Quarterly Report • May 4, 2017
Quarterly Report
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Page 36 Income Statement
Page 62 Financial Calendar
Page 63 Contacts
1
• 01
| 1st quarter 2017 | 1st quarter 2016 | Change in % | ||
|---|---|---|---|---|
| Group | ||||
| Profit before tax | € million | 3,005 | 2,368 | 26.9 |
| Workforce1 (at 31 March 2017/31 December 2016) |
126,317 | 124,729 | 1.3 | |
| Automotive segment | ||||
| Sales volume2 | units | 587,237 | 557,605 | 5.3 |
| Revenues | € million | 20,692 | 18,814 | 10.0 |
| EBIT margin3 | % (change in %pts) | 9.0 | 9.4 | – 0.4 |
| Motorcycles segment | ||||
| Sales volume | units | 35,636 | 33,788 | 5.5 |
| EBIT margin3 | % (change in %pts) | 20.1 | 16.2 | 3.9 |
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: 90,172 units, 2016: 81,900 units).
3 Profit before financial result as percentage of segment revenues.
• 02
| 1st quarter 2017 | 1st quarter 2016 | Change in % | ||
|---|---|---|---|---|
| Automotive segment | ||||
| Sales volume | ||||
| BMW1 | units | 503,445 | 478,743 | 5.2 |
| MINI | units | 83,059 | 78,311 | 6.1 |
| Rolls-Royce | units | 733 | 551 | 33.0 |
| Total1 | 587,237 | 557,605 | 5.3 | |
| Production volume | ||||
| BMW2 | units | 549,175 | 490,549 | 12.0 |
| MINI | units | 97,899 | 89,057 | 9.9 |
| Rolls-Royce | units | 855 | 701 | 22.0 |
| Total2 | 647,929 | 580,307 | 11.7 | |
| Motorcycles segment | ||||
| Production volume | units | 54,466 | 40,280 | 35.2 |
| Financial Services segment | ||||
| New contracts with retail customers | 465,634 | 413,372 | 12.6 | |
| Operating cash flow Automotive segment | € million | 2,626 | 1,219 | – |
| Revenues | € million | 23,448 | 20,853 | 12.4 |
| Automotive | € million | 20,692 | 18,814 | 10.0 |
| Motorcycles | € million | 623 | 582 | 7.0 |
| Financial Services | € million | 7,046 | 6,032 | 16.8 |
| Other Entities | € million | 2 | 1 | – |
| Eliminations | € million | – 4,915 | – 4,576 | – 7.4 |
| Profit before financial result (EBIT) | € million | 2,646 | 2,457 | 7.7 |
| Automotive | € million | 1,871 | 1,763 | 6.1 |
| Motorcycles | € million | 125 | 94 | 33.0 |
| Financial Services | € million | 604 | 591 | 2.2 |
| Other Entities | € million | 4 | 11 | – 63.6 |
| Eliminations | € million | 42 | – 2 | – |
| Profit before tax | € million | 3,005 | 2,368 | 26.9 |
| Automotive | € million | 2,279 | 1,734 | 31.4 |
| Motorcycles | € million | 125 | 94 | 33.0 |
| Financial Services | € million | 595 | 570 | 4.4 |
| Other Entities | € million | – 4 | – 2 | – |
| Eliminations | € million | 10 | – 28 | – |
| Income taxes | € million | – 856 | – 727 | –17.7 |
| Net profit | € million | 2,149 | 1,641 | 31.0 |
| Earnings per share3 | € | 3.26 / 3.26 | 2.48 / 2.48 | 31.5 / 31.5 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 90,172 units, 2016: 81,900 units).
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 98,715 units, 2016: 57,111 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
The BMW Group recorded a new first-quarter all-time high for automobile sales in the first three months of 2017, with 587,237* BMW, MINI and Rolls-Royce brand vehicles sold worldwide (2016: 557,605* units; +5.3%).
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 90,172 units, 2016: 81,900 units).
The Motorcycles segment also achieved its best-ever first-quarter sales figure, despite difficult market conditions. Worldwide, motorcycles sales rose by a solid 5.5% to 35,636 units (2016: 33,788 units).
During the first quarter of 2017, the Financial Services segment continued its successful performance of the past year, concluding a total of 465,634 new lease and credit financing contracts with retail customers (2016: 413,372 contracts; + 12.6%).
First-quarter Group revenues grew significantly by 12.4 % to € 23,448 million (2016: € 20,853 million), mainly driven by the sales volume increase.
At € 2,646 million, Group EBIT was 7.7% up on the previous year (2016: € 2,457 million).
Higher expenses and investment for research and development, personnel and IT had an adverse effect on the development. However, pre-tax profit increased by more than a quarter to € 3,005 million (2016 : € 2 ,368 million; + 26 . 9%).
The improvement was mainly driven by valuation effects in the result from equity accounted investments and in other financial result. Further information is provided in the "Automotive segment" section.
The BMW Group employed a workforce of 126 ,317 worldwide at the end of the first quarter 2017 (31 December 2016: 124,729; + 1.3%). The company's need for skilled workers and IT specialists in future-ori ented areas, such as digitalisation and autonomous driving, remains high.
Best first quarter to date for automobile and motorcycles sales volumes
For the first time, over 500,000 BMW brand vehicles delivered in a first quarter
+26.9 %
Profit before tax driven by positive valuation effects in financial result
The pace of growth on international automobile markets slowed down somewhat at the beginning of the year, with registrations rising by only 1.7% overall. The slight increase recorded in the first quarter was largely due to positive developments in Europe and Japan. By contrast, new registrations in the USA, China and a number of emerging economies were down.
The positive trend in Europe continued with a further 8.1% increase in registrations during the first three months of 2017. Almost all of the region's automobile markets recorded growth. Germany (+ 6.7%), France (+5.1%) and the UK (+6.2%) reported a robust increase in demand. Particularly significant was the increase in Italy (+ 11.6%) and Spain (+ 7.9%) during the first quarter.
After six years of strong expansion, the US market has seen a phase of consolidation since 2016, which continued at the beginning of 2017 and is reflected in a 1.5% drop in registrations.
The automobile market in China saw a slow start to the year, with new registrations broadly in line with the previous year (– 0.3%).
Despite sluggish economic growth, new registrations in Japan grew at a robust pace (+7.3%) during the first three months of 2017.
New registrations in Brazil and Russia continued to fall, albeit at a slightly slower rate than in previous years. The Brazilian automobile market contracted year-on-year (– 2.8%). The downward trend in Russia slowed significantly (– 0.9%).
Interim Group Management Report Report on Economic Position
General Economic Environment Automotive Segment
Motorcycle markets in the 250 cc plus class were generally slower at the beginning of the year, reflected in a 3.3% drop in motorcycle registrations worldwide. The European market was on a par with the previous year (+ 0.3%). The German market, however, decreased by 1.2%. Other major motorcycle markets in Europe also fell short of the previous year's mark. Italy saw only a slight decrease (– 0.5%), while the Spanish market contracted by 3.9%. The only major market in Europe with an increase was France, where registrations rose by 5.4% in the first quarter. Following a weak previous year, the US market saw a further decrease in motorcycle sales (– 5.2%).
The European Central Bank (ECB) continued its expansionary policies, despite improving growth rates, positive signals from the job market and a sharp rise in inflation during the first quarter.
The picture for the UK economy was somewhat mixed during this period. While growth figures remained stable and unemployment low, the rate of inflation rose strongly due to the ongoing weakness of the British pound. The Bank of England adopted a cautious approach and continued to pursue a policy of monetary expansion.
In the USA, the Federal Reserve decided to raise its benchmark interest rate by 25 basis points on the back of strong job market data, stable economic growth and an inflation rate close to the target level of 2% in March.
China's economy benefited from substantial investment in infrastructure during the first quarter and therefore started the year on a more dynamic footing. However, high debt ratios and the risk of greater trade barriers with the USA dampened market sentiment. The Chinese central bank undertook measures to counteract capital flight and further currency devaluation by raising short-term money market rates and implementing currency measures.
Boosted by a strong export performance, the Japanese economy remained on course for recovery at the beginning of the year. The Japanese central bank nevertheless continued its expansionary monetary policy.
Selling prices of premium segment pre-owned vehicles on international markets developed in line with expectations during the first quarter of 2017. Prices of pre-owned vehicles fell slightly in Europe due to seasonal factors, but remained stable in Asia. In North America, the slight downward trend recorded during the previous year continued into the first quarter of 2017.
The BMW Group sold 587,237 1 BMW, MINI and Rolls-Royce brand vehicles during the first quarter (2016: 557,605 1 units; + 5.3 %), registering a new first-quarter sales volume record for the seventh year in succession. The performance was driven by all brands. BMW exceeded the 500,000-unit threshold for the first time in a first quarter (503,445 1 units; 2016: 478,743 1 units; +5.2%). MINI delivered 83,059 vehicles
to customers worldwide (2016: 78,311 units; + 6.1%). Rolls-Royce Motor Cars increased sales by approximately one third to 733 units (2016: 551 units; +33.0%).
First-quarter sales of BMW, MINI and Rolls-Royce brand vehicles in Asia grew by a solid 9.2 % to 200,140 1 units (2016: 183,204 1 units). Sales volume growth in China was particularly dynamic, with deliveries up by 12.4% year-on-year (142,958 1 units; 2016: 127,167 1 units).
| in units | 1st quarter 2017 | 1st quarter 2016 | Change in % |
|---|---|---|---|
| Europe | 267,996 | 257,120 | 4.2 |
| thereof Germany | 67,432 | 66,649 | 1.2 |
| thereof UK | 63,004 | 59,169 | 6.5 |
| Americas | 102,238 | 100,245 | 2.0 |
| thereof USA | 82,169 | 81,601 | 0.7 |
| Asia1 | 200,140 | 183,204 | 9.2 |
| thereof China1 | 142,958 | 127,167 | 12.4 |
| Other markets | 16,863 | 17,036 | –1.0 |
| Total1 | 587,237 | 557,605 | 5.3 |
The BMW Group sold a total of 267,996 automobiles (2016: 257,120 units; + 4.2%) in Europe during the first three months of 2017. The number of vehicles sold in Germany was slightly higher than one year earlier at 67,432 units (2016: 66,649 units; + 1.2 %). Despite the uncertainty caused by Brexit, sales of the Group's three brands in the UK rose by a solid 6.5% to 63,004 units (2016: 59,169 units).
On the American continent, the BMW Group sold 102,238 BMW, MINI and Rolls-Royce brand vehicles during the first three months (2016: 100,245 units; + 2.0%). In the USA, sales volumes were at the level of the previous year with 82,169 units sold (2016: 81,601 units; + 0.7%).
| 1st quarter 2017 | 1st quarter 2016 | Change in % | ||
|---|---|---|---|---|
| Sales volume1, 2 | units | 587,237 | 557,605 | 5.3 |
| Production3 | units | 647,929 | 580,307 | 11.7 |
| Revenues2 | € million | 20,692 | 18,814 | 10.0 |
| Profit before financial result (EBIT) | € million | 1,871 | 1,763 | 6.1 |
| Profit before tax | € million | 2,279 | 1,734 | 31.4 |
| EBIT margin2 | % (change in %pts) | 9.0 | 9.4 | – 0.4 |
| Workforce (at 31 March 2017/31 December 2016) | 114,265 | 112,869 | 1.2 |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 90,172 units, 2016: 81,900 units).
2 Key performance indicators reported on during the year.
3 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 98,715 units, 2016: 57,111 units).
With 503,445 vehicles sold, BMW exceeded the 500,000-delivery mark for the first time in a first quarter (2016: 478,743 units; + 5.2%). This was mainly driven by sales of BMW X family models as well as the new BMW 5 and 7 Series Sedans. Diesel vehicles also saw favourable demand.
At 42,036 units, sales volumes for the BMW 1 Series from January to March 2017 were on a par with the previous year (2016: 41,859 units; + 0.4 %). Sales of the 2 Series fell slightly to 42,817 units (2016: 43,657 units; – 1.9 %). Customers took delivery of a total of 100,265 units of the BMW 3 Series (2016: 103,225 units; – 2.9%). The new BMW 5 Series Sedan has been available since mid-February 2017 and had already recorded sales volume of 16,745 units by the
end of the reporting period. Overall, first-quarter sales of the 5 Series were 1.6% up on the previous year at 83,459 units (2016: 82,171 units). The follow-up model to the highly successful 5 Series extended-wheelbase version will become available in China in June 2017. The BMW 7 Series proved extremely popular, exceeding the previous year's first-quarter figures by around one half (15,898 units; 2016: 10,588 units; + 50.2%).
Demand for BMW X vehicles grew significantly, with deliveries up 14.3% in the first three months of 2017 to 176,836 units (2016: 154,746 units). Sales of the BMW X1 increased by more than a quarter to 66,063 units (2016: 51,002 units; +29.5%) during the same period. The BMW X3 recorded solid growth (41,742 units; 2016: 38,719 units; +7.8%), while the X5 saw a significant rise in sales volume to 45,892 units, exceeding the previous year's high figure (2016: 39,007 units; + 17.7%).
| in units | 1st quarter 2017 | 1st quarter 2016 | Change in % |
|---|---|---|---|
| BMW 1 Series | 42,036 | 41,859 | 0.4 |
| BMW 2 Series | 42,817 | 43,657 | –1.9 |
| BMW 3 Series | 100,265 | 103,225 | – 2.9 |
| BMW 4 Series | 30,745 | 32,729 | – 6.1 |
| BMW 5 Series | 83,459 | 82,171 | 1.6 |
| BMW 6 Series | 2,522 | 3,292 | – 23.4 |
| BMW 7 Series | 15,898 | 10,588 | 50.2 |
| BMW X1 | 66,063 | 51,002 | 29.5 |
| BMW X3 | 41,742 | 38,719 | 7.8 |
| BMW X4 | 12,960 | 14,975 | –13.5 |
| BMW X5 | 45,892 | 39,007 | 17.7 |
| BMW X6 | 10,179 | 11,043 | – 7.8 |
| BMW Z4 | 769 | 1,348 | – 43.0 |
| BMW i | 8,098 | 5,128 | 57.9 |
| BMW total | 503,445 | 478,743 | 5.2 |
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 90,172 units, 2016: 81,900 units).
Sales of 83,059 vehicles during the period from January to March 2017 also represented a new first-quarter sales volume record for the MINI brand (2016: 78,311 units; +6.1%). With 47,530 units sold, the MINI 3- and 5-door models matched their previous year's performance
(2016: 47,396 units; +0.3%). The new MINI Clubman saw significant sales volume growth to 14,830 units (2016: 12,173 units; +21.8%). First-quarter sales of the new MINI Convertible tripled to 7,705 units (2016: 2,553 units).
• 10
| in units | 1st quarter 2017 | 1st quarter 2016 | Change in % |
|---|---|---|---|
| MINI Hatch (3- and 5-door) | 47,530 | 47,396 | 0.3 |
| MINI Convertible | 7,705 | 2,553 | – |
| MINI Clubman | 14,830 | 12,173 | 21.8 |
| MINI Countryman / Paceman | 12,994 | 16,189 | –19.7 |
| MINI total | 83,059 | 78,311 | 6.1 |
Rolls-Royce Motor Cars delivered 733 vehicles to customers during the period under report (2016: 551 units; + 33.0%). First-quarter sales of the Rolls-Royce Ghost
rose to 243 units (2016: 206 units; + 18.0%). Sales of the Rolls-Royce Wraith and Dawn models in the threemonth period grew by more than one half (434 units; 2016: 286 units; + 51.7%).
| in units | 1st quarter 2017 | 1st quarter 2016 | Change in % |
|---|---|---|---|
| Phantom | 56 | 59 | – 5.1 |
| Ghost | 243 | 206 | 18.0 |
| Wraith /Dawn | 434 | 286 | 51.7 |
| Rolls-Royce total | 733 | 551 | 33.0 |
BMWi and iPerformance models are making a clear contribution to brand success. Sales of electrified vehicles doubled in the first three months of 2017 (19,400 units; 2016: 9,648 units; + 101.1%). The BMWi3
was also in high demand in the first quarter, with deliveries increasing by over two-thirds to 7,431 units (2016: 4,441 units; +67.3%). A significant proportion of electrified vehicle sales (11,302 units) related to BMW plug-in hybrid models sold under the "iPerformance" brand name (2016: 4,520 units).
| in units | 1st quarter 2017 | 1st quarter 2016 | Change in % |
|---|---|---|---|
| BMW i | 8,098 | 5,128 | 57.9 |
| BMW iPerformance | 11,302 | 4,520 | – |
| Total | 19,400 | 9,648 | 101.1 |
Interim Group Management Report Report on Economic Position
Automotive Segment Motorcycles Segment
Strong demand and the introduction of new models resulted in a significant increase in production volume in the first quarter of 2017. In total, 647,929* BMW, MINI and Rolls-Royce brand vehicles rolled off assembly lines of the BMW Group production network during the reporting period (2016: 580,307* units; + 11.7%), comprising 549,175* BMW (2016: 490,549* units; + 12.0 %), 97,899 MINI (2016: 89,057 units; + 9.9%) and 855 Rolls-Royce vehicles (2016: 701 units; + 22.0%).
Automotive segment revenues for the period from January to March 2017 increased significantly, surpassing the € 20 billion mark for the first time in an initial three-month period (€ 20,692 million; 2016: € 18,814 million; + 10.0%). The positive development was mainly driven by the increase in sales volume.
Despite a challenging competitive environment and higher costs and investment in research and development, personnel and IT, EBIT rose by € 108 million to € 1,871 million (2016: € 1,763 million; + 6.1%). At 9.0%, the EBIT margin was within the target range of between 8 and 10% (2016: 9.4%; – 0.4 percentage points).
First-quarter segment profit before tax increased by 31.4 % to € 2,279 million (2016: € 1,734 million). This was mainly due to the significantly improved result from equity accounted investments. This includes a positive valuation effect of € 183 million in conjunction with the participation of new investors in the HERE mapping service. Further disclosures relating to the transaction are provided in note 2. In addition, the earnings contribution for the period from the joint venture BMW Brilliance Automotive Ltd., Shenyang, was higher than in the previous year. Moreover, other financial result reported by the segment improved by € 100 million.
see note 2
At 31 March 2017, the BMW Group employed a workforce of 114,265 in the Automotive segment (31 December 2016: 112,869 employees), an increase of 1.2%.
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 98,715 units, 2016: 57,111 units).
BMW Motorrad also had a successful start to the year. The segment sold 35,636 motorcycles worldwide during the three-month period under report, achieving a record first-quarter sales volume performance for the sixth year in succession (2016: 33,788 units; +5.5%). In Europe, sales rose significantly by 10.3% to 22,991 units (2016: 20,849 units), despite difficult market conditions. Sales in Germany grew by 2.8% to 5,824 units (2016: 5,668 units). Business also developed positively in Italy, where BMW Motorrad recorded first-quarter sales of 3,463 units (2016: 3,125 units; + 10.8%). First-quarter sales in France improved significantly by 14.4% to 3,696 units (2016: 3,230 units). By contrast, sales volume in the USA dropped moderately to 2,866 units (2016: 3,022 unit; –5.2%).
A total of 54,466 motorcycles rolled off the production lines during the first three months of 2017, 35.2% more than one year earlier (2016: 40,280 units). This significant year-on-year increase was mainly due to initial supply of the latest models to the dealership organisation.
In the first quarter, the Motorcycles segment benefited from sales volume growth and the trend towards higher-value models. The sale of optional equipment also made a significant contribution to earnings. Segment revenues rose by 7.0 % to € 623 million (2016: € 582 million). Both EBIT and profit before tax improved by approximately one third to € 125 million (2016: both € 94 million; + 33.0%). The EBIT margin for the Motorcycles segment came in at 20.1% (2016: 16.2%; + 3.9 percentage points).
The BMW Group employed 3,424 people in the Motorcycles segment at 31 March 2017 (31 December 2016: 3,351 employees; + 2.2%).
| 1st quarter 2017 | 1st quarter 2016 | Change in % | ||
|---|---|---|---|---|
| Sales volume* | units | 35,636 | 33,788 | 5.5 |
| Production | units | 54,466 | 40,280 | 35.2 |
| Revenues | € million | 623 | 582 | 7.0 |
| Profit before financial result (EBIT) | € million | 125 | 94 | 33.0 |
| Profit before tax | € million | 125 | 94 | 33.0 |
| EBIT margin* | % (change in %pts) | 20.1 | 16.2 | 3.9 |
| Workforce (at 31 March 2017/31 December 2016) | 3,424 | 3,351 | 2.2 |
*Key performance indicators reported on during the year.
Interim Group Management Report
Report on Economic Position General Economic Environment
Financial Services Segment
In the first quarter of 2017, the Financial Services segment continued the successful performance of the previous financial year. The segment's contract portfolio under management grew by 2.0% during the three-month period under report and stood at 5,214,729 contracts at 31 March 2017 (31 December 2016: 5,114,906 contracts). In balance sheet terms, business volume rose slightly to € 125,735 million (31 December 2016: € 123,394 million; + 1.9%).
Credit financing and leasing business with retail customers is the Financial Services segment's main line of business, with 465,634 new contracts signed during the three-month period under report. Compared to the previous year's first quarter, this performance represented a significant increase of 12.6 % (2016: 413,372 contracts).
While the number of new leasing contracts remained at the level of the previous year (+0.1%), the number of new credit financing contracts grew by 19.3%. Overall, leasing accounted for 30.8% and credit financing for 69.2% of new business in the period under report.
The number of new credit financing and leasing contracts for pre-owned BMW and MINI brand vehicles also rose significantly, with 102,151 contracts signed during the three-month period (2016: 85,692 contracts; + 19.2%).
The volume of new business concluded in the period from January to March 2017 for all credit financing and leasing contacts with retail customers totalled € 14,521 million. This represents a significant increase on the previous year's first quarter (2016: € 12,460 million; + 16.5%).
In total, 4,792,708 contracts were in place with retail customers at the end of the reporting period (31 December 2016: 4,703,417 contracts; + 1.9%). The Asia / Pacific region continued to see solid growth, with a 6.1% increase in the contract portfolio compared to 31 December 2016. The Europe / Middle East / Africa region (+ 2.1%) and the EU Bank 1 region (+ 1.2%) also recorded growth. The portfolio of contracts with retail customers in the Americas region was broadly in line with the previous financial year (– 0.1%).
In the first quarter of 2017, 49.2 % 2 of new BMW Group vehicles were either leased or financed by the Financial Services segment (2016: 46.1 % 2 ; + 3.1 percentage points).
| 1st quarter 2017 | 1st quarter 2016 | Change in % | ||
|---|---|---|---|---|
| New contracts with retail customers | 465,634 | 413,372 | 12.6 | |
| Revenues | € million | 7,046 | 6,032 | 16.8 |
| Profit before financial result (EBIT) | € million | 604 | 591 | 2.2 |
| Profit before tax | € million | 595 | 570 | 4.4 |
| Workforce (at 31 March 2017/31 December 2016) | 8,513 | 8,394 | 1.4 | |
| 31. 3. 2017 | 31. 12. 2016 | Change in % | ||
| Business volume in balance sheet terms3 | € million | 125,735 | 123,394 | 1.9 |
1 EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal and its subsidiary in France.
2 The calculation only includes automobile markets in which the Financial Services segment is represented by a consolidated entity.
3 Calculated on the basis of the lines Leased products and Receivables from sales financing (current and non-current) of the Financial Services segment balance sheet.
Operating under the brand name "Alphabet", the BMW Group is one of the leading leasing and full-service providers of fleet management services in Europe. Alphabet provides leasing and financing arrangements and other specific services to commercial customers. In total, 649,191 contracts were in place at the end of the reporting period (31 December 2016: 644,420 contracts; + 0.7%).
The multi-brand financing line of business operated by the Financial Services segment recorded a solid increase in the number of new contracts signed in the reporting period, with an increase of 7.9% to 42,143 contracts (2016: 39,052 contracts). At 31 March 2017, the total portfolio comprised 483,114 contracts, slightly above the year-end 2016 level (31 December 2016: 466,436 contracts; + 3.6%).
The total volume of dealership financing also increased in the first quarter, rising by 1.9 % to € 18,648 million at the end of the reporting period (31 December 2016: € 18,307 million).
Deposit taking provides an important source of refinancing for the Financial Services segment. The volume of bank deposits increased slightly to € 13,743 million during the first three months of 2017 (31 December 2016: € 13,512 million; + 1.7%).
The number of insurance contracts signed during the first quarter rose by 7.7% to 318,318 (2016: 295,439 contracts). A total of 3,453,091 brokered insurance contracts was in place at the end of the reporting period (31 December 2016: 3,411,872 contracts; + 1.2%).
Reflecting the segment's positive business development during the first quarter of 2017, segment revenues grew significantly by 16.8 % to € 7,046 million (2016: € 6,032 million). Profit before taxes for the three-month period amounted to € 595 million, slightly higher than one year earlier (2016: € 570 million; + 4.4%).
The Financial Services segment's growth is also reflected in the size of its workforce, which comprised 8,513 employees worldwide at the end of the reporting period (31 December 2016: 8,394 employees), a 1.4% increase over the three-month period.
Interim Group Management Report
Report on Economic Position
Results of Operations, Financial Position and Net Assets
In the first quarter of 2017, the BMW Group once again recorded year-on-year growth in revenues,
in € million 1st quarter 2017 1st quarter 2016 Change in % Revenues 23,448 20,853 12.4 Cost of sales –18,637 –16,373 13.8 Gross profit 4,811 4,480 7.4 Selling and administrative expenses – 2,178 –1,988 9.6 Other operating income and expenses 13 – 35 – Profit before financial result 2,646 2,457 7.7 Financial result 359 – 89 – Profit before tax 3,005 2,368 26.9 Income taxes – 856 – 727 17.7 Net profit 2,149 1,641 31.0
Profit before tax for the first quarter of 2017 was significantly higher than one year earlier. The pretax return on sales – Group profit before tax as a percentage of Group revenues – was 12.8% (2016: 11.4%) and therefore slightly up on the previous year's first quarter. Earnings per share amounted to € 3.26 for both common and preferred stock (2016: € 2.48 common and preferred stock).
BMW Group revenues increased significantly compared to the previous year by € 2,595 million to reach € 23,448 million for the three-month period. The main drivers of this performance were the higher volume of automobiles and motorcycles sold and the growth of the Financial Services segment's contract portfolio and sales of returned leasing vehicles in the terminations business. Positive currency factors also contributed to the increase in revenues, with most of the impact attributable to changes in the average exchange rates of the Russian rouble, the South African rand and the US dollar against the euro.
The Group's first-quarter cost of sales was significantly higher year-on-year, due to sales volume and portfolio
factors. Cost of sales relating to Financial Services business also rose significantly by € 999 million to € 5,911 million, reflecting the increased portfolio size. At € 1,185 million (2016: € 985 million), research and development expenses were also significantly higher year-on-year. As a percentage of revenues, research and development expenses increased from 4.7% to 5.1%. Total research and development expenditure – comprising research and development expenses (excluding the associated amortisation), and new expenditure for capitalised development cost, including development prepayments – amounted to € 1,317 million in the first quarter 2017 (2016: € 974 million). The increase was due primarily to the higher level of development costs capitalised in conjunction with new model launches as compared to the same quarter of the previous year. This resulted in a research and development ratio – calculated as research and non-capitalised development costs divided by Group revenues – of 5.6% (2016: 4.7%). The capitalisation rate for this period – calculated as capitalised development costs divided by total research and development expenditure – was 33.1% (2016: 30.1%).
sales volume and profit before tax. The number of BMW, MINI and Rolls-Royce brand vehicles delivered to customers rose by a solid 5.3% to 587,237 units. The figure includes 90,172 units (2016: 81,900 units) manufactured by the joint venture BMW Brilliance Automotive Ltd., Shenyang.
At the end of the reporting period, the BMW Group's workforce comprised 126,317 employees worldwide (31 December 2016: 124,729).
Gross profit amounted to € 4,811 million, with the solid rise of € 331 million reflecting increased vehicles sales and business volumes in the Financial Services segment. The gross profit margin – calculated as gross profit divided by Group revenues – came in at 20.5% (2016: 21.5%).
Selling and administrative expenses compared to the previous year's first quarter were € 190 million higher at € 2,178 million. As a percentage of revenues, the expense ratio was 9.3% (2016: 9.5%). The increase in selling and administrative expenses mainly reflects the larger workforce and higher IT expenses.
Depreciation and amortisation on property, plant and equipment and intangible assets recorded in cost of sales and in selling and administrative expenses at € 1,190 million (2016: € 1,187 million) was in line with the previous year due to stable levels of investment and capitalised development costs in recent years.
Other operating income and expenses improved significantly to a net positive amount of € 13 million (2016: € – 35 million). The improvement was due amongst others to lower expenses, as the previous year's figures included a donation to a BMW foundation.
Profit before financial result (EBIT) for the first quarter amounted to € 2,646 million (2016: € 2,457 million). The improvement was largely due to the higher gross profit, which was mitigated by a solid increase in sales and administrative expenses.
Compared to the first quarter of 2016, the financial result improved by € 448 million to € 359 million. The improvement was mainly due to the result from equity-accounted investments, which includes the Group's share of the results of the joint ventures BMW Brilliance Automotive Ltd., Shenyang, the DriveNow companies (DriveNow GmbH & Co. KG, Munich, and DriveNow Verwaltungs GmbH, Munich) and the associated company THERE Holding B. V., Amsterdam. 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 first-quarter result from equity-accounted investments improved by € 280 million to € 351 million. In addition, other financial result improved by € 122 million to € 45 million. This is due to the result on investments which included no impairment losses on other investments (2016: € – 66 million) and positive valuation effects on interest rate derivates. Furthermore, the net interest result improved by € 46 million to € – 37 million, due to higher interest income and lower refinancing costs compared to the previous year. In addition to higher business volumes, the significantly improved financial result in particular contributed to the increase in profit before tax to € 3,005 million (2016: € 2,368 million).
Income tax expense amounted to € 856 million (2016: € 727 million), resulting in an effective tax rate – based on income tax expense as a percentage of Group profit before tax – of 28.5% (2016: 30.7%).
The after-tax return on sales – calculated as Group net profit divided by Group revenues – was 9.2% (2016: 7.9%).
Results of operations by segment
• 16 Report on Economic
Results of Operations, Financial Position and Net Assets
Management Report
| 1st quarter 2017 | 1st quarter 2016 | Change in % | Currency adjusted change* in % |
|---|---|---|---|
| 20,692 | 18,814 | 10.0 | 8.9 |
| 623 | 582 | 7.0 | 5.1 |
| 7,046 | 6,032 | 16.8 | 15.4 |
| 2 | 1 | – | – |
| – 4,915 | – 4,576 | 7.4 | – |
| 23,448 | 20,853 | 12.4 | 11.4 |
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
• 17
| in € million | 1st quarter 2017 | 1st quarter 2016 | Change in % |
|---|---|---|---|
| Automotive | 2,279 | 1,734 | 31.4 |
| Motorcycles | 125 | 94 | 33.0 |
| Financial Services | 595 | 570 | 4.4 |
| Other Entities | – 4 | – 2 | – |
| Eliminations | 10 | – 28 | – |
| Group | 3,005 | 2,368 | 26.9 |
Automotive segment revenues grew significantly due to higher sales volumes. The volume increase at the joint venture BMW Brilliance Automotive Ltd., Shenyang, also contributed to revenue growth. The gross profit margin came in at 17.9 %, broadly in line with the previous year's first quarter (18.4 %).
Selling and administrative expenses compared to the previous year's first quarter were € 169 million higher at € 1,820 million. The increase in administrative expenses was due amongst others to the larger workforce and higher expenses for new IT projects. As a percentage of revenues, the expense ratio remained at 8.8%.
The net amount of other operating income and expenses improved by € 30 million compared to the first quarter of 2016 (2016: € – 48 million). The improvement was mainly due to lower expenses, as the previous year's figures included a donation to a BMW foundation.
As a result, the segment profit before financial result increased to € 1,871 million (2016: € 1,763 million). The EBIT margin – profit before financial result as a percentage of revenues – came in at 9.0% (2016: 9.4%), reflecting increased sales volumes counterbalanced amongst others by higher research and development costs.
Overall, the Automotive segment reported a significant increase in pre-tax profit. This was largely due to the improved financial result for the three-month period, mainly due to positive effects in the result from equity accounted investments – primarily related to the sale of 15% of the shares in HERE International B. V., Amsterdam, by THERE Holding B. V., Amsterdam – and the other financial result.
Position
The Motorcycles segment recorded solid revenue growth in the first quarter, mainly reflecting a 5 . 5% rise in deliveries. Higher sales of optional equipment and improved pricing also contributed. As a result, the segment gross profit margin improved from 26 . 6% to 28 . 7%.
Cost of sales increased slightly due to the development of new models and higher production costs. Thanks to the improvement in other operating result, first-quar ter profit before tax, which reflects seasonal factors, increased significantly. The EBIT margin for the threemonth period came in at 20.1% (2016: 16.2%).
Financial Services segment revenues grew significant ly due to a positive business development and the sale of vehicles previously leased to customers. The risk profile also remained favourable during the first quarter 2017 .
Selling and administrative expenses within the segment increased by a solid € 17 million to € 300 million, mainly due to the increased workforce and higher project costs.
Larger credit financing volumes as well as higher other operating income contributed to a slight improvement in the Financial Services segment's first-quarter profit before taxes.
Position Results of Operations, Financial Position and Net Assets
The consolidated cash flow statements for the Group and the Automotive and Financial Services segments show the sources and applications of cash flows for the first three months of 2017 and 2016, classified into cash flows from operating, investing and financing activities. Cash and cash equivalents in the cash flow
• 18
| statements correspond to the amounts disclosed in | ||||
|---|---|---|---|---|
| the balance sheet. |
Cash flows from operating activities are determined indirectly, starting with Group and segment net profit. By contrast, cash flows from investing and financing activities are based on actual payments and receipts.
| in € million | 1st quarter 2017 | 1st quarter 2016 | Change |
|---|---|---|---|
| Cash inflow/outflow from operating activities | 328 | – 86 | 414 |
| Cash inflow/outflow from investing activities | –1,111 | – 449 | – 662 |
| Cash inflow/outflow from financing activities | – 42 | 578 | – 620 |
| Effect of exchange rate and changes in composition of Group | 88 | –10 | 98 |
| Change in cash and cash equivalents | – 737 | 33 | – 770 |
Cash flows from operating activities were influenced in the first quarter of 2017 by the higher net profit, lower increase in working capital, higher liabilities for bonuses and services contracts, liabilities for other taxes and the increase in receivables for sales financing.
Higher cash outflows for investing activities at Group level mainly reflected increased levels of investment in intangible assets and property, plant and equipment and the change in the net amount invested in marketable securities and investment funds (cash outflow of € 308 million).
The change in cash flows from financing activities was mainly due to the net outflow of funds used to settle commercial paper.
Free cash flow for the Automotive segment was as follows:
| in € million | 1st quarter 2017 | 1st quarter 2016 | Change |
|---|---|---|---|
| Cash inflow/outflow from operating activities | 2,626 | 1,219 | 1,407 |
| Cash inflow/outflow from investing activities | –1,069 | – 373 | – 696 |
| Net investment in marketable securities and investment funds | 42 | – 314 | 356 |
| Free cash flow Automotive segment | 1,599 | 532 | 1,067 |
The higher cash inflow from operating activities was mainly due to the higher net profit, a lower increase in working capital and higher liabilities related to bonuses, services contracts and other taxes.
The higher cash outflow for investing activities mainly reflects increased investments for new vehicle projects and the change in the net investment in marketable securities and investment funds.
| in € million | 31. 3. 2017 | 31.12. 2016 | Change |
|---|---|---|---|
| Cash and cash equivalents | 4,468 | 4,794 | – 326 |
| Marketable securities and investment funds | 4,226 | 4,147 | 79 |
| Intragroup net financial assets | 14,047 | 12,077 | 1,970 |
| Financial assets | 22,741 | 21,018 | 1,723 |
| Less: external financial liabilities* | –1,498 | –1,498 | – |
| Net financial assets Automotive segment | 21,243 | 19,520 | 1,723 |
*Excluding derivative financial instruments.
Cash flows from operating and investing activities in the Financial Services segment developed as follows:
| in € million | 1st quarter 2017 | 1st quarter 2016 | Change |
|---|---|---|---|
| Cash inflow/outflow from operating activities | –1,181 | –1,615 | 434 |
| Cash inflow/outflow from investing activities | – 43 | 8 | – 51 |
| Net | –1,224 | –1,607 | 383 |
Cash outflows from operating activities in the Financial Services segment were driven mainly by the increase in leased products and receivables from sales financing.
The BMW Group uses a 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 March 2017, BMW Group entities issued a euro benchmark bond with a volume of € 2.0 billion as well as EMTN private placements in various currencies with a total volume of € 0.7 billion. Bonds denominated in Indian rupees and Korean won were issued with a total volume of € 0.2 billion. In addition, three ABS transactions with a total volume of € 1.5 billion were issued in Japan, Canada and the USA. The regular issue of commercial paper and deposit-taking by the Group's banking subsidiaries are also used to refinance the BMW Group.
• 19
BMW Group condensed balance sheet
Management Report Report on Economic
| Group | |||||
|---|---|---|---|---|---|
| in € million | 31. 3. 2017 | 31.12. 2016 | Change in % | Currency adjusted change in % |
Proportion of balance sheet total in % |
| Assets | |||||
| Intangible assets | 8,295 | 8,157 | 1.7 | 0.9 | 4.3 |
| Property, plant and equipment | 17,704 | 17,960 | –1.4 | –1.4 | 9.2 |
| Leased products | 37,487 | 37,789 | – 0.8 | – 0.9 | 19.6 |
| Investments accounted for using the equity method | 2,913 | 2,546 | 14.4 | 14.4 | 1.5 |
| Other investments | 462 | 560 | –17.5 | –17.5 | 0.2 |
| Receivables from sales financing | 80,891 | 78,260 | 3.4 | 2.9 | 42.2 |
| Financial assets | 9,150 | 9,770 | – 6.3 | – 6.4 | 4.8 |
| Deferred and current tax | 4,339 | 4,265 | 1.7 | 4.5 | 2.3 |
| Inventories | 13,656 | 11,841 | 15.3 | 16.0 | 7.1 |
| Trade receivables | 2,901 | 2,825 | 2.7 | 4.5 | 1.5 |
| Other assets | 6,659 | 6,682 | – 0.3 | – 0.8 | 3.5 |
| Cash and cash equivalents | 7,143 | 7,880 | – 9.4 | – 9.2 | 3.8 |
| Total assets | 191,600 | 188,535 | 1.6 | 1.5 | 100.0 |
| Equity and liab ilities |
|||||
| Equity | 49,581 | 47,363 | 4.7 | 3.5 | 25.9 |
| Pension provisions | 3,954 | 4,587 | –13.8 | –13.7 | 2.1 |
| Other provisions | 11,035 | 10,918 | 1.1 | 1.5 | 5.7 |
| Deferred and current tax | 4,193 | 3,869 | 8.4 | 10.2 | 2.2 |
| Financial liabilities | 97,412 | 97,731 | – 0.3 | – 0.3 | 50.8 |
| Trade payables | 8,971 | 8,512 | 5.4 | 5.9 | 4.7 |
| Other liabilities | 16,454 | 15,555 | 5.8 | 6.2 | 8.6 |
| Total equity and liabilities | 191,600 | 188,535 | 1.6 | 1.5 | 100.0 |
The balance sheet total of the BMW Group increased slightly compared to 31 December 2016. Currency adjusted changes show the development of balance sheet items after excluding the effect of changes in individual exchange rates.
Investments accounted for using the equity method increased significantly compared to the year end 2016. The increase was mainly due to the sale of 15 % of the shares of HERE International B. V., Amsterdam, by the THERE Holding B. V., Amsterdam, and a positive contribution from the joint venture BMW Brilliance Automotive Ltd., Shenyang.
Business volume growth in the Financial Services segment is mainly reflected in the slightly higher level of receivables from sales financing. A total of 322,086 new credit financing contracts were signed during the quarter, 19.3% more than one year earlier. As a result, the total credit financing portfolio grew to 3,108,880 contracts, a 2.8% increase from 31 December 2016. A total of 143,548 new leasing contracts were signed during the first quarter of 2017, in line with the previous year's first-quarter performance (2016: 143,434 contracts). The portfolio of leasing contracts increased by 0.2% compared to the end of 2016 to 1,683,828 contracts at 31 March 2017. The increase in business volume was held down by the sale of vehicles coming off lease.
Financial assets decreased moderately compared to 31 December 2016, mainly due to changes in currency derivatives.
Inventories were significantly higher than at the end of the financial year 2016. The increase is mainly due to finished goods, reflecting business growth and stocking up in the markets.
Cash and cash equivalents decreased moderately compared to 31 December 2016. Group liquidity nevertheless remained at a solid level.
Group equity rose by € 2,218 million to € 49,581 million. Equity increased mainly as a result of the net profit attributable to shareholders of BMWAG amounting to € 2,139 million and the positive impact of remeasurements of the net defined benefit liability for pension plans amounting to € 459 million, mainly due to higher interest rates and lower inflation in Germany and positive investment income on UK plan assets. By contrast, changes in the fair value of derivative financial instruments decreased equity by € 527 million.
The equity ratio of the BMW Group – calculated by dividing equity by the balance sheet total – was 25.9% at the end of the reporting period (31 December 2016: 25.1%). The equity ratio for the Automotive segment was 41.9% (31 December 2016: 41.3%) and for the Financial Services segment 8.4% (31 December 2016: 8.0%).
Pension provisions decreased significantly compared to the end of the financial year 2016, mainly due to higher interest rates and lower inflation in Germany and positive investment income on UK plan assets.
The solid increase in other liabilities reflected higher personnel-related liabilities and liabilities for other taxes due to timing factors at the period end.
The increase in trade payables mainly reflects higher production volumes.
Overall, the earnings performance, financial position and net assets position of the BMW Group continued to develop positively during the first quarter.
Further information on transactions with related parties can be found in note 32 to the Interim Group Financial Statements. see note 32
Interim Group Management Report
Report on Outlook, Risks and Opportunities Outlook
Further growth to continue
Profitability within target range expected
Global economy offers favourable conditions
The report on outlook, risks and opportunities describes the expected development of the BMW Group, including the associated material risks and opportunities, from the perspective of the Group's management. It contains forward-looking assertions and is based on expectations and assessments which are, by their nature, subject to uncertainty. As a result, actual outcomes, including those attributable to political and economic developments, could differ substantially – either positively or negatively – from the expectations described below. Further related information is provided in the Annual Report 2016 (Outlook, pp 82, Risks and Opportunities, pp 88).
According to the forecast of the International Monetary Fund, the global economy is set to grow by approximately 3.5% in 2017.
Within the eurozone, elections in France and Germany in 2017 and the official start of exit negotiations between the EU and the UK expose economic developments in the region to significant uncertainty. Nevertheless, estimations point to a continued upturn, with a 1.6 % increase in gross domestic product (GDP). Falling unemployment combined with rising consumption by private households, solid industrial production figures and robust investment activities should provide a broad basis for economic growth in the eurozone.
The ECB is likely to continue its expansive monetary policies, given that the inflation rate in 2017 is only expected to rise to around 1.6% and therefore below the medium-term target of no more than 2%. The euro is not expected to depreciate further against the US dollar in the current year.
The economic climate in Germany is expected to remain favourable. Strong domestic consumption, solid levels of investment and a robust export sector are all contributing to the positive development. As a result, GDP is forecast to grow by approximately 1.6% in 2017.
The French economy is forecast to grow by 1.3 %. Here too, the export sector is performing well. The positive trend in investment activities from the previous year is likely to continue and could also gain momentum. By contrast, the unemployment rate is only falling slowly.
In Italy, the job market is recovering only gradually and is therefore unlikely to generate a significant increase in consumer spending. Overall, the Italian economy is forecast to grow by 0.9% in 2017.
Spain is expected to contribute to Europe's overall economic growth with an above-average GDP rise of around 2.5%. The main factors driving this positive development are high investment levels, solid industrial production and a dynamic export sector.
In March 2017, the UK government submitted a formal request to exit the EU, marking the beginning of a twoyear phase of negotiations on the future relationship between the EU and the UK. In April, the government announced its intention to hold elections in the UK in June 2017. This could bring additional uncertainty. With some signs of economic slowdown already emerging for the current year, the UK economy is now expected to grow only by around 1.6%.
GDP in the USA is expected to grow by 2.3% in 2017. Despite a strong US dollar, exports could increase significantly more than in the previous year. Investments and industrial production could also rise and contribute to improved economic growth. With wages rising, consumer spending is likely to remain the bedrock of the US economy.
The government in China is continuing the transition from an investment-driven to a consumer-driven economy. For this reason, growth rates in the coming years are likely to be lower than in the past. State-driven economic stimulus measures should prevent any abrupt downturn in the economy. In line with the Chinese government's own target, the pace of growth is now forecast to decelerate slightly to 6.5% in 2017. However, the risk of a possible financial and liquidity crisis in China remains, in view of steep and continuing rises in debt levels, particularly in the corporate sector.
The Japanese economy could pick up slightly and grow by around 1.1% in 2017. Strong growth in exports and industrial production should provide the domestic economy with fresh momentum. However, consumer spending is likely to grow only moderately year-on-year.
India is improving investment and planning security for investors by creating a favourable, competitive environment. These measures should encourage growth and enable GDP to rise by around 7.3% in the current year.
The situation in Brazil and Russia is heavily dependent on the price of oil. With the recent increase in oil price, the value of the Russian rouble and the Brazilian real has tended upward, thus making imports cheaper and reducing inflationary pressures. These developments have enabled the central banks in both countries to move away partially from their restrictive monetary policies and stimulate the economy by means of lower interest rates. GDP growth rates over the full year are forecast at around 1.3% for Russia and 0.6% for Brazil.
The average price of Brent crude oil during the current year's reporting period has been around 55 US dollars per barrel, mainly due to production cutbacks by OPEC countries and other major oil-producing nations. With inventories of crude oil at historically high levels, however, significant price increases should be limited for the foreseeable future.
Outlook
Automobile markets worldwide are currently forecast to grow by 2.0% in 2017 compared to the previous year. Key sources of growth are expected from China, individual markets in Europe, and Russia. By contrast, new registrations in the USA are likely to decline slightly.
Continued economic recovery in Europe should provide the basis for stable automobile markets. At present, new registrations in the region in 2017 are expected to be slightly up on the previous year (15.3 million units; + 1.2%). Germany is again expected to make a positive contribution to the development in Europe with forecast growth of 1.4% to 3.4 million units. With around 2.0 million registrations, France is likely to be slightly up on the previous year (+ 1.3%). Markets in Italy (1.95 million units; + 5.5%) and Spain (1.19 million units; + 3.7%) are also expected to see rising registration figures. Uncertainty related to Brexit is likely to have a negative impact on the UK automobile market. The number of new registrations could receive a setback, with 2.56 million (– 4.9%) currently predicted for the full year 2017.
Registrations in the USA, while remaining at a high level, are set to decrease slightly in 2017. Currently, they are forecast to fall by 0.9% to 17.4 million units.
Slower economic growth in China is likely to be reflected in the country's automobile market. Nonetheless, the number of new registrations is forecast to grow by 5.7% to 25.5 million units in the course of the current year.
The automobile market in Japan is expected to recover in 2017, with new registrations forecast to rise by around 1.6% to 4.85 million units.
Russian and Brazilian automobile markets could also benefit from higher GDP growth rates. New registrations in Russia are forecast to increase to around 1.3 million units (+ 4.0%), with a more modest rise expected for Brazil (1.7 million units; + 2.1%).
The world's motorcycle markets in the 250 cc plus class are forecast to grow slightly in 2017. In Europe, the positive trend is likely to continue in the major markets of Germany, France, Italy and Spain. In the USA, the motorcycles market is forecast to remain flat or slightly below the previous year's level.
In the eurozone, the ECB is expected to continue its expansive monetary policies over the coming months. In an attempt to address the conflicting issues of rising inflation and weaker growth prospects following the Brexit decision, the Bank of England is expected to continue its cautious approach and leave its monetary policies unchanged. Assuming the US economy continues its positive development, the Federal Reserve is likely to raise its reference interest rate further during the course of the year. The government in China is likely to continue measures aimed at driving the transformation towards a more consumer-orientated economy. The government and central bank are likely to support this process with a combination of economic and monetary measures. The Japanese central bank is likely to retain its expansionary monetary approach.
The BMW Group expects the used car market on continental Europe to stabilise at the previous year's level. In the UK, the situation remains unclear in the wake of the Brexit decision and will depend on the course of the exit negotiations. In North America, a declining trend is expected, while used car prices in the premium segment in Asia are likely to remain stable.
Competition on international automobile markets is likely to remain intense throughout the current year. The formal start of exit negotiations between the EU and the UK as well as elections in France, the UK and Germany are also creating uncertainty with respect to future political and economic developments. In the USA, the impact of the new administration's economic policies also remains to be seen. Further information is provided in the Report on Risks and Opportunities in the Annual Report 2016.
Nevertheless, the BMW Group intends to pursue its growth course in 2017. New vehicles such as the BMW 5 Series and MINI Countryman introduced in February and motorcycles such as the new R NineT Pure and R NineT Racer models, as well as a range of attractive services, should contribute to earnings growth. Investments in future-oriented projects, including vehicle electrification, digitalisation and the expansion of the production network, will offset the general positive trend. 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). This is mainly due to projects aimed at securing the Group's future, the growth of automobile and motorcycles business and the expansion of financial and mobility services.
1 Including the joint venture BMW Brilliance Automotive, Ltd., Shenyang (2016: 316,200 units).
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. Balanced growth in the major sales regions of Europe, Asia and the Americas will help to compensate for volatilities in individual markets. Assuming economic conditions do not deteriorate, deliveries to customers are forecast to rise slightly to a new high (2016: 2,367,6031 units).
Important contributions to continued sales volume growth are likely to come primarily from the introduction of 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 will be available to customers in China starting in June. The new BMW 5 Series Touring will be launched during the same month. The model revisions of the BMW 4 Series and the BMW M4 Coupé and Convertible were launched in March. The second generation of the highly successful MINI Countryman became available in February. Towards mid-year, a John Cooper Works and a plug-in hybrid model will be added to the MINI Countryman range. Further new models are planned for the second half of 2017.
The BMW Group is continuing its efforts to reduce vehicle-fuel consumption and carbon dioxide emissions. 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).
Interim Group Management Report Report on Outlook, Risks and
Opportunities Outlook
Automotive segment revenues are expected to rise slightly in line with sales volume. The BMW Group expects segment revenues to increase slightly in 2017 (2016: € 86,424 million).
An EBIT margin within a range of 8 to 10% (2016: 8.9%) remains the target for the Automotive segment.
Segment RoCE is forecast to decrease slightly (2016: 74.3%). However, the long-term target RoCE of at least 26% for the Automotive segment will be significantly exceeded.
Deliveries to customers: significant increase expected The BMW Group expects the positive trend in the Motorcycles segment to continue. The new R NineT Pure and R NineT Racer models unveiled at international trade fairs held 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 available since March. The revised S 1000 RR has been in showrooms since January and was joined by the updated versions of the S 1000 R and the K 1600 GT in February. The new K 1600 B, the updated version of the luxury K 1600 GTL and the R NineT Urban G / S will follow in the summer and the G 310 GS in September. The broader product range is designed to 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 will serve as an additional key performance indicator for the Motorcycles segment. Accordingly, segment performance will also be managed based on the operating return on sales (EBIT margin) in future. Further information can be found in the description of the Group management system in the section "General Information on the BMW Group" in the Annual Report 2016. In this context, 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 in 2017 is forecast to be in line with the previous year (2016: 33.0%). The long-term target RoCE of 26% for the Motorcycles segment should therefore be exceeded.
Return on equity: slight decrease expected
According to forecasts, the Financial Services segment should continue its successful performance in 2017. However, it is expected 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.
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 individual mobility-related services 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, Automotive segment revenues are expected to grow slightly. At the same time, a slight decrease in fleet carbon dioxide emissions is expected. The Group's 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 decrease slightly. A slight decline is also forecast for the RoE in the Financial Services segment. Both performance indicators should, however, 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 an EBIT margin within the target range of between 8 and 10% and RoCE at the previous year's level.
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.
| • 20 | |||
|---|---|---|---|
| 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 | slight increase |
| EBIT margin | % | 8.9 | between 8 and 10 |
| Return on capital employed | % | 74.3 | slight decrease |
| Motorcycles segment | |||
| Sales volume | units | 145,032 | significant increase |
| EBIT margin | % | 9.0 | between 8 and 10 |
| Return on capital employed | % | 33.0 | in line with last year's level |
| Financial Services segment | |||
| Return on equity | % | 21.2 | slight decrease |
| 1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units). |
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units). 2 EU-28.
BMW Group key performance indicators
Report on Outlook, Risks and Opportunities Risks and
Interim Group Management Report
Opportunities BMWAG Stock and Capital Markets
As a globally operating enterprise, the BMW Group is confronted with numerous risks and opportunities. Making full use of opportunities is the basis for the Group's corporate success. The Group also consciously takes risks in order to achieve growth, profitability, efficiency and sustainable business for the future. There have been no material changes to the overall risk profile compared to that described in the Group Management Report 2016. Further information on risks and opportunities, and on the methods employed to manage them, can be found in the "Report on Risks and Opportunities" section of the Annual Report 2016 (pp 88).
DAX finishes positively in first quarter 2017
BMW stock negatively impacted by external factors
Earnings per share up to € 3.26 (+31.5%) per common / preferred share
Compared to the previous year's first quarter, which was overshadowed by negative signals from the Chinese economy, the world's stock markets performed well during the first quarter of 2017. The results of the parliamentary elections in the Netherlands, signifying that the country will remain in the European Union, were positively received by investors. Moreover, the 0.25 percentage point increase in the interest rate announced by the US Federal Reserve in March 2017 was interpreted as a sign that the US economy is in good health.
The German stock index, DAX, closed at 12,312 points at the end of the first quarter. Compared to the end of the previous year (2016: 11,481 points), the index rose by 7.2%, only 0.6% below its record level from April 2015 (12,390 points).
The Prime Automobile Index also showed a positive development, finishing the first quarter at 1,554 points (+ 3.2%). Nevertheless, the sector index lagged slightly behind the overall stock market and remained below the development of the DAX, reflecting the negative impact on automobile stocks caused by uncertainties in the sector.
Under the influence of unfavourable sector-related factors, BMW common stock lost ground during the first quarter of 2017, closing at € 85.51 at 31 March 2017 (– 3.7%). By contrast, BMW preferred stock increased slightly in value during the three-month period and finished the first quarter at € 73.82 (+ 1.5%).
The value of the US dollar fell slightly against the euro during the first quarter. At 1.07 US dollars to the euro at the end of reporting period, it was down 0.9% (31 December 2016: 1.06 US dollars to the euro).
Interim Group Management Report
BMWAG Stock and Capital Markets
(Index: 30. 12. 2016 = 100)
Source: Reuters.
Page 36 Income Statement
36
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 31 March • 22
| Group | Automotive | Motorcycles | |||||
|---|---|---|---|---|---|---|---|
| in € million | Note | 1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
| Revenues | 5 | 23,448 | 20,853 | 20,692 | 18,814 | 623 | 582 |
| Cost of sales | 6 | –18,637 | –16,373 | –16,983 | –15,352 | – 444 | – 427 |
| Gross profit | 4,811 | 4,480 | 3,709 | 3,462 | 179 | 155 | |
| Selling and administrative expenses | 7 | – 2,178 | –1,988 | –1,820 | –1,651 | – 53 | – 55 |
| Other operating income | 8 | 173 | 213 | 140 | 181 | – | – |
| Other operating expenses | 8 | –160 | – 248 | –158 | – 229 | –1 | – 6 |
| Profit/ loss before financial result | 2,646 | 2,457 | 1,871 | 1,763 | 125 | 94 | |
| Result from equity accounted investments | 9 | 351 | 71 | 351 | 71 | – | – |
| Interest and similar income | 10 | 61 | 35 | 94 | 92 | – | – |
| Interest and similar expenses | 10 | – 98 | –118 | –122 | –177 | – | – |
| Other financial result | 11 | 45 | – 77 | 85 | –15 | – | – |
| Financial result | 359 | – 89 | 408 | – 29 | – | – | |
| Profit/ loss before tax | 3,005 | 2,368 | 2,279 | 1,734 | 125 | 94 | |
| Income taxes | 12 | – 856 | – 727 | – 664 | – 554 | – 37 | – 30 |
| Net profit/ loss | 2,149 | 1,641 | 1,615 | 1,180 | 88 | 64 | |
| Attributable to minority interest | 10 | 10 | – | –1 | – | – | |
| Attributable to shareholders of BMW AG | 2,139 | 1,631 | 1,615 | 1,181 | 88 | 64 | |
| Basic earnings per share of common stock in € | 13 | 3.26 | 2.48 | ||||
| Basic earnings per share of preferred stock in € | 13 | 3.26 | 2.48 | ||||
| Dilutive effects | 13 | – | – | ||||
| Diluted earnings per share of common stock in € | 13 | 3.26 | 2.48 | ||||
| Diluted earnings per share of preferred stock in € | 13 | 3.26 | 2.48 | ||||
Statement of Comprehensive Income for Group for the period from 1 January to 31 March • 23
| in € million | 1st quarter Note 2017 |
1st quarter 2016 |
|---|---|---|
| Net profit | 2,149 | 1,641 |
| Remeasurement of the net liability for defined benefit pension plans | 459 | –1,053 |
| Deferred taxes | –123 | 331 |
| Items not expected to be reclassified to the income statement in the future | 336 | – 722 |
| Available-for-sale securities | 2 | 48 |
| Financial instruments used for hedging purposes | – 527 | 2,165 |
| Other comprehensive income from equity accounted investments | 2 | 54 |
| Deferred taxes | 150 | – 753 |
| Currency translation foreign operations | 51 | – 445 |
| Items expected to be reclassified to the income statement in the future | – 322 | 1,069 |
| Other comprehensive income for the period after tax | 14 14 |
347 |
| Total comprehensive income | 2,163 | 1,988 |
| Total comprehensive income attributable to minority interest | 10 | 10 |
| Total comprehensive income attributable to shareholders of BMW AG | 2,153 | 1,978 |
| Eliminations | Other Entities | Financial Services | ||||
|---|---|---|---|---|---|---|
| 1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
|
| Revenues | – 4,576 | – 4,915 | 1 | 2 | 6,032 | 7,046 |
| Cost of sales | 4,564 | 4,944 | – | – | – 5,158 | – 6,154 |
| Gross profit | –12 | 29 | 1 | 2 | 874 | 892 |
| Selling and administrative expenses | 6 | 7 | – 5 | –12 | – 283 | – 300 |
| Other operating income | –16 | – 43 | 43 | 45 | 5 | 31 |
| Other operating expenses | 20 | 49 | – 28 | – 31 | – 5 | –19 |
| Profit/ loss before financial result | – 2 | 42 | 11 | 4 | 591 | 604 |
| Result from equity accounted investments | – | – | – | – | – | – |
| Interest and similar income | – 359 | – 309 | 301 | 275 | 1 | 1 |
| Interest and similar expenses | 333 | 277 | – 273 | – 251 | –1 | – 2 |
| Other financial result | – | – | – 41 | – 32 | – 21 | – 8 |
| Financial result | – 26 | – 32 | –13 | – 8 | – 21 | – 9 |
| Profit/ loss before tax | – 28 | 10 | – 2 | – 4 | 570 | 595 |
| Income taxes | 10 | – 4 | 1 | 2 | –154 | –153 |
| Net profit/ loss | –18 | 6 | –1 | – 2 | 416 | 442 |
| Attributable to minority interest | – | – | – | – | 11 | 10 |
| Attributable to shareholders of BMW AG | –18 | 6 | –1 | – 2 | 405 | 432 |
| 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 | Motorcycles | |||||
|---|---|---|---|---|---|---|---|
| in € million | Note | 31. 3. 2017 | 31.12. 2016 | 31. 3. 2017 | 31.12. 2016 | 31. 3. 2017 | 31.12. 2016 |
| Assets | |||||||
| Intangible assets | 15 | 8,295 | 8,157 | 7,803 | 7,705 | 45 | 46 |
| Property, plant and equipment | 16 | 17,704 | 17,960 | 17,320 | 17,566 | 355 | 365 |
| Leased products | 17 | 37,487 | 37,789 | – | – | – | – |
| Investments accounted for using the equity method | 18 | 2,913 | 2,546 | 2,913 | 2,546 | – | – |
| Other investments | 18 | 462 | 560 | 5,223 | 5,195 | – | – |
| Receivables from sales financing | 19 | 49,982 | 48,032 | – | – | – | – |
| Financial assets | 20 | 2,082 | 2,705 | 947 | 1,287 | – | – |
| Deferred tax | 21 | 2,496 | 2,327 | 4,376 | 4,310 | – | – |
| Other assets | 22 | 1,648 | 1,595 | 4,214 | 4,043 | 27 | 28 |
| Non-current assets | 123,069 | 121,671 | 42,796 | 42,652 | 427 | 439 | |
| Inventories | 23 | 13,656 | 11,841 | 13,106 | 11,344 | 545 | 492 |
| Trade receivables | 2,901 | 2,825 | 2,486 | 2,502 | 200 | 144 | |
| Receivables from sales financing | 19 | 30,909 | 30,228 | – | – | – | – |
| Financial assets | 20 | 7,068 | 7,065 | 4,912 | 4,862 | – | – |
| Current tax | 21 | 1,843 | 1,938 | 939 | 1,000 | – | – |
| Other assets | 22 | 5,011 | 5,087 | 23,086 | 21,561 | 6 | 2 |
| Cash and cash equivalents | 7,143 | 7,880 | 4,468 | 4,794 | 9 | – | |
| Current assets | 68,531 | 66,864 | 48,997 | 46,063 | 760 | 638 | |
| Total assets | 191,600 | 188,535 | 91,793 | 88,715 | 1,187 | 1,077 | |
| Equity and liab ilities |
|||||||
| Subscribed capital | 24 | 657 | 657 | ||||
| Capital reserves | 24 | 2,047 | 2,047 | ||||
| Revenue reserves | 24 | 46,975 | 44,445 | ||||
| Accumulated other equity | 24 | – 363 | – 41 | ||||
| Equity attributable to shareholders of BMWAG | 24 | 49,316 | 47,108 | ||||
| Minority interest | 24 | 265 | 255 | ||||
| Equity | 49,581 | 47,363 | 38,436 | 36,624 | – | – | |
| Pension provisions | 25 | 3,954 | 4,587 | 2,514 | 2,911 | 68 | 83 |
| Other provisions | 26 | 5,431 | 5,039 | 4,978 | 4,570 | 106 | 103 |
| Deferred tax | 27 | 3,307 | 2,795 | 1,120 | 740 | – | – |
| Financial liabilities | 28 | 53,936 | 55,405 | 1,925 | 1,942 | – | – |
| Other liabilities | 29 | 5,510 | 5,357 | 6,676 | 6,530 | 487 | 442 |
| Non-current provisions and liabilities | 72,138 | 73,183 | 17,213 | 16,693 | 661 | 628 | |
| Other provisions | 26 | 5,604 | 5,879 | 4,883 | 5,187 | 96 | 90 |
| Current tax | 27 | 886 | 1,074 | 616 | 770 | – | – |
| Financial liabilities | 28 | 43,476 | 42,326 | 1,578 | 1,481 | – | – |
| Trade payables | 8,971 | 8,512 | 7,792 | 7,483 | 336 | 303 | |
| Other liabilities | 29 | 10,944 | 10,198 | 21,275 | 20,477 | 94 | 56 |
| Current provisions and liabilities | 69,881 | 67,989 | 36,144 | 35,398 | 526 | 449 | |
| Total equity and liabilities | 191,600 | 188,535 | 91,793 | 88,715 | 1,187 | 1,077 |
| Eliminations | Other Entities | Financial Services | ||||
|---|---|---|---|---|---|---|
| 31.12. 2016 | 31. 3. 2017 | 31.12. 2016 | 31. 3. 2017 | 31.12. 2016 | 31. 3. 2017 | |
| Intangible assets | – | – | 1 | 1 | 405 | 446 |
| Property, plant and equipment | – | – | – | – | 29 | 29 |
| Leased products | – 7,345 | – 7,357 | – | – | 45,134 | 44,844 |
| Investments accounted for using the equity method | – | – | – | – | – | – |
| Other investments | –11,223 | –11,590 | 6,585 | 6,825 | 3 | 4 |
| Receivables from sales financing | – | – | – | – | 48,032 | 49,982 |
| Financial assets | – 583 | – 459 | 1,780 | 1,415 | 221 | 179 |
| Deferred tax | – 2,635 | – 2,558 | 263 | 224 | 389 | 454 |
| Other assets | – 32,689 | – 33,376 | 27,120 | 27,617 | 3,093 | 3,166 |
| Non-current assets | – 54,475 | – 55,340 | 35,749 | 36,082 | 97,306 | 99,104 |
| – | – | – | – | 5 | 5 | |
| Trade receivables | – | – | 1 | 2 | 178 | 213 |
| Receivables from sales financing | – | – | – | – | 30,228 | 30,909 |
| Financial assets | – 630 | – 588 | 1,329 | 1,206 | 1,504 | 1,538 |
| – | – | 894 | 785 | 44 | 119 | |
| Other assets | – 66,675 | – 68,151 | 44,782 | 44,572 | 5,417 | 5,498 |
| Cash and cash equivalents | – | – | 40 | 72 | 3,046 | 2,594 |
| Current assets | – 67,305 | – 68,739 | 47,046 | 46,637 | 40,422 | 40,876 |
| Total assets | –121,780 | –124,079 | 82,795 | 82,719 | 137,728 | 139,980 |
| Equity and liab Subscribed capital |
||||||
| Capital reserves | ||||||
| Revenue reserves | ||||||
| Accumulated other equity | ||||||
| Equity attributable to shareholders of BMWAG | ||||||
| Minority interest | ||||||
| –17,054 | –17,396 | 16,744 | 16,803 | 11,049 | 11,738 | |
| Pension provisions | – | – | 1,516 | 1,291 | 77 | 81 |
| Other provisions | – – 4,748 |
– – 4,666 |
13 48 |
– 50 |
353 6,755 |
347 6,803 |
| Financial liabilities | – 583 | – 459 | 36,328 | 36,647 | 17,718 | 15,823 |
| Other liabilities | – 31,629 | – 32,468 | 601 | 815 | 29,413 | 30,000 |
| Non-current provisions and liabilities | – 36,960 | – 37,593 | 38,506 | 38,803 | 54,316 | 53,054 |
| – | – | 3 | 15 | 599 | 610 | |
| 255 | 220 | |||||
| – | – | 49 | 50 | |||
| – 630 | – 588 | 14,107 | 12,867 | 27,368 | 29,619 | |
| Other provisions Financial liabilities Trade payables |
– | – | 24 | 24 | 702 | 819 |
| Other liabilities | – 67,136 | – 68,502 | 13,362 | 14,157 | 43,439 | 43,920 |
| Current provisions and liabilities | – 67,766 | – 69,090 | 27,545 | 27,113 | 72,363 | 75,188 |
BMW Group Cash Flow Statement
| Group | ||
|---|---|---|
| in € million | 1st quarter 2017 |
1st quarter 2016 |
| Net profit | 2,149 | 1,641 |
| Depreciation and amortisation of tangible, intangible and investment assets | 1,190 | 1,256 |
| Change in provisions | –127 | –123 |
| Change in leased products and receivables from sales financing | –1,882 | –1,029 |
| Change in deferred taxes | 413 | 358 |
| Changes in working capital | –1,366 | –1,903 |
| Other | – 49 | – 286 |
| Cash inflow/outflow from operating activities | 328 | – 86 |
| Investment in intangible assets and property, plant and equipment | –1,041 | – 698 |
| Net investment in marketable securities and investment funds | – 72 | 236 |
| Other | 2 | 13 |
| Cash inflow/outflow from investing activities | –1,111 | – 449 |
| Cash inflow/outflow from financing activities | – 42 | 578 |
| Effect of exchange rate on cash and cash equivalents | 22 | – 52 |
| Effect of changes in composition of Group on cash and cash equivalents | 66 | 42 |
| Change in cash and cash equivalents | – 737 | 33 |
| Cash and cash equivalents as at 1 January | 7,880 | 6,122 |
| Cash and cash equivalents as at 31 March | 7,143 | 6,155 |
| Financial Services | Automotive | |||
|---|---|---|---|---|
| 1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
|
| Net profit | 416 | 442 | 1,180 | 1,615 |
| Depreciation and amortisation of tangible, intangible and investment assets | 7 | 9 | 1,231 | 1,161 |
| Change in provisions | 92 | 37 | – 4 | – 8 |
| Change in leased products and receivables from sales financing | – 996 | –1,912 | – | – |
| Change in deferred taxes | – 9 | 54 | 263 | 356 |
| Changes in working capital | 10 | 78 | –1,885 | –1,540 |
| Other | –1,135 | 111 | 434 | 1,042 |
| Cash inflow/outflow from operating activities | –1,615 | –1,181 | 1,219 | 2,626 |
| Investment in intangible assets and property, plant and equipment | –1 | – 2 | – 692 | –1,030 |
| Net investment in marketable securities and investment funds | 9 | – 41 | 314 | – 42 |
| – | – | 5 | 3 | |
| Cash inflow/outflow from investing activities | 8 | – 43 | – 373 | –1,069 |
| Cash inflow/outflow from financing activities | 1,639 | 700 | –179 | –1,884 |
| Effect of exchange rate on cash and cash equivalents | – 22 | 6 | –18 | 1 |
| Effect of changes in composition of Group on cash and cash equivalents | 12 | 66 | 30 | – |
| Change in cash and cash equivalents | 22 | – 452 | 679 | – 326 |
| Cash and cash equivalents as at 1 January | 1,359 | 3,046 | 3,952 | 4,794 |
| Cash and cash equivalents as at 31 March | 1,381 | 2,594 | 4,631 | 4,468 |
Interim Group Financial Statements
| Note | Subscribed capital |
Capital reserves |
Revenue reserves |
|
|---|---|---|---|---|
| 24 | 657 | 2,047 | 44,445 | |
| – | – | 2,139 | ||
| – | – | 336 | ||
| – | – | 2,475 | ||
| 24 | 657 | 2,047 | 46,975 | |
| – | – | 55 |
| in € million | Note | Subscribed capital |
Capital reserves |
Revenue reserves |
|
|---|---|---|---|---|---|
| 1 January 2016 | 24 | 657 | 2,027 | 41,027 | |
| Net profit | – | – | 1,631 | ||
| Other comprehensive income for the period after tax | – | – | – 722 | ||
| Comprehensive income to 31 March 2016 | – | – | 909 | ||
| Other changes 31 March 2016 |
24 | – 657 |
– 2,027 |
– 41,936 |
|
| 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 | |
| Net profit | 2,149 | 10 | 2,139 | – | – | – | |
| Other comprehensive income for the period after tax | 14 | – | 14 | – 368 | – | 46 | |
| Comprehensive income to 31 March 2017 | 2,163 | 10 | 2,153 | – 368 | – | 46 | |
| Other changes | 55 | – | 55 | – | – | – | |
| 31 March 2017 | 49,581 | 265 | 49,316 | – 290 | 52 | –125 | |
| 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 |
| Net profit | 1,641 | 10 | 1,631 | – | – | – |
| Other comprehensive income for the period after tax | 347 | – | 347 | 1,555 | 34 | – 520 |
| Comprehensive income to 31 March 2016 | 1,988 | 10 | 1,978 | 1,555 | 34 | – 520 |
| Other changes | – 4 | – 4 | – | – | – | – |
| 31 March 2016 | 44,748 | 240 | 44,508 | 218 | 58 | – 388 |
Accumulated other equity
Interim Group Financial Statements
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 31 March 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 interim Group financial statements. All Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) which were mandatory at 31 March 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 (DRSC e. V.).
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 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 mainly to internal sales of products, the provision of funding for Group companies and the related interest. These items are eliminated in the relevant "Eliminations" column. 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 to 31 March 2017 have been neither audited nor reviewed by the Group auditor.
The Interim Group Financial Statements to 31 March 2017 consolidate BMWAG and all material subsidiaries over which BMWAG exercises control, either directly or indirectly, including one special purpose securities fund and 41 structured entities. 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 three months of 2017:
| Germany | Foreign | Total | |
|---|---|---|---|
| Included at 31 December 2016 |
21 | 178 | 199 |
| Included for the first time in 2017 |
– | 4 | 4 |
| No longer included in 2017 |
– | 2 | 2 |
| Included at 31 March 2017 |
21 | 180 | 201 |
Herald International Financial Leasing Co., Ltd., Tianjin, was consolidated for the first time in the first quarter of 2017.
The other changes in the Group reporting entity have no material impact on the results of operations, financial position and 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. A 15% stake was sold to Intel Holdings B. V., Schiphol-Rijk, and 10% to a consortium comprising NavInfo Co. Ltd., Peking, Tencent Holdings Ltd., Shenzhen, and GIC Private Ltd., Singapore. The transaction with Intel Holdings B. V., Schiphol-Rijk, was completed on 31 January 2017. The transaction with the consortium is expected to be closed during the second quarter of 2017, after receipt of the approval of the relevant regulatory authorities.
The sale 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.
Interim Group Financial Statements Notes to the Group
Financial Statements Accounting Principles and Policies Notes to the Income Statement
The exchange rates applied for currency translation
purposes in accordance with the modified closing rate method, and which have a material impact on the Group Financial Statements, were as follows:
| Closing rate | Average rate | |||||
|---|---|---|---|---|---|---|
| 31.3. 2017 | 31.12. 2016 | 1st quarter 2017 | 1st quarter 2016 | |||
| US-Dollar | 1.07 | 1.06 | 1.07 | 1.10 | ||
| British Pound | 0.86 | 0.85 | 0.86 | 0.77 | ||
| Chinese Renminbi | 7.35 | 7.34 | 7.34 | 7.21 | ||
| Japanese Yen | 119.16 | 123.34 | 121.03 | 126.98 | ||
| Korean Won | 1,194.29 | 1,274.34 | 1,227.53 | 1,325.04 |
For further information regarding foreign currency translation, please refer to note 3 of the BMW Group Financial Statements for the year ended 31 December 2016.
During the first quarter of 2017, there have been no significant changes in the assessments of the impact of financial reporting rules that have not yet been applied. For further details, please see the comments in the Group Financial Statements for the year ended 31 December 2016.
Revenues by activity comprise the following:
| in € million | 1st quarter 2017 | 1st quarter 2016 |
|---|---|---|
| Sales of products and related goods | 16,481 | 14,871 |
| Income from lease instalments | 2,492 | 2,335 |
| Sales of products previously leased to customers | 2,713 | 2,041 |
| Interest income on loan financing | 937 | 835 |
| Other income | 825 | 771 |
| Revenues | 23,448 | 20,853 |
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 | 1st quarter 2017 | 1st quarter 2016 |
|---|---|---|
| Manufacturing costs | 9,953 | 8,778 |
| Cost of sales relating to financial services business | 5,911 | 4,912 |
| Research and development expenses | 1,185 | 985 |
| thereof amortisation of capitalised development costs | 304 | 304 |
| Other cost of sales | 1,588 | 1,698 |
| Cost of sales | 18,637 | 16,373 |
Other cost of sales comprise mainly warranty expenses, service contracts, telemetrics and roadside assistance.
Interim Group Financial Statements
Notes to the Group Financial Statements
| ıts | ||
|---|---|---|
| in $\epsilon$ million |
07
| Notes to the Income |
|---|
| Statement |
| in € million | 1st quarter 2017 | 1st quarter 2016 |
|---|---|---|
| Selling expenses | 1,404 | 1,327 |
| Administrative expenses | 774 | 661 |
| Selling and administrative expenses | 2,178 | 1,988 |
Selling expenses comprise mainly marketing, advertising and sales personnel costs. Administrative expenses relate mainly to personnel and IT costs.
These items principally comprise exchange gains and losses, gains and losses on the disposal of assets, impairment losses and reversals and income / expense from the reversal of, and allocation to, provisions. Income from the reversal of provisions includes amounts arising on the termination of legal disputes.
Result from equity accounted investments includes the 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 arising from the sale of 15 % of the shares of HERE International B. V., Amsterdam, by THERE Holding B. V., Amsterdam, during the first quarter 2017 is provided in note 2.
| in € million | 1st quarter 2017 | 1st quarter 2016 |
|---|---|---|
| Interest and similar income | 61 | 35 |
| Interest and similar expenses | – 98 | –118 |
| Net interest result | – 37 | – 83 |
| in € million | 1st quarter 2017 | 1st quarter 2016 |
|---|---|---|
| Result on investments | – | – 66 |
| Sundry other financial result | 45 | –11 |
| Other financial result | 45 | – 77 |
Result on investments in the first quarter 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 | 1st quarter 2017 | 1st quarter 2016 |
|---|---|---|
| Current tax expense | 444 | 369 |
| Deferred tax expense | 412 | 358 |
| Income taxes | 856 | 727 |
The effective tax rate for the three-month-period ended 31 March 2017 was 28.5% (2016: 30.7%) 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.
The computation of earnings per share is based on the following figures:
| 1st quarter 2017 | 1st quarter 2016 | ||
|---|---|---|---|
| Profit attributable to shareholders of BMW AG | € million | 2,138.9 | 1,631.3 |
| Profit attributable to common stock | € million | 1,959.5 | 1,495.2 |
| Profit attributable to preferred stock | € million | 179.4 | 136.1 |
| Average number of common stock shares in circulation | number | 601,995,196 | 601,995,196 |
| Average number of preferred stock shares in circulation | number | 55,114,404 | 54,809,404 |
| Basic earnings per share of common stock | € | 3.26 | 2.48 |
| Basic earnings per share of preferred stock | € | 3.26 | 2.48 |
In computing earnings per share of preferred stock, the additional dividend of € 0.02 per share of preferred stock is spread proportionately 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.
Interim Group Financial Statements
Notes to the Group Financial Statements Notes to the Statement of Comprehensive
Income Notes to the Balance Sheet
Other comprehensive income for the period after tax comprises the following:
| in € million | 1st quarter 2017 | 1st quarter 2016 |
|---|---|---|
| Remeasurement of the net defined benefit liability for pension plans | 459 | –1,053 |
| Deferred taxes | –123 | 331 |
| Items not expected to be reclassified to the income statement in the future | 336 | – 722 |
| Available-for-sale securities | 2 | 48 |
| thereof gains / losses arising in the period under report | 6 | 55 |
| thereof reclassifications to the income statement | – 4 | – 7 |
| Financial instruments used for hedging purposes | – 527 | 2,165 |
| thereof gains / losses arising in the period under report | – 683 | 1,959 |
| thereof reclassifications to the income statement | 156 | 206 |
| Other comprehensive income from equity accounted investments | 2 | 54 |
| Deferred taxes | 150 | – 753 |
| Currency translation foreign operations | 51 | – 445 |
| Items expected to be reclassified to the income statement in the future | – 322 | 1,069 |
| Other comprehensive income for the period after tax | 14 | 347 |
Deferred taxes on components of other comprehensive income for the first quarter were as follows:
| 1st quarter 2017 | 1st 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 | 459 | –123 | 336 | –1,053 | 331 | – 722 |
| Available-for-sale securities | 2 | – 2 | – | 48 | –14 | 34 |
| Financial instruments used for hedging purposes | – 527 | 149 | – 378 | 2,165 | – 707 | 1,458 |
| Other comprehensive income from equity accounted investments | 2 | 3 | 5 | 54 | – 32 | 22 |
| Currency translation foreign operations | 51 | – | 51 | – 445 | – | – 445 |
| Other comprehensive income | –13 | 27 | 14 | 769 | – 422 | 347 |
Other comprehensive income arising from equity accounted investments is reported in the Statement of Changes in Equity within currency translation with an amount of € – 5 million (2016: € – 75 million)
and within financial instruments used for hedging purposes with an amount of € 10 million (2016: € 97 million).
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 | 31. 3. 2017 | 31.12. 2016 |
|---|---|---|
| Capitalised development costs | 7,353 | 7,221 |
| Other intangible assets | 561 | 572 |
| Goodwill | 381 | 364 |
| thereof allocated to the Automotive cash-generating unit |
33 | 33 |
| thereof allocated to the Financial Services cash-generating unit |
348 | 331 |
| Intangible assets | 8,295 | 8,157 |
Other intangible assets include a brand-name right amounting to € 42 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.
Intangible assets amounting to € 42 million (31 December 2016: € 42 million) are subject to restrictions on title.
Intangible assets developed during the first three months of the year as follows:
| in € million | 1st quarter 2017 |
1st quarter 2016 |
|---|---|---|
| Capitalised development costs | ||
| Investments | 436 | 293 |
| Amortisation | 304 | 304 |
| Other intangible assets | ||
| Investments | 10 | 5 |
| Amortisation | 49 | 44 |
As in the previous year, there was no requirement to recognise or reverse impairment losses on intangible assets during the period under report.
Property, plant and equipment developed during the first three months of the year as follows:
| in € million | 1st quarter 2017 |
1st quarter 2016 |
|---|---|---|
| Investments | 595 | 400 |
| Depreciation | 837 | 839 |
| Disposals | 3 | 5 |
No impairment losses were recognised during the first quarter of 2017.
Purchase commitments for property, plant and equipment totalled € 4,320 million (31 December 2016: € 3,141 million).
Interim Group Financial Statements Notes to the Group
Financial Statements Notes to the Balance Sheet
17
Leased products developed during the first quarter as follows:
| in € million | 1st quarter 2017 |
1st quarter 2016 |
|---|---|---|
| Additions | 4,524 | 3,540 |
| Depreciation | 774 | 1,075 |
| Disposals | 3,944 | 2,311 |
Investments accounted for using the equity method comprise the joint ventures BMW Brilliance Automotive Ltd., Shenyang, DriveNow GmbH & Co. KG, Munich, and DriveNow Verwaltungs GmbH, Munich and the BMW Group's interests in the associated company THERE Holding B. V., Amsterdam.
Other investments relate to investments in non-consolidated subsidiaries, joint ventures, joint operations and associated companies, participations and non-current marketable securities.
Receivables from sales financing totalling € 80,891 million (31 December 2016: € 78,260 million) include credit financing for retail customers and dealerships, and finance leases.
Financial assets comprise:
| in € million | 31. 3. 2017 | 31.12. 2016 |
|---|---|---|
| Marketable securities and investment funds |
5,404 | 5,287 |
| Derivative instruments | 3,161 | 3,922 |
| Credit card receivables | 269 | 287 |
| Loans to third parties | 157 | 129 |
| Other | 159 | 145 |
| Financial assets | 9,150 | 9,770 |
Income tax assets totalling € 1,843 million (31 December 2016: € 1,938 million) include € 349 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:
| 31. 3. 2017 | 31.12. 2016 |
|---|---|
| 2,014 | 1,914 |
| 1,040 | 1,217 |
| 1,256 | 1,135 |
| 802 | 779 |
| 314 | 422 |
| 371 | 387 |
| 862 | 828 |
| 6,659 | 6,682 |
Inventories comprise the following:
| in € million | 31. 3. 2017 | 31.12. 2016 |
|---|---|---|
| Finished goods and goods for resale | 11,357 | 9,684 |
| Work in progress, unbilled contracts | 1,199 | 1,157 |
| Raw materials and supplies | 1,100 | 1,000 |
| Inventories | 13,656 | 11,841 |
The Group Statement of Changes in Equity is shown on pages 42 and 43.
see pages 42 and 43
At 31 March 2017 common stock issued by BMWAG, as at 31 December 2016, amounted 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. The number of authorised shares and the Authorised Capital of BMWAG amounted to 4.2 million shares and € 4.2 million respectively at the end of the reporting period. The Company is authorised until 14 May 2019 to issue 5 million shares of non-voting preferred stock amounting to nominal € 5.0 million. The BMW Group did not hold any treasury shares at 31 March 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.
Accumulated other equity comprises all amounts recognised directly in equity resulting from the translation of the financial statements of foreign subsidiaries, the effects of recognising changes in the fair value of derivative financial instruments and marketable securities directly in equity and the related deferred taxes recognised directly in equity.
Pension provisions stood at € 3,954 million (31 December 2016: € 4,587 million). Remeasurements of the net defined benefit liability for pension plans reduced provisions by € 459 million in the first three months of 2017, mainly due to lower inflation and higher interest rates in Germany and positive investment income on UK plan assets.
Other provisions consist of the following:
| in € million | 31. 3. 2017 | 31.12. 2016 |
|---|---|---|
| Obligations for personnel and social expenses |
2,538 | 2,191 |
| Obligations for ongoing operational expenses |
6,255 | 6,527 |
| Other obligations | 2,242 | 2,200 |
| Other provisions | 11,035 | 10,918 |
Provisions for obligations for ongoing operational expenses include mainly warranty obligations. Also included are expected payments for bonuses, rebates and other price deductions.
Income tax liabilities totalling € 886 million (31 December 2016: € 1,074 million) include € 32 million (31 December 2016: € 33 million), which is expected to be settled after more than twelve months. Some of the liabilities may be settled earlier than this depending on the timing of proceedings.
Current income tax liabilities comprise € 158 million (31 December 2016: € 269 million) for taxes payable and € 728 million (31 December 2016: € 805 million) for tax provisions.
Notes to the Group Financial Statements Notes to the
Interim Group Financial Statements
28
| liabilities comprise the following: | |||
|---|---|---|---|
| -- | -- | -- | ------------------------------------- |
| Other Disclosures | |
|---|---|
| ------------------- | -- |
BMW Group relating to financing activities. Financial
| in € million | 31. 3. 2017 | 31.12. 2016 |
|---|---|---|
| Bonds | 44,817 | 44,421 |
| Asset backed financing transactions | 16,339 | 16,474 |
| Liabilities to banks | 15,277 | 14,892 |
| Liabilities from customer deposits (banking) | 13,743 | 13,512 |
| Commercial paper | 2,668 | 3,852 |
| Derivative instruments | 3,420 | 3,331 |
| Other | 1,148 | 1,249 |
| Financial liabilities | 97,412 | 97,731 |
Other liabilities comprise the following items:
| in € million | 31. 3. 2017 | 31.12. 2016 |
|---|---|---|
| Deferred income | 7,368 | 7,256 |
| Advance payments from customers | 907 | 977 |
| Deposits received | 989 | 893 |
| Other taxes | 1,093 | 807 |
| Payables to other companies in which an investment is held |
785 | 615 |
| Payables to subsidiaries | 78 | 99 |
| Social security | 90 | 92 |
| Sundry | 5,144 | 4,816 |
| Other liabilities | 16,454 | 15,555 |
Sundry other liabilities include mainly bonuses for services already performed as well as sales promotions, commission payable and credit balances on customers' accounts.
For disclosures relating to contingent liabilities, please see note 36 to the BMW Group Financial Statements for the year ended 31 December 2016, since there have been no significant changes during the first three months of 2017.
A description of the accounting treatment and measurement of derivative financial instruments and allocation of financial instruments to the various measurement levels is provided in notes 4 and 37 of the BMW Group Financial Statements for the year ended 31 December 2016.
Amounts are discounted to 31 March 2017 on the basis of the following interest rates:
| ISO Code | |||||
|---|---|---|---|---|---|
| in % | EUR | USD | GBP | JPY | CNY |
| Interest rate for six months | – 0.23 | 1.38 | 0.58 | – 0.06 | 3.04 |
| Interest rate for one year | – 0.22 | 1.37 | 0.53 | 0.04 | 4.38 |
| Interest rate for five years | 0.19 | 2.05 | 0.85 | 0.11 | 4.51 |
| Interest rate for ten years | 0.79 | 2.41 | 1.19 | 0.27 | 4.86 |
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.
Interim Group Financial Statements
Notes to the Group Financial Statements Other Disclosures
The following table shows the amounts allocated to each measurement level at the end of the reporting period:
| 31. 3. 2017 Level hierarchy in accordance with IFRS 13 |
|||||
|---|---|---|---|---|---|
| 5,491 | – | – | |||
| 241 | – | – | |||
| – | 1,604 | – | |||
| – | 1,277 | – | |||
| – | 280 | – | |||
| – | 1,389 | – | |||
| – | 1,797 | – | |||
| – | 234 | – | |||
| 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 2016 financial year, there were no reclassifications within the level hierarchy during the first three months of 2017.
Where a financial instrument's fair value was required only for disclosure purposes, this was determined using the discounted cash flow method and taking account of the BMW Group's own default risk. For this reason, the fair values calculated can be allocated to Level 2.
For financial instruments held by the BMW Group which are not measured at fair value, the carrying amounts generally correspond to fair values.
The following items are the main exceptions to this general rule:
| 31. 3. 2017 | 31.12. 2016 | |||
|---|---|---|---|---|
| in € million | Fair value | Carrying amount | Fair value | Carrying amount |
| Receivables from sales financing | 84,251 | 80,891 | 81,621 | 78,260 |
| Bonds | 45,557 | 44,817 | 45,140 | 44,421 |
32 Related parties
Transactions of Group entities with related parties arise exclusively in the normal course of the business of each of the parties concerned and are conducted at normal market conditions.
The major part of the BMW Group's transactions with related parties relates to the joint venture BMW Brilliance Automotive Ltd., Shenyang.
| Supplies and services performed |
Supplies and services received |
Receivables | Payables | ||||||
|---|---|---|---|---|---|---|---|---|---|
| in € million | 1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
31. 3. 2017 | 31.12. 2016 | 31. 3. 2017 | 31.12. 2016 | |
| BMW Brilliance Automotive Ltd. | 1,315 | 1,087 | 14 | 8 | 1,038 | 1,215 | 785 | 615 |
Business relationships of the BMW Group with other associated companies and joint ventures as well as with non-consolidated subsidiaries are of limited scale.
Stefan Quandt, Germany, is a shareholder and Deputy Chairman of the Supervisory Board of BMWAG. He is also the sole shareholder and Chairman of the Supervisory Board of DELTON AG, Bad Homburg v. d. H., which, via its subsidiaries, performed logistic-related services for the BMW Group during the first quarter. In addition, companies of the DELTON Group acquired vehicles from the BMW Group through leasing.
Stefan Quandt, Germany, is also the indirect majority shareholder of SOLARWATT GmbH, Dresden. A cooperation arrangement exists between BMWAG and SOLARWATT GmbH, Dresden, within the field of electric mobility. The focus of this collaboration is on providing complete photovoltaic solutions for rooftop systems and carports to BMWi customers. SOLARWATT GmbH, Dresden, leased vehicles from the BMW Group during the first three months of 2017.
Susanne Klatten, Germany, is a shareholder and member of the Supervisory Board of BMWAG and a shareholder and Deputy Chairman of the Supervisory Board of ALTANA AG, Wesel. ALTANA AG, Wesel, acquired vehicles from the BMW Group in the first quarter of 2017, mainly through leasing.
Susanne Klatten, Germany, is also the sole shareholder and Chairwoman of the Supervisory Board of UnternehmerTUM GmbH, Garching. During the first three months of 2017, the BMW Group bought in services from UnternehmerTUM GmbH, Garching, primarily in the form of consultancy and workshop services.
Apart from vehicle leasing and credit financing contracts concluded at normal 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 obligations relating to pensions and 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 did not have any 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 which could have a major impact on the earnings performance, financial position and net assets of the BMW Group.
Financial Statements Segment Information
For information on the definition of reportable segments and the management system, please see
the BMW Group Financial Statements for the year ended 31 December 2016. No changes have been made either in the accounting policies applied or in the definition of reportable segments as compared to 31 December 2016.
Segment information by operating segment for the first quarter is as follows:
| Automotive | Motorcycles | Financial Services | ||||
|---|---|---|---|---|---|---|
| in € million | 1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
| Segment information by operating segment |
||||||
| External revenues | 16,179 | 14,607 | 621 | 580 | 6,648 | 5,666 |
| Inter-segment revenues | 4,513 | 4,207 | 2 | 2 | 398 | 366 |
| Total revenues | 20,692 | 18,814 | 623 | 582 | 7,046 | 6,032 |
| Segment result | 1,871 | 1,763 | 125 | 94 | 595 | 570 |
| Result from equity accounted investments | 351 | 71 | – | – | – | – |
| Capital expenditure on non-current assets | 1,030 | 692 | 9 | 5 | 6,034 | 4,759 |
| Depreciation and amortisation on non-current assets | 1,161 | 1,162 | 20 | 18 | 2,322 | 2,349 |
| Automotive | Motorcycles | Financial Services | ||||
|---|---|---|---|---|---|---|
| in € million | 31. 3. 2017 | 31.12. 2016 | 31. 3. 2017 | 31.12. 2016 | 31. 3. 2017 | 31.12. 2016 |
| Segment assets | 9,245 | 9,411 | 634 | 600 | 11,738 | 11,049 |
| Investments accounted for using the equity method | 2,913 | 2,546 | – | – | – | – |
| Group | Reconciliation to Group figures | Other Entities | ||||||
|---|---|---|---|---|---|---|---|---|
| 1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
1st quarter 2016 |
1st quarter 2017 |
|||
| Segment information by operating segment |
||||||||
| External revenues | 20,853 | 23,448 | – | – | – | – | ||
| Inter-segment revenues | – | – | – 4,576 | – 4,915 | 1 | 2 | ||
| Total revenues | 20,853 | 23,448 | – 4,576 | – 4,915 | 1 | 2 | ||
| Segment result | 2,368 | 3,005 | – 57 | 418 | – 2 | – 4 | ||
| Result from equity accounted investments | 71 | 351 | – | – | – | – | ||
| Capital expenditure on non-current assets | 4,238 | 5,565 | –1,218 | –1,508 | – | – | ||
| Depreciation and amortisation on non-current assets | 2,262 | 1,964 | –1,267 | –1,539 | – | – |
| Group | Reconciliation to Group figures | Other Entities | ||||
|---|---|---|---|---|---|---|
| 31.12. 2016 | 31. 3. 2017 | 31.12. 2016 | 31. 3. 2017 | 31.12. 2016 | 31. 3. 2017 | |
| Segment assets | 188,535 | 191,600 | 92,112 | 94,913 | 75,363 | 75,070 |
| Investments accounted for using the equity method | 2,546 | 2,913 | – | – | – | – |
Interim Group Financial Statements
Notes to the Group Financial Statements Segment Information
| to the corresponding Group figures as follows: | ||
|---|---|---|
| in € million | 1st quarter 2017 | 1st quarter 2016 |
| Reconciliation of segment result | ||
| Total for reportable segments | 2,587 | 2,425 |
| Financial result of Automotive segment and Motorcycles segment | 408 | – 29 |
| Elimination of inter-segment items | 10 | – 28 |
| Reconciliation of capital expenditure on non-current assets | ||
|---|---|---|
| Total for reportable segments | 7,073 | 5,456 |
| Elimination of inter-segment items | –1,508 | –1,218 |
| Total Group capital expenditure on non-current assets | 5,565 | 4,238 |
| Reconciliation of depreciation and amortisation on non-current assets | ||
| Total for reportable segments | 3,503 | 3,529 |
| Elimination of inter-segment items | –1,539 | –1,267 |
| Total Group depreciation and amortisation on non-current assets | 1,964 | 2,262 |
Group profit before tax 3,005 2,368
| in € million | 31. 3. 2017 | 31.12. 2016 |
|---|---|---|
| Reconciliation of segment assets | ||
| Total for reportable segments | 96,687 | 96,423 |
| Non-operating assets – Other Entities segment | 7,649 | 7,432 |
| Total liabilities – Financial Services segment | 128,242 | 126,679 |
| Non-operating assets – Automotive and Motorcycles segments | 47,139 | 45,923 |
| Liabilities of Automotive and Motorcycles segments not subject to interest | 35,962 | 33,858 |
| Elimination of inter-segment items | –124,079 | –121,780 |
| Total Group assets | 191,600 | 188,535 |
60
Page 62 Financial Calendar
Page 63 Contacts
Other Information
Financial Calendar
Contacts
11 May 2017 Annual General Meeting
3 August 2017 Quarterly Report to 30 June 2017
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
| Telephone | + 49 89 382 - 2 45 44 |
|---|---|
| + 49 89 382 - 2 41 18 |
|
| Fax | + 49 89 382 - 2 44 18 |
| [email protected] |
| Telephone | + 49 89 382 - 3 16 84 |
|---|---|
| + 49 89 382 - 2 53 87 |
|
| Fax | + 49 89 382 - 1 46 61 |
| [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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