validations performed for the data delivery process. Based on the results of these simulations and validations, no material change is expected overall to the value adjustments on receivables from sales financing.
In future, all costs in conjunction with hedge accounting will be reported as part of the profit before financial result. As the cost of options to hedge foreign currency exposures is currently reported in the financial result, this will result in a shift between the items "Financial result" and "Profit before financial result". The scale of the shift will depend mainly on the future volume of option contracts. The volume of the option portfolio at 31 December 2017 is not expected to be material.
Regarding IFRS 15, compared to the comments provided in the Group Financial Statements of BMWAG at 31 December 2016, the following has been added:
Assessment of the impact within the Automotive segment of repurchase agreements with the Financial Services segment has yet to be concluded.
Regarding IFRS 16, compared to the comments provided in the Group Financial Statements of BMWAG at 31 December 2016, it has now been decided to apply the available exemptions to recognition of short-term leases and low value leasing assets. In addition, the grandfather clause available for existing leases will be applied.
For further details, please see the comments in the Group Financial Statements for the year ended 31 December 2016.
Revenues
Revenues by activity comprise the following:
| in € million | 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|---|---|---|---|---|
| Sales of products and related goods | 18,827 | 18,586 | 35,308 | 33,457 |
| Sales of products previously leased to customers | 2,690 | 2,440 | 5,403 | 4,481 |
| Income from lease instalments | 2,475 | 2,355 | 4,967 | 4,690 |
| Interest income on loan financing | 939 | 844 | 1,876 | 1,679 |
| Other income | 868 | 789 | 1,693 | 1,560 |
| Revenues | 25,799 | 25,014 | 49,247 | 45,867 |
An analysis of revenues by business segment is shown in the segment information in note 34.
see note 34
Cost of sales relate to the following items:
| in € million | 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|---|---|---|---|---|
| Manufacturing costs | 11,394 | 11,361 | 21,347 | 20,139 |
| Cost of sales relating to financial services business | 5,847 | 5,238 | 11,758 | 10,150 |
| Research and development expenses | 1,113 | 1,041 | 2,298 | 2,026 |
| thereof amortisation of capitalised development costs | 287 | 308 | 591 | 612 |
| Other cost of sales | 1,913 | 2,317 | 3,501 | 4,015 |
| Cost of sales | 20,267 | 19,957 | 38,904 | 36,330 |
Other cost of sales comprises mainly warranty expenses, service contracts, telemetrics and roadside assistance.
56
Interim Group Financial Statements
Notes to the Group Financial Statements Notes to the Income
Statement
| Selling and administrative expenses | ||||||
|---|---|---|---|---|---|---|
| ------------------------------------- | -- | -- | -- | -- | -- | -- |
| in € million | 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|---|---|---|---|---|
| Selling expenses | 1,524 | 1,500 | 2,928 | 2,827 |
| Administrative expenses | 815 | 787 | 1,589 | 1,448 |
| Selling and administrative expenses | 2,339 | 2,287 | 4,517 | 4,275 |
Selling expenses comprise mainly marketing, advertising and sales personnel costs. Administrative expenses relate mainly to personnel and IT costs.
07
These items mainly include currency gains and losses, gains and losses on the disposal of assets, impairment losses and reversals, as well as income or expense from the reversal of and allocation to provisions, including provisions for legal risks. Income from the reversal of provisions includes amounts arising on the termination of legal disputes.
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, and the associated company THERE Holding B. V., Amsterdam. Information regarding the earnings impact of the sale of 15% of the shares of HERE International B. V., Amsterdam, by THERE Holding B. V., Amsterdam, is provided in note 2.
see note 2
| in € million | 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|---|---|---|---|---|
| Interest and similar income | 46 | 38 | 107 | 73 |
| Interest and similar expenses | – 88 | –141 | –186 | – 259 |
| Net interest result | – 42 | –103 | – 79 | –186 |
| in € million | 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|---|---|---|---|---|
| Result on investments | 14 | 14 | 14 | – 52 |
| Sundry other financial result | 15 | 35 | 60 | 24 |
| Other financial result | 29 | 49 | 74 | – 28 |
Result on investments in the half-year of the previous year included an impairment loss of € 66 million on the investment in SGL Carbon SE, Wiesbaden.
12
Taxes on income comprise the following:
| in € million | 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|---|---|---|---|---|
| Current tax expense | 697 | 335 | 1,141 | 704 |
| Deferred tax expense | 144 | 514 | 556 | 872 |
| Income taxes | 841 | 849 | 1,697 | 1,576 |
The effective tax rate for the six-month period ended 30 June 2017 was 28.0 % (2016: 30.5 %) 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 interim reporting period.
Calculation of earnings per share is based on the following data:
| 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
||
|---|---|---|---|---|---|
| Profit attributable to shareholders of BMW AG | € million | 2,193.9 | 1,941.0 | 4,332.8 | 3,572.3 |
| Profit attributable to common stock | € million | 2,009.4 | 1,778.5 | 3,968.9 | 3,273.7 |
| Profit attributable to preferred stock | € million | 184.5 | 162.5 | 363.9 | 298.6 |
| 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 | 55,114,404 | 54,809,404 | 55,114,404 | 54,809,404 |
| Basic earnings per share of common stock | € | 3.33 | 2.95 | 6.59 | 5.44 |
| Basic earnings per share of preferred stock | € | 3.34 | 2.96 | 6.60 | 5.45 |
In calculating earnings per share of preferred stock, 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
comprehensive income
Other comprehensive income for the period after tax comprises the following:
| in € million | 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|---|---|---|---|---|
| Remeasurement of the net defined benefit liability for pension plans | 452 | – 1,035 | 911 | – 2,088 |
| Deferred taxes | –133 | 336 | – 256 | 667 |
| Items not expected to be reclassified to the income statement in the future | 319 | – 699 | 655 | – 1,421 |
| Available-for-sale securities | 31 | 54 | 33 | 102 |
| thereof gains / losses arising in the period under report | 30 | 65 | 36 | 120 |
| thereof reclassifications to the income statement | 1 | – 11 | – 3 | – 18 |
| Financial instruments used for hedging purposes | 2,043 | – 108 | 1,516 | 2,057 |
| thereof gains / losses arising in the period under report | 2,117 | – 289 | 1,434 | 1,670 |
| thereof reclassifications to the income statement | – 74 | 181 | 82 | 387 |
| Other comprehensive income from equity accounted investments | 26 | 19 | 28 | 73 |
| Deferred taxes | – 634 | 12 | – 484 | – 741 |
| Currency translation foreign operations | – 747 | 44 | – 696 | – 401 |
| Items expected to be reclassified to the income statement in the future | 719 | 21 | 397 | 1,090 |
| Other comprehensive income for the period after tax | 1,038 | – 678 | 1,052 | – 331 |
| 2nd quarter 2017 | 2nd quarter 2016 | |||||
|---|---|---|---|---|---|---|
| in € million | Before tax |
Deferred taxes |
After tax |
Before tax |
Deferred taxes |
After tax |
| Remeasurement of the net defined benefit liability for pension plans | 452 | –133 | 319 | – 1,035 | 336 | – 699 |
| Available-for-sale securities | 31 | – | 31 | 54 | – 12 | 42 |
| Financial instruments used for hedging purposes | 2,043 | – 590 | 1,453 | – 108 | 31 | – 77 |
| Other comprehensive income from equity accounted investments | 26 | – 44 | – 18 | 19 | – 7 | 12 |
| Currency translation foreign operations | – 747 | – | – 747 | 44 | – | 44 |
| Other comprehensive income | 1,805 | – 767 | 1,038 | – 1,026 | 348 | – 678 |
| 1 January to 30 June 2017 | 1 January to 30 June 2016 | |||||
|---|---|---|---|---|---|---|
| in € million | Before tax |
Deferred taxes |
After tax |
Before tax |
Deferred taxes |
After tax |
| Remeasurement of the net defined benefit liability for pension plans | 911 | – 256 | 655 | – 2,088 | 667 | – 1,421 |
| Available-for-sale securities | 33 | – 2 | 31 | 102 | – 26 | 76 |
| Financial instruments used for hedging purposes | 1,516 | – 441 | 1,075 | 2,057 | – 676 | 1,381 |
| Other comprehensive income from equity accounted investments | 28 | – 41 | – 13 | 73 | – 39 | 34 |
| Currency translation foreign operations | – 696 | – | – 696 | – 401 | – | – 401 |
| Other comprehensive income | 1,792 | – 740 | 1,052 | – 257 | – 74 | – 331 |
Other comprehensive income arising from equity accounted investments is reported in the Statement of Changes in Equity within currency translation with a negative amount of € 135 million (2016: – € 84 million) and within financial instruments used for hedging purposes with a positive amount of € 163 million (2016: € 118 million).
60
Interim Group Financial Statements
Balance Sheet
Notes to the Group Financial Statements Notes to the
15 Intangible assets
Intangible assets mainly comprise capitalised development costs on vehicle and engine projects as well as subsidies for tool costs, licences, purchased development projects, software and purchased customer lists.
| in € million | 30. 6. 2017 | 31.12. 2016 |
|---|---|---|
| Capitalised development costs | 7,573 | 7,221 |
| Other intangible assets | 524 | 572 |
| Goodwill | 380 | 364 |
| thereof allocated to the Automotive cash-generating unit |
33 | 33 |
| thereof allocated to the Financial Services cash-generating unit |
347 | 331 |
| Intangible assets | 8,477 | 8,157 |
Other intangible assets include a brand-name right amounting to € 41 million (31 December 2016: € 42 million), which is allocated to the Automotive segment and is not subject to amortisation since its useful life is deemed to be indefinite. The change is entirely due to currency factors.
Intangible assets amounting to € 41 million (31 December 2016: € 42 million) are subject to restrictions on title. Intangible assets developed during the first six months of the year as follows:
| in € million | 2017 | 2016 |
|---|---|---|
| Capitalised development costs | ||
| Investments | 943 | 688 |
| Amortisation | 591 | 612 |
| Other intangible assets | ||
| Investments | 27 | 25 |
| Amortisation | 96 | 88 |
As in the previous year, no impairment losses or reversals of impairment losses were recorded on intangible assets during the period under report.
Property, plant and equipment developed during the first six months of the year as follows:
| in € million | 2017 | 2016 |
|---|---|---|
| Investments | 1,433 | 1,017 |
| Depreciation | 1,662 | 1,681 |
| Disposals | 8 | 8 |
No impairment losses were recognised during the first half-year of 2017.
Purchase commitments for property, plant and equipment totalled € 4,681 million (31 December 2016: € 3,141 million).
17
Leased products developed during the first half of the year as follows:
| in € million | 2017 | 2016 |
|---|---|---|
| Additions | 8,908 | 11,467 |
| Depreciation | 1,701 | 2,050 |
| Disposals | 7,370 | 8,408 |
Investments accounted for using the equity method comprise the joint ventures BMW Brilliance Automotive Ltd., Shenyang, DriveNow GmbH & Co. KG, Munich, DriveNow Verwaltungs GmbH, Munich, and the BMW Group's interest in the associated company THERE Holding B. V., Amsterdam.
Other investments relate to investments in non-consolidated subsidiaries, joints ventures, joint operations and associated companies, participations and non-current marketable securities.
Receivables from sales financing totalling € 79,692 million (31 December 2016: € 78,260 million) include credit financing for retail customers and dealerships, as well as finance leases.
Financial assets comprise:
| in € million | 30. 6. 2017 | 31.12. 2016 |
|---|---|---|
| Marketable securities and investment funds |
5,195 | 5,287 |
| Derivative instruments | 4,341 | 3,922 |
| Credit card receivables | 251 | 287 |
| Loans to third parties | 115 | 129 |
| Other | 184 | 145 |
| Financial assets | 10,086 | 9,770 |
Income tax assets totalling € 1,717 million (31 December 2016: € 1,938 million) include € 356 million (31 December 2016: € 351 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 time.
Other assets comprise:
| in € million | 30. 6. 2017 | 31.12. 2016 |
|---|---|---|
| Prepayments | 1,960 | 1,914 |
| Receivables from companies in which an investment is held |
1,159 | 1,217 |
| Other taxes | 1,035 | 1,135 |
| Expected reimbursement claims | 833 | 779 |
| Collateral receivables | 327 | 387 |
| Receivables from subsidiaries | 325 | 422 |
| Sundry other assets | 781 | 828 |
| Other assets | 6,420 | 6,682 |
Inventories comprise the following:
| in € million | 30. 6. 2017 | 31.12. 2016 |
|---|---|---|
| Finished goods and goods for resale | 10,857 | 9,684 |
| Raw materials and supplies | 1,209 | 1,000 |
| Work in progress, unbilled contracts | 1,067 | 1,157 |
| Inventories | 13,133 | 11,841 |
Interim Group Financial Statements Notes to the Group
Financial Statements
24
The Group Statement of Changes in Equity is shown on pages 50 and 51.
Notes to the Balance Sheet
At 30 June 2017 common stock issued by BMWAG, as at 31 December 2016, amounted to 601,995,196 shares with a par value of € 1. The number of shares of preferred stock at that date was 55,114,404 shares, as at 31 December 2016, each with a par value of € 1. Unlike the common stock, no voting rights are attached to the preferred stock. All of the Company's stock is issued to bearer. Preferred stock bears an additional dividend of € 0.02 per share.
To date, 854,617 shares of preferred stock have been issued to employees. BMWAG is authorised until 14 May 2019 to issue 5 million shares of non-voting preferred stock amounting to nominal € 5.0 million. As a result, 4.2 million authorised shares and Authorised Capital amounting to € 4.2 million remained available for issue at the end of the reporting period. No treasury shares were held at 30 June 2017.
Capital reserves include premiums arising from the issue of shares and were unchanged from 31 December 2016 at € 2,047 million.
Revenue reserves comprise the post-acquisition and non-distributed earnings of consolidated companies. In addition, remeasurements of the net defined benefit liability for pension plans are also presented in revenue reserves.
During the first half of 2017, BMWAG paid the dividend for the financial year 2016 amounting to € 2,107 million for common stock and € 193 million for preferred stock.
Accumulated other equity comprises 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 and the related deferred taxes.
see pages 50 and 51
Pension provisions stood at € 3,164 million (31 December 2016: € 4,587 million). Remeasurement of the net defined benefit liability for pension plans decreased provisions by € 911 million in the first six months of 2017, mainly due to the higher interest rate and the lower inflation rate in Germany. In addition, the pension provision decreased due to a transfer from plan assets for pre-retirement part-time working arrangements to plan assets for pension plans.
Other provisions consist of the following:
| 30. 6. 2017 | 31.12. 2016 |
|---|---|
| 6,116 | 6,527 |
| 2,695 | 2,191 |
| 2,390 | 2,200 |
| 11,201 | 10,918 |
Provisions for obligations for ongoing operational expenses mainly include warranty obligations. Also included are other provisions for expected payments for bonuses, rebates and other price deductions.
Income tax liabilities totalling € 984 million (31 December 2016: € 1,074 million) include € 123 million (31 December 2016: € 33 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 € 147 million (31 December 2016: € 269 million) for taxes payable and € 837 million (31 December 2016: € 805 million) for tax provisions.
Financial liabilities include all obligations of the BMW Group relating to financing activities. Financial liabilities comprise the following:
| in € million | 30. 6. 2017 | 31.12. 2016 |
|---|---|---|
| Bonds | 47,721 | 44,421 |
| Asset backed financing transactions | 14,737 | 16,474 |
| Liabilities to banks | 14,256 | 14,892 |
| Liabilities from customer deposits (banking) | 13,439 | 13,512 |
| Commercial paper | 2,130 | 3,852 |
| Derivative instruments | 1,605 | 3,331 |
| Other | 1,163 | 1,249 |
| Financial liabilities | 95,051 | 97,731 |
29
Other liabilities comprise the following items:
| in € million | 30. 6. 2017 | 31.12. 2016 |
|---|---|---|
| Deferred income | 7,381 | 7,256 |
| Other taxes | 1,040 | 807 |
| Deposits received | 934 | 893 |
| Advance payments from customers | 768 | 977 |
| Payables to other companies in which an investment is held |
745 | 615 |
| Social security | 100 | 92 |
| Payables to subsidiaries | 72 | 99 |
| Sundry | 4,997 | 4,816 |
| Other liabilities | 16,037 | 15,555 |
Sundry other liabilities include mainly bonuses for services already performed as well as sales promo tions, commission payables and credit balances on customers' accounts.
Notes to the Group Financial Statements Other Disclosures
For disclosures relating to contingent liabilities, please see note 36 to the Group Financial Statements of BMWAG for the year ended 31 December 2016, as no significant changes have occurred during the first six months of 2017. note 36
31
A description of the accounting treatment and measurement of derivative financial instruments and allocation of financial instruments to different measurement levels is provided in notes 4 and 37 of the Group Financial Statements of BMWAG for the year ended 31 December 2016. note 4 and 37
Amounts are discounted at 30 June 2017 on the basis of the following interest rates:
| in % | ISO Code | |||||
|---|---|---|---|---|---|---|
| EUR | USD | GBP | JPY | CNY | ||
| Interest rate for six months | – 0.32 | 1.35 | 0.54 | – 0.05 | 4.52 | |
| Interest rate for one year | – 0.23 | 1.43 | 0.55 | 0.03 | 4.43 | |
| Interest rate for five years | 0.27 | 1.92 | 0.99 | 0.11 | 4.43 | |
| Interest rate for ten years | 0.92 | 2.27 | 1.36 | 0.27 | 4.52 |
see
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.
The following table shows the amounts allocated to each measurement level at the end of the reporting period:
| 30. 6. 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Level hierarchy in accordance with IFRS 13 | ||||||||
| in € million | Level 1 | Level 2 | Level 3 | |||||
| Marketable securities, investment funds and collateral assets – available-for-sale | 5,296 | – | – | |||||
| Other investments – available-for-sale / fair value option | 272 | – | – | |||||
| Derivative instruments (assets) | ||||||||
| Interest rate risks | – | 1,809 | – | |||||
| Currency risks | – | 2,301 | – | |||||
| Raw materials price risks | – | 231 | – | |||||
| Derivative instruments (liabilities) | ||||||||
| Interest rate risks | – | 1,022 | – | |||||
| Currency risks | – | 369 | – | |||||
| Raw materials price risks | – | 214 | – |
| 31.12. 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Level hierarchy in accordance with IFRS 13 | ||||||||
| in € million | Level 1 | Level 2 | Level 3 | |||||
| Marketable securities, investment funds and collateral assets – available-for-sale | 5,387 | – | – | |||||
| Other investments – available-for-sale / fair value option | 213 | – | – | |||||
| Derivative instruments (assets) | ||||||||
| Interest rate risks | – | 1,933 | – | |||||
| Currency risks | – | 1,842 | – | |||||
| Raw materials price risks | – | 147 | – | |||||
| Derivative instruments (liabilities) | ||||||||
| Interest rate risks | – | 1,402 | – | |||||
| Currency risks | – | 1,479 | – | |||||
| Raw materials price risks | – | 450 | – | |||||
As in the previous financial year 2016, no reclassifications within the level hierarchy have been performed during the first six months of 2017.
Where a fair value was required for a financial instrument for disclosure purposes only, the discounted cash flow method was used and taking account of the BMW Group's own default risk. For this reason, the fair values calculated can be allocated to Level 2.
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:
| 30. 6. 2017 | 31.12. 2016 | ||||
|---|---|---|---|---|---|
| in € million | Fair value | Carrying amount | Fair value | Carrying amount | |
| Receivables from sales financing | 83,164 | 79,692 | 81,621 | 78,260 | |
| Bonds | 48,494 | 47,721 | 45,140 | 44,421 |
Interim Group Financial Statements Notes to the Group
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. Financial Statements Other Disclosures
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 | |||||
|---|---|---|---|---|---|
| in € million | 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|
| BMW Brilliance Automotive Ltd. | 1,454 | 1,327 | 2,769 | 2,414 | |
| Supplies and services received | |||||
| in € million | 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
|
| BMW Brilliance Automotive Ltd. | 18 | 14 | 32 | 22 | |
| Receivables | Payables | ||||
| in € million | 30. 6. 2017 | 31.12. 2016 | 30. 6. 2017 | 31.12. 2016 | |
| BMW Brilliance Automotive Ltd. | 1,158 | 1,215 | 745 | 615 |
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 BMW AG. 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 half-year. 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 BMW AG 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 BMW i customers. SOLARWATT GmbH, Dresden, leased vehicles from the BMW Group during the first six months of 2017.
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 half-year of 2017, mostly 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 2017, the BMW Group bought in services from UnternehmerTUM GmbH, Garching, primarily in the form of consultancy and workshop services.
Seen from the perspective of BMW Group entities, the volume of transactions with the above-mentioned entities was as follows:
| in € thousand | Supplies and services performed | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
||||||||
| DELTON AG | 861 | 846 | 1,717 | 1,699 | |||||||
| SOLARWATT GmbH | 63 | 65 | 154 | 140 | |||||||
| ALTANA AG | 507 | 520 | 1,022 | 1,048 | |||||||
| UnternehmerTUM GmbH | 32 | 29 | 32 | 29 |
| in € thousand | Supplies and services received | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2nd quarter 2017 | 2nd quarter 2016 | 1 January to 30 June 2017 |
1 January to 30 June 2016 |
||||||||
| DELTON AG | 6,952 | 6,051 | 17,358 | 11,710 | |||||||
| SOLARWATT GmbH | – | – | – | – | |||||||
| ALTANA AG | – | – | – | – | |||||||
| UnternehmerTUM GmbH | 414 | 130 | 582 | 292 |
| Receivables | Payables | |||
|---|---|---|---|---|
| in € thousand | 30. 6. 2017 | 31.12. 2016 | 30. 6. 2017 | 31.12. 2016 |
| DELTON AG | 37 | 64 | 2,643 | 1,331 |
| SOLARWATT GmbH | 6 | 1 | – | – |
| ALTANA AG | 201 | 337 | – | 50 |
| UnternehmerTUM GmbH | – | – | 305 | 585 |
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 assets on a trustee basis for performance of pension obligations and manages the accrued entitlement relating to pre-retirement part-time 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 earnings performance, financial position or net assets of the BMW Group.
68
Interim Group Financial Statements Notes to the Group
Financial Statements Segment Information
For information on the basis used for identifying and managing reportable segments, please refer to the Group Financial Statements of BMWAG for the year ended 31 December 2016.
Due to the management system, reported segment results and asset values are based on different per-
formance measures. Details can be found in note 44 of the Group Financial Statements of BMWAG at 31 December 2016. No changes have been made either in the valuation methods applied or in the basis used for identifying reportable segments as compared to 31 December 2016. see note 44
Segment information by operating segment for the second quarter is as follows:
| Automotive | Motorcycles | Financial Services | ||||
|---|---|---|---|---|---|---|
| in € million | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
| Segment information by operating segment |
||||||
| External revenues | 18,469 | 18,290 | 693 | 615 | 6,636 | 6,108 |
| Inter-segment revenues | 4,507 | 4,582 | 3 | 2 | 408 | 397 |
| Total revenues | 22,976 | 22,872 | 696 | 617 | 7,044 | 6,505 |
| Segment result | 2,238 | 2,178 | 104 | 98 | 589 | 503 |
| Result from equity accounted investments | 139 | 127 | – | – | – | – |
| Capital expenditure on non-current assets | 1,333 | 1,013 | 27 | 19 | 6,030 | 9,448 |
| Depreciation and amortisation on non-current assets | 1,129 | 1,170 | 21 | 17 | 2,462 | 2,355 |
Segment information by operating segment for the first half of the year is as follows:
| Automotive | Motorcycles | Financial Services | ||||
|---|---|---|---|---|---|---|
| in € million | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
| Segment information by operating segment |
||||||
| External revenues | 34,648 | 32,897 | 1,314 | 1,195 | 13,284 | 11,774 |
| Inter-segment revenues | 9,020 | 8,789 | 5 | 4 | 806 | 763 |
| Total revenues | 43,668 | 41,686 | 1,319 | 1,199 | 14,090 | 12,537 |
| Segment result | 4,109 | 3,941 | 229 | 192 | 1,184 | 1,073 |
| Result from equity accounted investments | 490 | 198 | – | – | – | – |
| Capital expenditure on non-current assets | 2,363 | 1,705 | 36 | 24 | 12,064 | 14,207 |
| Depreciation and amortisation on non-current assets | 2,290 | 2,332 | 41 | 35 | 4,784 | 4,704 |
| Automotive Motorcycles Financial Services |
|||||||
|---|---|---|---|---|---|---|---|
| in € million | 30. 6. 2017 | 31.12. 2016 | 30. 6. 2017 | 31.12. 2016 | 30. 6. 2017 | 31.12. 2016 | |
| Segment assets | 9,741 | 9,411 | 595 | 600 | 11,088 | 11,049 | |
| Investments accounted for using the equity method | 3,020 | 2,546 | – | – | – | – |
| Group | Reconciliation to Group figures | Other Entities | ||||
|---|---|---|---|---|---|---|
| 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | |
| Segment information by operating segment |
||||||
| External revenues | 25,014 | 25,799 | – | – | 1 | 1 |
| Inter-segment revenues | – | – | – 4,982 | – 4,918 | 1 | – |
| Total revenues | 25,014 | 25,799 | – 4,982 | – 4,918 | 2 | 1 |
| Segment result | 2,798 | 3,055 | – 27 | 101 | 46 | 23 |
| Result from equity accounted investments | 127 | 139 | – | – | – | – |
| Capital expenditure on non-current assets | 8,959 | 5,746 | –1,521 | –1,644 | – | – |
| Depreciation and amortisation on non-current assets | 2,169 | 2,086 | –1,373 | –1,526 | – | – |
| Group | Reconciliation to Group figures | Other Entities | ||||
|---|---|---|---|---|---|---|
| 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | |
| Segment information by operating segment |
||||||
| External revenues | 45,867 | 49,247 | – | – | 1 | 1 |
| Inter-segment revenues | – | – | – 9,558 | – 9,833 | 2 | 2 |
| Total revenues | 45,867 | 49,247 | – 9,558 | – 9,833 | 3 | 3 |
| Segment result | 5,166 | 6,060 | – 84 | 519 | 44 | 19 |
| Result from equity accounted investments | 198 | 490 | – | – | – | – |
| Capital expenditure on non-current assets | 13,197 | 11,311 | – 2,739 | – 3,152 | – | – |
| Depreciation and amortisation on non-current assets | 4,431 | 4,050 | – 2,640 | – 3,065 | – | – |
| Group | Reconciliation to Group figures | Other Entities | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 31.12. 2016 | 30. 6. 2017 | 31.12. 2016 | 30. 6. 2017 | 31.12. 2016 | 30. 6. 2017 | |||||
| Segment assets | 188,535 | 188,592 | 92,112 | 91,346 | 75,363 | 75,822 | ||||
| Investments accounted for using the equity method | 2,546 | 3,020 | – | – | – | – |
Segment Information
Segment figures for the second quarter can be reconciled to the corresponding Group figures as follows:
| in € million | 2017 | 2016 |
|---|---|---|
| Reconciliation of segment result | ||
| Total for reportable segments | 2,954 | 2,825 |
| Financial result of Automotive segment and Motorcycles segment | 146 | 98 |
| Elimination of inter-segment items | – 45 | – 125 |
| Group profit before tax | 3,055 | 2,798 |
| Reconciliation of capital expenditure on non-current assets | ||
| Total for reportable segments | 7,390 | 10,480 |
| Elimination of inter-segment items | –1,644 | – 1,521 |
| Total Group capital expenditure on non-current assets | 5,746 | 8,959 |
| Reconciliation of depreciation and amortisation on non-current assets | ||
| Total for reportable segments | 3,612 | 3,542 |
| Elimination of inter-segment items | –1,526 | – 1,373 |
| Total Group depreciation and amortisation on non-current assets | 2,086 | 2,169 |
Segment figures for the first half of the year can be reconciled to the corresponding Group figures as follows:
| in € million | 2017 | 2016 |
|---|---|---|
| Reconciliation of segment result | ||
| Total for reportable segments | 5,541 | 5,250 |
| Financial result of Automotive segment and Motorcycles segment | 554 | 69 |
| Elimination of inter-segment items | – 35 | – 153 |
| Group profit before tax | 6,060 | 5,166 |
| Reconciliation of capital expenditure on non-current assets | ||
| Total for reportable segments | 14,463 | 15,936 |
| Elimination of inter-segment items | – 3,152 | – 2,739 |
| Total Group capital expenditure on non-current assets | 11,311 | 13,197 |
| Reconciliation of depreciation and amortisation on non-current assets | ||
| Total for reportable segments | 7,115 | 7,071 |
| Elimination of inter-segment items | – 3,065 | – 2,640 |
| Total Group depreciation and amortisation on non-current assets | 4,050 | 4,431 |
| in € million | 30. 6. 2017 | 31.12. 2016 |
|---|---|---|
| Reconciliation of segment assets | ||
| Total for reportable segments | 97,246 | 96,423 |
| Non-operating assets – Other Entities segment | 7,610 | 7,432 |
| Total liabilities – Financial Services segment | 125,472 | 126,679 |
| Non-operating assets – Automotive and Motorcycles segments | 46,642 | 45,923 |
| Liabilities of Automotive and Motorcycles segments not subject to interest | 34,575 | 33,858 |
| Elimination of inter-segment items | –122,953 | –121,780 |
| Total Group assets | 188,592 | 188,535 |
Munich, 25 July 2017
Bayerische Motoren Werke Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Markus Duesmann
Klaus Fröhlich Dr. Nicolas Peter
Dr. Ian Robertson (HonDSc) Peter Schwarzenbauer
Oliver Zipse
Interim Group Financial Statements Responsibility Statement by the Company's Legal Representatives Review Report
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, 25 July 2017
Bayerische Motoren Werke Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Markus Duesmann
Klaus Fröhlich Dr. Nicolas Peter
Dr. Ian Robertson (HonDSc) Peter Schwarzenbauer
Oliver Zipse
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 2017, that are part of the semi-annual financial report according to § 37 w WpHG ("Wertpapierhandelsgesetz": "German Securities Trading Act"). The preparation of the condensed interim consolidated financial statements in accordance with those IFRS applicable to 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 the IFRS applicable to 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 those IFRS applicable to 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, 31 July 2017
KPMG AG Wirtschaftsprüfungsgesellschaft
Sailer Feege
Wirtschaftsprüfer Wirtschaftsprüfer
Page 75 Financial Calendar
Page 76 Contacts
7 November 2017 Quarterly Report to 30 September 2017
21 March 2018 Annual Report 2017
21 March 2018 Annual Accounts Press Conference
22 March 2018 Analyst and Investor Conference
4 May 2018 Quarterly Report to 31 March 2018
17 May 2018 Annual General Meeting
2 August 2018 Quarterly Report to 30 June 2018
7 November 2018 Quarterly Report to 30 September 2018 Other Information
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 .
Bayerische Motoren Werke Aktiengesellschaft 80788 Munich Germany Telephone +49 89 382-0
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