Quarterly Report • May 6, 2015
Quarterly Report
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| 1st quarter 2015 | 1st quarter 2014 | Change in % | ||
|---|---|---|---|---|
| Principle performance indicators reported on during the year | ||||
| BMW Group | ||||
| Workforce at 31 March1 | 117,554 | 111,378 | 5.5 | |
| Profit before tax | € million | 2,269 | 2,1592 | 5.1 |
| Automotive segment | ||||
| Sales volume3 | units | 526,669 | 487,024 | 8.1 |
| Revenues | € million | 18,893 | 16,559 | 14.1 |
| EBIT margin | % (change in %pts) | 9.5 | 9.5 | |
| Motorcycles segment | ||||
| Sales volume | units | 31,370 | 28,719 | 9.2 |
| Further key performance figures | ||||
| Automotive segment | ||||
| Sales volume | ||||
| BMW3 | units | 451,576 | 428,259 | 5.4 |
| MINI | units | 74,312 | 57,868 | 28.4 |
| Rolls-Royce | units | 781 | 897 | –12.9 |
| Total 3 | 526,669 | 487,024 | 8.1 | |
| Production | ||||
| BMW4 | units | 471,404 | 461,096 | 2.2 |
| MINI | units | 83,907 | 57,674 | 45.5 |
| Rolls-Royce | units | 963 | 1,154 | –16.6 |
| Total 4 | 556,274 | 519,924 | 7.0 | |
| Motorcycles segment | ||||
| Production | units | 43,357 | 38,649 | 12.2 |
| Financial Services segment | ||||
| New contracts with retail customers | 384,565 | 348,072 | 10.5 | |
| Operating cash flow Automotive segment | € million | 1,830 | 1,9422 | –5.8 |
| Revenues | € million | 20,917 | 18,235 | 14.7 |
| Automotive | € million | 18,893 | 16,559 | 14.1 |
| Motorcycles | € million | 567 | 472 | 20.1 |
| Financial Services | € million | 6,058 | 4,890 | 23.9 |
| Other Entities | € million | 2 | 2 | |
| Eliminations | € million | –4,603 | –3,688 | –24.8 |
| Profit before financial result (EBIT) | € million | 2,521 | 2,090 | 20.6 |
| Automotive | € million | 1,794 | 1,580 | 13.5 |
| Motorcycles | € million | 115 | 64 | 79.7 |
| Financial Services | € million | 555 | 465 | 19.4 |
| Other Entities | € million | 40 | 10 | |
| Eliminations | € million | 17 | –29 | |
| € million | 2,269 | 2,1592 | 5.1 | |
| Automotive | € million | 1,634 | 1,643 | –0.5 |
| Motorcycles | € million | 114 | 63 | 81.0 |
| Profit before tax Financial Services |
€ million | 559 | 4532 | 23.4 |
| Other Entities Eliminations |
€ million € million |
–23 –15 |
57 –57 |
73.7 |
| Income taxes | € million | –753 | –7012 | –7.4 |
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
Earnings per share5 € 2.30/2.30 2.22/2.22 3.6/3.6
3 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 62,494 units, 2015: 72,185 units).
4 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 70,824 units. 2015, 69,353 units).
5 Common/preferred stock. In computing earnings per share of preferred stock, earnings to cover the additional dividend of €0.02 per share of preferred stock are spread over the quarters of the corresponding financial year.
2 BMW GROUP IN FIGURES
46 Financial Calendar 47 Contacts
The BMW Group continued to perform well during the first three months of 2015, selling 526,6691 BMW, MINI and Rolls-Royce brand vehicles and setting a new sales volume record for the sixth quarter in succession (2014: 487,0241 units; +8.1%).
In a favourable market environment, BMW Motorrad also registered its best-ever first-quarter sales volume performance, with motorcycles sales up by a solid 9.2% to 31,370 units (2014: 28,719 units).
The Financial Services segment benefited from the continued upward trend in the automobile sector and made a fine start to the year, concluding a total of 384,565 new lease and credit financing contracts with retail customers during the three-month period (2014: 348,072 contracts; +10.5%).
The positive trend recorded by each of the three segments is also reflected in the Group's first-quarter revenues,
which climbed to € 20,917 million (2014: € 18,235 million; + 14.7%). On the back of these positive developments, EBIT improved by 20.6% to € 2,521 million (2014: € 2,090 million) and profit before tax by 5.1% to € 2,269 million (2014: € 2,1592 million), at both levels, a new first-quarter record for the BMW Group.
The BMW Group had a worldwide workforce of 117,554 employees at the end of the first quarter 2015 (2014: 111,378 employees; +5.5%). The BMW Group continues to recruit engineers and skilled workers as needed, thus ensuring its ability to make further progress with innovative technologies, including developments in the field of digitisation. Achieving this aim is seen as an important aspect of extending the Group's competitive lead.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 62,494 units, 2015: 72,185 units).
2 Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
3
General Information
4
Bayerische Motoren Werke Aktiengesellschaft (BMWAG), which is based in Munich, Germany, is the parent company of the BMW Group. The primary business object of the BMW Group is the development, manufacture and sale of engines as well as all vehicles equipped with those engines. The BMW Group is sub-divided into the Automotive, Motorcycles, Financial Services and Other Entities segments (the latter primarily comprising holding companies and Group financing companies). The BMW Group operates on a global scale and is represented in more than 140 countries worldwide. Its research and innovation network is spread over twelve locations in five countries. The Group's production network currently comprises 30 locations in 14 countries.
Long-term thinking and responsible action have long been the cornerstones of our business success. Striving for ecological and social sustainability along the entire value-added chain, taking full responsibility for our products and giving an unequivocal commitment to preserving resources are prime objectives firmly embedded in our corporate strategy. As a result of these endeavours, we have ranked among the most sustainable companies in the automobile industry for many years.
Further information regarding the BMW Group's business model and its internal management system can be found in the chapter "General Information on the BMW Group" in the Annual Report 2014 (page 18 et seq.).
5
Report on Economic Position General Economic Environment in the first quarter 2015
The majority of the world's automobile markets continued their upward trend at the beginning of 2015. Among the major markets, the USA and most European countries saw robust growth. Decreases, however, were recorded in Japan and in some emerging markets.
In the USA, demand grew dynamically, continuing the trend observed in recent years. The US automobile market grew by 5.6% compared to the first three-month period of the previous year.
As a whole, Europe seems to be well on the road to recovery, with vehicle registration figures up by 8.5%. The fastest growth rates were again recorded in the southern countries of the EU, where market slumps had been most pronounced in recent years. The Spanish automobile market, for example, grew sharply by almost one third (+32.2%), while Italy managed a significant 13.6% increase. Among the major EU countries, solid growth rates were recorded in Germany (+6.4%), France (+7.2%) and the UK (+6.8%).
In Japan, registration figures were down by 15.0% on the same quarter one year earlier, when the market had benefited from purchases brought forward to pre-empt the value-added tax hike on 1 April 2014.
The automobile market in China saw continued growth during the first three months of the year, with new registrations rising by 15.5% despite the moderate economic slowdown.
The picture on emerging markets was inconsistent, with some countries doing less well than others, notably Brazil and Russia. Brazil saw a further 16.4% contraction in first-quarter registrations, while the Russian market slumped by more than one third (– 36.4%) as economic recession began to take its toll.
Markets for 500 cc plus class motorcycles generally continued their upward trend at the beginning of 2015. The total number of new motorcycles registered worldwide went up by 3.3%. The European market grew by 8.2% in the first quarter, benefiting above all from the sharp recovery in Southern Europe. France recorded a relatively small increase of 0.5%, whereas markets in Spain (+ 26.5%), Italy (+ 10.0%) and Germany (+ 7.4%) were significantly ahead year-on-year. The motorcycle market also showed good signs of recovery in the USA, growing by 5.8%.
Low oil prices helped bolster economic growth in the first quarter 2015. One consequence of this was that inflation rates slowed down further, even showing some deflationary tendencies. In Europe, the European Central Bank (ECB) began buying government bonds at the beginning of the year in response to generally lower price levels. The massive expansion of money supply within the eurozone caused the euro to lose value against the US dollar and other currencies. As a result of the strong economic growth rate and low unemployment figures in the USA, the US Reserve Bank began the processes of preparing markets for a change in monetary policies. By contrast, the Bank of England and the Bank of Japan continued to pursue their respective expansive policies. In the long run, China wishes to slow down the extreme pace at which its economy has been growing in recent years. Nevertheless, the reference interest rate there was lowered in order to avoid the economy cooling off too rapidly. The central banks in Australia and Canada also resolved to reduce their benchmark rates.
Prices on the world's used car markets remained at the previous year's levels during the first quarter 2015, with selling prices fluctuating within normal ranges.
Report on Economic Position Automotive Segment
The BMW Group set a new sales volume record in the first quarter with sales of 526,6691 BMW, MINI and Rolls-Royce brand vehicles (2014: 487,0241 units; +8.1%). The BMW and MINI brands each made substantial contributions to this excellent performance with new high first-quarter figures. Worldwide, the BMW Group sold 451,5761 BMW brand vehicles (2014: 428,2591 units; + 5.4%) and 74,312 MINI brand vehicles (2014: 57,868; + 28.4%). Rolls-Royce Motor Cars' first-quarter sales figure of 781 units was down on the previous year's high level (2014: 897 units; –12.9%).
In Europe, sales of the Group's three brands rose sharply by 9.6% to 234,849 units (2014: 214,210 units). Germany saw a 3.4% rise in sales volume to 64,610 units (2014: 62,502 units). In total, 53,534 BMW, MINI and Rolls-Royce brand vehicles were handed over to customers in the sales region Great Britain during the three-month period, significantly up on the previous year (2014: 46,500 units; +15.1%).
On the American continent, customers took delivery of 109,743 vehicles (2014: 99,840 units; + 9.9%), with the USA accounting for most of the increase with sales up by 12.6% to 91,479 units (2014: 81,248 units).
In Asia, the BMW Group recorded a solid growth rate of 5.1% in the first quarter 2015, with 166,6781 units sold (2014: 158,5821 units). Sales in China were 6.4% up on the previous year at 115,0781 units (2014: 108,1431 units).
The BMW brand recorded a new sales volume record of 451,576 units in the first quarter of 2015 (2014: 428,259 units; + 5.4%), thus retaining its position as world market leader in the premium segment. The BMW X5 as well as the 4, 5 and 6 Series, each market leaders in their relevant segments, remained the mainstays of success within the brand's model portfolio.
Sales of the BMW 1 Series were down on the previous year at 41,541 units (2014: 50,178 units; –17.2%), reflecting the fact that the Coupé and Convertible body variants are now reported as part of the 2 Series. In total, 27,930 BMW 2 Series cars were delivered to customers (2014: 2,608 units). Sales volume of 107,283 units was recorded for the BMW 3 Series during the period from January to March (2014: 116,671 units; –8.0%). Here too, the Coupé and Convertible models have become part of the 4 Series. First-quarter sales of the 4 Series totalled 36,545 units worldwide, more than twice the number sold one year earlier (2014: 17,709 units). The BMW 5 Series achieved a sales volume of 88,621 units (2014: 91,600 units; –3.3%).
With sales of 40,242 units – almost one third ahead of the previous year (2014: 31,025 units; + 29.7%) – the BMW X5 was the most successful model within the BMW X family. By contrast, first-quarter sales of the BMW X1 and the BMW X3 fell to 30,435 units (2014: 43,262 units; –29.6%) and to 30,521 units (2014: 40,125 units; –23.9%) respectively.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 62,494 units, 2015: 72,185 units).
2 Principal performance indicators reported on during the year.
3 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 70,824 units, 2015: 69,353 units).
| Sales volume of BMW vehicles by model series* |
|---|
| ----------------------------------------------- |
| in units | |
|---|---|
| -- | ---------- |
| 1st quarter 2015 | 1st quarter 2014 | Change in % | |
|---|---|---|---|
| BMW 1 Series | 41,541 | 50,178 | –17.2 |
| BMW 2 Series | 27,930 | 2,608 | – |
| BMW 3 Series | 107,283 | 116,671 | –8.0 |
| BMW 4 Series | 36,545 | 17,709 | – |
| BMW 5 Series | 88,621 | 91,600 | –3.3 |
| BMW 6 Series | 6,977 | 8,223 | –15.2 |
| BMW 7 Series | 8,803 | 12,670 | –30.5 |
| BMW X1 | 30,435 | 43,262 | –29.6 |
| BMW X3 | 30,521 | 40,125 | –23.9 |
| BMW X4 | 13,925 | – | – |
| BMW X5 | 40,242 | 31,025 | 29.7 |
| BMW X6 | 9,588 | 9,160 | 4.7 |
| BMW Z4 | 2,529 | 3,006 | –15.9 |
| BMW i | 6,636 | 2,022 | – |
| BMW total | 451,576 | 428,259 | 5.4 |
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 62,494 units, 2015: 72,185 units).
74,312 MINI brand vehicles were sold worldwide in the first quarter (2014: 57,868 units), almost one third (28.4%) up on the previous year and a new first-quarter record as well. Sales of the MINI 3- and 5-Door more than doubled to 47,922 units (2014: 17,860 units). A sales volume of 18,639 units (2014: 25,108 units; – 25.8%) was recorded for the MINI Countryman.
| Sales volume of MINI vehicles by model variant | |||
|---|---|---|---|
| in units | |||
| 1st quarter 2015 | 1st quarter 2014 | Change in % | |
| MINI 3- and 5-Door | 47,922 | 17,860 | – |
| MINI Convertible | 3,595 | 3,831 | –6.2 |
| MINI Clubman | 297 | 4,484 | –93.4 |
| MINI Countryman | 18,639 | 25,108 | –25.8 |
| MINI Coupé | 741 | 1,061 | –30.2 |
| MINI Roadster | 991 | 1,449 | –31.6 |
| MINI Paceman | 2,127 | 4,075 | –47.8 |
| MINI total | 74,312 | 57,868 | 28.4 |
8
46 Financial Calendar 47 Contacts
Although Rolls-Royce Motor Cars was unable to match its previous year's first-quarter performance, the 781 units sold nevertheless represented its second-best start to a year (2014: 897 units; –12.9%). The Rolls-Royce Ghost
was presented to 310 new owners in various parts of the world (2014: 305 units; + 1.6%), while 383 customers opted for the Rolls-Royce Wraith (2014: 446 units; –14.1%).
| Sales volume of Rolls-Royce vehicles by model variant | |||
|---|---|---|---|
| in units | |||
| 1st quarter 2015 | 1st quarter 2014 | Change in % | |
| Phantom | 88 | 146 | –39.7 |
| Ghost | 310 | 305 | 1.6 |
| Wraith | 383 | 446 | –14.1 |
| Rolls-Royce total | 781 | 897 | –12.9 |
The BMW Group continued its model offensive at the beginning of 2015. The new BMW 2 Series Convertible is the successor model to the 1 Series Convertible and has been on sale since February. The high-performance BMW X5 M and X6 M models were launched in March. The four-wheel-drive models combine the excellent characteristics of the successful X family with the highperformance flair synonymous with BMW's M series. The revised models of the BMW 6 Series and M6 vehicles as well as the BMW 1 Series also became available in March. The new BMW 6 Series Convertible, the new 6 Series Coupé and the new 6 Series Gran Coupé offer outstanding, premium-class, sporting sophistication in terms of driving dynamics, comfort, state-of-the-art technology and elegance. With the typical "M-model" balance between performance, efficiency, agility, comfort and luxury, the new BMW M6 series is in a class of its own. The 4.4-litre V8 turbo engine provides both extraordinary performance and outstanding efficiency.
In April, the new MINI John Cooper Works appeared in MINI showrooms for the first time. The high-performance model is powered by a 4-cylinder turbo engine and features unrivalled driving pleasure expected of this brand.
In total, 556,274* BMW, MINI and Rolls-Royce brand vehicles rolled off production lines during the first three months of the year (2014: 519,924* units; +7.0%), comprising 471,404* BMW (2014: 461,096* units; + 2.2%), 83,907 MINI (2014: 57,674 units; + 45.5%) and 963 Rolls-Royce (2014: 1,154 units; –16.6%).
The BMW Group continued to grow profitably in the first quarter 2015 on the back of its attractive range of models. The first-quarter EBIT margin came in as in the previous year at 9.5% and was therefore at the upper end of the target range of 8 to 10%.
Segment revenues rose sharply by 14.1% to € 18,893 million (2014: € 16,559 million), reaching a new high level for a first quarter. EBIT improved by € 214 million to € 1,794 million (2014: € 1,580 million; +13.5%). At € 1,634 million, segment profit before tax was on a par with the previous year (2014: € 1,643 million; – 0.5%), partially reflecting the somewhat dampening impact of the ongoing process of normalisation on the Chinese automobile market and the fair value measurement of commodity derivatives within the financial result.
The Automotive segment employed a workforce of 107,014 people at the end of the reporting period (2014: 101,564 employees), 5.4% more than one year earlier.
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 70,824 units, 2015: 69,353 units).
Report on Economic Position Motorcycles Segment
With a sales volume of 31,370 motorcycles in the first quarter of 2015, 9.2% up on the previous year's figure, BMW Motorrad recorded the best first quarter in its history (2014: 28,719 units). Within Europe, sales rose by 12.1% to 19,159 units (2014: 17,098 units), primarily driven by favourable market conditions in Southern Europe. Sales in Germany also rose significantly by 11.9% to 5,369 units (2014: 4,796 units). The French market performed extremely well with 3,155 units sold (2014: 2,725 units; + 15.8%) during the period under report. In Italy, BMW Motorrad recorded first-quarter sales of 2,936 units (2014: 2,892 units; + 1.5%). By contrast, the sales figure of 3,229 units in the USA did not quite match the previous year's high level (2014: 3,397 units; –4.9%).
The new R1200 R, R1200 RS, S1000 RR, S1000 XR and F 800 R models presented at the autumn trade fairs were all launched in time for the beginning of this year's motorcycling season. The new models have received broad acclaim from customers and the media alike and are expected to provide additional tailwind for the BMW Group's motorcycles business.
A total of 43,357 motorcycles were produced during the first quarter 2015, 12.2% more than one year earlier (2014: 38,649 motorcycles).
In line with its strong first-quarter sales volume performance, revenues for the Motorcycles segment rose by 20.1% to € 567 million (2014: € 472 million). EBIT for the quarter jumped to € 115 million (2014: € 64 million;
+79.7%), while profit before tax also surged by 81.0% to € 114 million (2014: € 63 million). At both levels, these figures marked the best quarterly earnings performance in the history of the Motorcycles segment.
The BMW Group employed 2,981 people in the Motorcycles segment at the end of the reporting period (2014: 2,791 employees; +6.8%).
| Motorcycles | |
|---|---|
| 1st quarter 2015 | 1st quarter 2014 | Change in % | |
|---|---|---|---|
| Sales volume* units |
31,370 | 28,719 | 9.2 |
| Production units |
43,357 | 38,649 | 12.2 |
| Revenues € million |
567 | 472 | 20.1 |
| Profit before financial result (EBIT) € million |
115 | 64 | 79.7 |
| Profit before tax € million |
114 | 63 | 81.0 |
| Workforce at 31 March | 2,981 | 2,791 | 6.8 |
* Principal performance indicator reported on during the year.
9
Report on Economic Position Financial Services Segment
1
The Financial Services segment's worldwide portfolio of lease and financing contracts reached a new record level of 4,419,817 contracts at the end of the reporting period (2014: 4,170,318 contracts). This solid performance corresponded to an increase of 6.0%, measured at the relevant period ends. The segment's business volume in balance sheet terms grew to € 104,348 million (31 December 2014: € 96,390 million; +8.3%).
The Financial Services segment concluded 384,565 new financing and lease contracts with retail customers during the first quarter – another new record figure – reflecting the continued buoyancy of the BMW Group's automobile business. Compared to the same quarter last year, the number of new contracts rose significantly by 10.5% (2014: 348,072 contracts). With 20.6% additional contracts, lease business benefited in particular from the segment's strong market position in the USA. Credit financing business also grew by 5.6% in the first quarter, despite a relentlessly challenging competitive environment.
The proportion of new BMW Group vehicles1 leased or financed by the segment increased to 44.9% (2014: 40.5%; +4.4 percentage points).
In the pre-owned vehicle financing line of business, 79,425 new contracts for BMW and MINI brand vehicles were signed during the three-month period (2014: 83,777 contracts), a moderate decrease of 5.2%.
The total volume of new business pertaining to financing and lease contracts with retail customers in the first quarter amounted to € 11,789 million, a significant increase of 27.8% on the same quarter last year (2014: € 9,228 million).
The surge in new business also resulted in further growth of the overall contract portfolio with retail customers. Altogether, the Financial Services segment was managing a worldwide portfolio of 4,071,468 contracts at 31 March 2015, a solid year-on-year increase of 6.2% (2014: 3,835,335 contracts). All regions contributed to the growth. As in previous years, growth in the Asia / Pacific region was particularly dynamic and resulted in an 18.6% increase in the contract portfolio. Growth of 6.2% and 5.3% was achieved in the Europe / Middle East /Africa and the Americas regions respectively. The EU Bank finished 1.5% up on the previous year.
The BMW Group operates its international multibrand fleet business under the brand name "Alphabet".
| Financial Services | ||||
|---|---|---|---|---|
| 1st quarter 2015 | 1st quarter 2014 | Change in % | ||
| New contracts with retail customers | 384,565 | 348,072 | 10.5 | |
| Revenues | € million | 6,058 | 4,890 | 23.9 |
| Profit before financial result (EBIT) | € million | 555 | 465 | 19.4 |
| Profit before tax | € million | 559 | 4532 | 23.4 |
| Workforce at 31 March | 7,444 | 6,907 | 7.8 | |
| 31.3.2015 | 31.12.2014 | Change in % | ||
| Business volume in balance sheet terms3 | € million | 104,348 | 96,390 | 8.3 |
The calculation only includes automobile markets, in which the Financial Services segment is represented by a consolidated entity.
2 Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
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. The total portfolio of fleet-related contracts increased to 563,394 contracts at the end of the reporting period (2014: 534,869 contracts; +5.3%).
Multi-brand financing decreased slightly in the first quarter 2015, 39,429 new contracts signed during the three-month period (2014: 40,341 contracts; –2.3%). A total portfolio of 468,992 contracts (2014: 458,120 contracts; + 2.4%) was in place at 31 March 2015.
The Financial Services segment is a strong and reliable partner, providing a well-designed range of financial products to the Group's dealer organisation. The total volume of dealership financing at the end of the reporting period stood at € 15,719 million, 19.5% up on the previous year, mainly due to exchange rate factors (2014: € 13,155 million).
Deposit-taking represents an important source of refinancing for the BMW Group. At the end of the period under report, banking deposits worldwide totalled € 13,580 million, to a significant increase of 11.1% (2014: € 12,225 million).
Business with insurance products also grew in the first quarter 2015, with the number of new contracts up by 15.7% to 289,119 contracts (2014: 249,842 contracts). The portfolio of insurance contracts also rose significantly to 2,968,302 contracts (2014: 2,633,672 contracts; +12.7%).
The Financial Services segment's strong business performance is also reflected in new record revenues and earnings figures. First-quarter segment revenues totalled € 6,058 million (2014: € 4,890 million; +23.9%). EBIT improved by 19.4% to € 555 million (2014: € 465 million) and profit before tax by 23.4% to € 559 million (2014: € 453* million).
The Financial Services segment employed a workforce of 7,444 people worldwide at 31 March 2015, 7.8% more than one year earlier (2014: 6,907 employees).
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
Report on Economic Position Results of Operations, Financial Position and Net Assets
First-quarter sales of BMW, MINI and Rolls-Royce brand vehicles increased by 8.1% to 526,669 units. This figure includes 72,185 units (2014: 62,494 units) manufactured by the joint venture, BMW Brilliance Automotive Ltd., Shenyang.
The BMW Group had a worldwide workforce of 117,554 employees at the end of the first quarter 2015 (2014: 111,378 employees). The BMW Group continues to recruit engineers and skilled workers as needed, thus ensuring its ability to make further progress with innovative technologies, including developments in the field of digitisation.
The BMW Group recorded a first-quarter net profit of € 1,516 million (2014: € 1,458 million). The post-tax return on sales was 7.2% (2014: 8.0%). Earnings per share were € 2.30 both for common and preferred stock (2014: € 2.22 in both cases).
Group revenues increased by 14.7% to € 20,917 million (2014: € 18,235 million). Adjusted for exchange rate factors, revenues increased by 6.5%, mainly reflecting higher sales volumes and the growth of Financial Services business.
External revenues of the segments also developed positively compared to the first quarter of the previous year. Revenues from sales of BMW, MINI and Rolls-Royce brand vehicles were significantly higher (10.6%) than one year earlier (3.0% adjusted for exchange rate factors). The currency impact was mainly attributable to the change in the average exchange rates of the US dollar, the Chinese renminbi and the British pound. Firstquarter external revenues of the Motorcycles segment climbed significantly (20.5%) compared to the previous year. The Financial Services segment recorded a 26.2% increase in external revenues. Adjusted for exchange rate factors, external revenues of the Motorcycles and Financial Services segments increased by 15.8% and 15.5% respectively.
Group revenues comprise mainly the sale of automobiles, motorcycles and related products (2015: € 14,980 million; 2014: € 13,502 million), lease instalments (2015: € 2,181 million; 2014: € 1,869 million), the sale of vehicles previously leased to customers (2015: € 2,276 million; 2014: € 1,552 million) and interest income on loan financing (2015: € 791 million; 2014: € 689 million).
Group cost of sales, which were 15.2% higher than in the previous year, comprised mainly manufacturing costs (2015: € 9,267 million; 2014: € 8,145 million), cost of sales directly attributable to financial services (2015: € 4,964 million; 2014: € 3,945 million) and research and development expenses (2015: € 937 million; 2014: € 987 million).
As a percentage of revenues, the research and development expense ratio decreased by 0.9 percentage points to 4.5%. Research and development expenses include amortisation of capitalised development costs amounting to € 257 million (2014: € 265 million). Total research and development expenditure – comprising research costs, non-capitalised development costs and capitalised development costs (excluding systematic amortisation thereon) – amounted to € 926 million in the first quarter (2014: € 993 million). The research and development expenditure ratio was therefore 4.4% (2014: 5.4%). The proportion of development costs recognised as assets was 26.6% (2014: 27.3%).
Gross profit for the first quarter improved by 12.7% to € 4,356 million, resulting in a gross profit margin of 20.8% (2014: 21.2%).
Compared to the previous year, selling and administrative expenses rose by € 126 million to € 1,884 million. Overall, selling and administrative expenses were equivalent to 9.0% (2014: 9.6%) of revenues. Administrative expenses increased due to a number of factors, including the higher workforce size and higher expenses for new IT projects.
Depreciation and amortisation on property, plant and equipment and intangible assets recorded in cost of sales and in selling and administrative expenses amounted to € 1,106 million (2014: € 957 million).
Other operating income and expenses improved by € 65 million to give a net positive amount of € 49 million for the first quarter 2015, mainly thanks to increased gains on the sale of non-current assets.
Profit before financial result (EBIT) finished at € 2,521 million (2014: € 2,090 million).
The financial result for the three-month period was a net negative amount of € 252 million, a deterioration of € 321 million compared to the first quarter 2014. The negative other financial result deteriorated by € 194 million to € 300 million, mostly reflecting the negative impact of interest-rate and commodity derivatives. The result from equity accounted investments, which includes the Group's share of the results of the joint ventures BMW Brilliance Automotive Ltd., Shenyang, DriveNow GmbH & Co. KG, Munich, and DriveNow Verwaltungs GmbH, Munich, fell by € 97 million to € 128 million compared to the first quarter of the previous year. The decrease was mainly attributable to a lower contribution from BMW Brilliance Automotive Ltd., Shenyang, reflecting a range of factors including the impact of
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
| Revenues by segment in the first quarter | ||||||
|---|---|---|---|---|---|---|
| in € million | ||||||
| External | Inter-segment | Total | ||||
| revenues | revenues | revenues | ||||
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| Automotive | 14,655 | 13,253 | 4,238 | 3,306 | 18,893 | 16,559 |
| Motorcycles | 565 | 469 | 2 | 3 | 567 | 472 |
| Financial Services | 5,696 | 4,512 | 362 | 378 | 6,058 | 4,890 |
| Other Entities | 1 | 1 | 1 | 1 | 2 | 2 |
| Eliminations | – | – | –4,603 | –3,688 | –4,603 | –3,688 |
| Group | 20,917 | 18,235 | – | – | 20,917 | 18,235 |
preparing for production start-ups of new vehicles, capacity expansion measures and the increased level of competition on the market.
Profit before tax edged up to € 2,269 million (2014: € 2,159 million). The pre-tax return on sales was 10.8% (2014: 11.8%).
Income tax expense amounted to € 753 million (2014: € 701 million), corresponding to an effective tax rate of 33.2% (2014: 32.5%). The changed regional earnings mix as well as intergroup pricing issues contributed to the increase in the income tax expense for the period.
Revenues of the Automotive segment increased by 14.1% to € 18,893 million. Adjusted for exchange rate factors, the increase was 5.4%, mainly reflecting higher sales volumes. At 17.9%, the first-quarter gross profit margin was on a par with the previous year (18.8%).
Selling and administrative expenses went up by € 95 million to € 1,590 million. Administrative expenses in the first quarter increased due to a number of factors, including the higher workforce size and higher expenses for new IT projects. Overall, selling and administrative expenses were equivalent to 8.4% (2014: 9.0%) of revenues.
The net negative amount from other operating income and expenses improved by € 43 million (2014: net negative amount of € 44 million) mainly reflecting gains on the sale of non-current assets.
The profit before financial result (EBIT) amounted to € 1,794 million (2014: € 1,580 million), giving an unchanged EBIT margin of 9.5%.
The Automotive segment's first-quarter financial result was a net negative amount of € 160 million, a deterioration of € 223 million compared to the previous year. Other financial result was adversely affected by commodity derivatives and deteriorated by € 102 million to a net negative amount of € 239 million. The result from equity accounted investments, which includes the segment's share of the results of BMW Brilliance Automotive Ltd., Shenyang, and the two DriveNow entities, fell by € 97 million (2014: € 225 million), mainly due to the lower contribution from BMW Brilliance Automotive Ltd., Shenyang, as described above.
| 2014* | |
|---|---|
| 1,634 | 1,643 |
| 114 | 63 |
| 559 | 453 |
| –23 | 57 |
| –15 | –57 |
| 2,269 | 2,159 |
| –753 | –701 |
| 1,516 | 1,458 |
| 2015 |
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
Overall, first-quarter profit before tax amounted to € 1,634 million (2014: € 1,643 million).
Motorcycles segment deliveries to customers were 9.2% up on the previous year, while segment revenues jumped by 20.1% (15.5% adjusted for exchange rate factors). Profit before tax for the first quarter improved by € 51 million (2014: € 63 million).
Financial Services segment revenues grew by 23.9% to € 6,058 million (13.8% adjusted for exchange rate factors). The segment's revenue performance primarily reflects the growth of its contract portfolio. The gross profit margin, measured as a percentage of revenues, was 13.3% (2014: 13.5%). Selling and administrative expenses, at € 247 million, were above their previous year's level (2014: € 214 million). Other operating income and expenses deteriorated by € 26 million. Overall, helped by positive currency factors, the Financial Services segment's first-quarter profit before tax rose by 23.4% to € 559 million.
The Other Entities segment recorded a loss before tax of € 23 million. The deterioration of € 80 million compared to the same quarter last year was primarily due to fair value measurement losses on interest-rate derivatives.
The negative impact on first-quarter earnings at the level of profit before tax reported in the Eliminations column increased from € 57 million to € 15 million.
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 quarters of 2015 and 2014, classified into cash flows from operating, investing and financing activities. Cash and cash equivalents in the cash flow statements correspond to the amount disclosed in the balance sheet.
Cash flows from operating activities are determined indirectly, starting with Group and segment net profit for the period. By contrast, cash flows from investing and financing activities are based on actual payments and receipts.
The cash inflow from operating activities in the first quarter 2015 decreased by € 412 million to € 989 million, in part attributable to the lower change in the level of provisions.
The cash outflow for investing activities amounted to € 1,712 million (2014: € 1,214 million) and was therefore 41.0% higher than in the previous year, mostly due the € 1,005 million higher net investments in marketable securities and term deposits (2015: € 994 million). By contrast, investments in intangible assets and property, plant and equipment (2015: € 794 million) were € 446 million lower than one year earlier.
Net cash outflows for financing activities totalled € 931 million (2014: € 338 million). Proceeds from the issue of bonds brought in € 2,749 million (2014: € 3,387 million), compared with an outflow of € 1,886 million (2014: € 1,975 million) for the repayment of bonds. The change in other financial liabilities and commercial paper gave rise to a cash outflow of € 1,794 million (2014: € 1,750 million).
Cash outflows for investing activities exceeded cash inflows from operating activities in the first quarter 2015 by € 723 million. In the same period last year, there had been a surplus of € 187 million.
After adjustment for the effects of exchange-rate fluctuations totalling a positive amount of € 180 million (2014: negative amount of € 19 million), the various cash flows resulted in a decrease in cash and cash equivalents of € 1,474 million (2014: decrease of € 170 million).
The cash flow statement for the Automotive segment shows that the cash inflows from operating activities exceeded cash outflows from investing activities by € 133 million (2014: € 713 million). Adjusted for net investments in marketable securities and term deposits amounting to € 927 million (2014: € 19 million), the excess amount was € 1,060 million (2014: € 732 million).
Free cash flow of the Automotive segment can be analysed as follows:
| in € million | 2015 | 2014* |
|---|---|---|
| Cash inflow from operating activities | 1,830 | 1,942 |
| Cash outflow from investing activities | –1,697 | –1,229 |
| Net investment in marketable securities and term deposits | 927 | 19 |
| Free cash flow Automotive segment | 1,060 | 732 |
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
Cash outflows for operating activities of the Financial Services segment are driven primarily by cash flows relating to leased products and receivables from sales financing and totalled € 1,382 million (2014: € 11 million). The cash inflow from investing activities totalled € 9 million (2014: € 30 million).
Net financial assets of the Automotive segment comprise the following:
| in € million | 31.3.2015 | 31.12.2014 |
|---|---|---|
| Cash and cash equivalents | 4,734 | 5,752 |
| Marketable securities and investment funds | 3,501 | 3,366 |
| Intragroup net financial assets | 10,160 | 8,583 |
| Financial assets | 18,395 | 17,701 |
| Less: external financial liabilities* | –3,358 | –3,478 |
| Net financial assets Automotive segment | 15,037 | 14,223 |
* Excluding derivative financial instruments.
The BMW Group uses a broadly diversified and flexible range of funding sources to finance its operating activities. Almost all of the funds raised are used to finance the BMW Group's Financial Services business. Further details regarding the principles and objectives of financial management are contained in the Group Financial Statements at 31 December 2014.
During the period from January to March 2015, BMW Group entities issued one euro-benchmark bond with a volume of € 1.5 billion and one bond for 500 million Australian dollars. A US private placement for 300 million US dollars and further EMTN private placements in various currencies with a total volume of € 832 million were also transacted. The first quarter also saw the issue of one promissory note for 10 billion Japanese yen and the execution of one ABS transaction with a volume of 1 billion US dollar in the USA. The regular issue of commercial paper and deposits received by the Group's banking subsidiaries are also used to refinance the BMW Group.
The Group balance sheet total increased by € 11,287 million (7.3%) compared to the end of the previous financial year to stand at € 166,090 million at 31 March 2015. Adjusted for exchange rate factors, the balance sheet total increased by 2.1%. The currency impact was mainly attributable to the appreciation in the value of a number of currencies against the euro, most notably the US dollar, the British pound and the Chinese renminbi.
The increase in non-current assets on the assets side of the balance sheet related primarily to receivables from sales financing (10.3%), leased products (7.8%) and deferred tax assets (55.0%).
Within current assets, increases were registered in particular for inventories (15.6%), receivables from sales financing (6.0%), financial assets (22.4%) and trade receivables (28.1%). By contrast, cash and cash equivalents decreased by 19.2%.
Non-current receivables from sales financing accounted for 24.9% (2014: 24.2%) of total assets, current receivables from sales financing for 15.0% (2014: 15.2%). Adjusted for exchange rate factors, non-current receivables from sales financing went up by 3.8%, while current receivables from sales financing remained unchanged. At the end of the reporting period, leased products accounted for 19.6% of total assets, similar to their level one year earlier (19.5%). Adjusted for exchange rate factors, leased products went up by 1.4%. The growth in business reported by the Financial Services segment is reflected in the increase in non-current receivables from sales financing and in the higher level of leased products.
Deferred tax assets rose by € 1,134 million to € 3,195 million in the first quarter, mainly as a result of lower fair values of derivative financial instruments recognised directly in equity and the effect of remeasurements of the net defined benefit liability for pension plans.
Inventories increased by € 1,725 million to € 12,814 million during the three-month period and accounted for 7.7% (2014: 7.2%) of total assets. Most of the increase related to finished goods, including the impact of stocking up in conjunction with the introduction of new models and the general increase in business volumes. Adjusted for exchange rate factors, the increase was 9.2%.
Current financial assets increased by € 1,204 million to € 6,588 million, mainly due to net investments in marketable securities and term deposits.
Report on Economic Position Events after the End of the Reporting Period
FINANCIAL STATEMENTS 22 Income Statements for
Trade receivables went up by € 604 million compared to the end of the previous financial year and accounted for 1.7% of total assets (2014: 1.4%). Adjusted for exchange rate factors, they increased by 22.0%.
Cash and cash equivalents fell by € 1,474 million to € 6,214 million compared to 31 December 2014.
On the equity and liabilities side of the balance sheet, increases were recorded for non-current (10.6%) and current financial liabilities (12.2%), pension provisions (33.8%), current other provisions (10.3%) and trade payables (8.9%). By contrast, Group equity decreased by 3.5%.
Non-current and current financial liabilities increased from € 80,649 to € 89,784 million during the three-month period (+6.0% adjusted for changes in exchange rates). Changes in currency derivatives and the issue of new bonds were the main factors driving the increase in noncurrent and current financial liabilities.
Pension provisions jumped from € 4,604 million to € 6,159 million during the three-month period, mainly as a result of the lower discount factors used in Germany, the UK and the USA.
The € 802 million increase in current other liabilities was attributable in particular to higher payables to entities with which an investment relationship exists, higher other taxes as well as the expansion of service and leasing business and the related impact on amounts recognised as deferred income.
Trade payables went up from € 7,709 million to € 8,393 million (+6.3% adjusted for changes in exchange rates) mainly reflecting higher production volumes. Trade payables accounted for 5.1% of the balance sheet total at the end of the reporting period (2014: 5.0%).
Group equity fell by € 1,310 million to € 36,127 million, mainly as a result of fair values losses on derivative financial instruments recognised directly in equity (€ 4,637 million). Remeasurements of the net defined benefit liability for pension plans, mainly due to the lower discount rates used in Germany, the UK and the USA, caused equity to fall by a further € 1,604 million. By contrast, the profit attributable to shareholders of BMWAG (€ 1,512 million) had a positive impact on equity. Deferred taxes on items recognised directly in equity and currency translation differences increased equity by € 2,146 million and € 1,347 million respectively. The fair value measurement of marketable securities increased equity by € 27 million, whereas income and expenses relating to equity accounted investments and
recognised directly in equity (before tax) reduced equity by € 130 million. Minority interests increased by € 29 million.
The Group equity ratio at the end of the reporting period was 21.8% (31 December 2014: 24.2%). The equity ratio of the Automotive segment was 34.6% (31 December 2014: 39.2%) and that of the Financial Services segment was 9.0% (31 December 2014: 8.8%).
Overall, the earnings performance, financial position and net assets position of the BMW Group continued to develop positively throughout the three-month period under report.
Further information on transactions with related parties can be found in note 30 to the Interim Group Financial Statements.
No events have occurred after the balance sheet date which could have a major impact on the earnings performance, financial position or net assets of the BMW Group.
Report on Outlook, Risks and Opportunities Report on Outlook
The report on outlook, risks and opportunities describes the expected development of the BMW Group, together with associated material risks and opportunities, from the perspective of Group management.
The report on outlook, risks and opportunities contains forward-looking assertions based on the BMW Group's expectations and assessments, which are, by their very 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 information is also available in the section "Report on risks and opportunities" of the Annual Report 2014 (page 70 et seq.).
Further information on the assumptions used in the BMW Group's outlook can be found in the "Outlook" section of the Annual Report 2014 (page 65 et seq.).
The global economy is predicted to grow by around 3.5% in 2015. However, this level of growth is only likely to be achieved if the major risks currently facing the world do not materialise. Developments in China in particular must be kept under close observation, as there is still a distinct danger of its property market collapsing. Asset prices have also risen sharply again in other countries in the wake of the highly expansive monetary policies still being pursued worldwide. Although the initial interest rate increases in the USA expected in the course of the year could help alleviate the situation, they could also lead to renewed turbulence, similar to that witnessed last year after tapering was first announced. Despite encouraging economic trends in Europe, the risks facing the common-currency area have increased again since the elections in Greece. A further destabilising factor is the lack of solutions for the ongoing political and military conflicts in Ukraine and the Middle East. Any further escalations are likely to have a negative impact on both energy prices and world trade. Further information on political and global economic risks can be found in the Risk Report section of the Annual Report 2014.
The eurozone's economy managed to pull itself from recession over the course of the previous year and should now pick up more momentum in 2015, with a growth rate rising slightly to 1.3%. The German economy should follow a similar pattern and is forecast to grow slightly more quickly at 1.8%. Although France's economic recovery is likely to gather some pace during the current year, unaddressed structural problems are unlikely to allow a growth rate of more than 1.0 %. After three straight years of recession, Italy's economy is again steering
towards a modest growth rate of 0.5%. Spain, on the other hand, seems to be taking far more decisive steps along the path of growth and its economic output is expected to climb by 2.3% in 2015. In the UK, the economy is set to continue growing strongly this year at a rate of 2.6% on the back of steady domestic demand.
At 3.0%, the pace of growth should remain high again in the USA throughout the current year. The trend on both the property and job markets is expected to continue upwards. Although low inflation makes it unnecessary to put up interest rates quickly, wages have again risen significantly, which may well lead to higher inflation in the medium term.
In Japan, the VAT hike caused a recession in summer 2014, which in turn led to economic stagnation for the year as a whole. However, there are signs that the economy will recover slightly in 2015 at a growth rate of 0.9%.
Guided by government policy, China's economy is likely to remain on track towards normalisation with a growth rate of around 7.0%. High risks remain, however, particularly from a possible overheating of the country's property market and the high rate of debt. Either of these factors could possibly trigger a slowdown in growth.
In India, economic momentum is set to increase strongly to 7.1%. The pace of growth in many other emerging economies, however, has slowed down. Once again this year, the Brazilian (– 0.6%) and Russian economies (– 4.2%) are likely to bring up the rear in terms of growth. In Russia, the general downward trend seems to be worsening under the pressure of economic sanctions.
The BMW Group expects automobile markets to grow by a total of 1.5% worldwide this year. New vehicle registrations in both the USA and Europe are predicted to grow at healthy rates. Although China's economy will continue to expand faster than in these two regions, the pace of growth is forecast to be less dynamic than in recent years.
The upswing on Europe's automobile markets is set to continue throughout the current year, with the number of vehicles sold rising by 3.8% to around 13.5 million units. In Germany, new registrations should rise by 2.1% to approximately 3.1 million vehicles. Demand in France, however, is expected to grow more quickly (+6.7%), with 1.8 million new vehicles entering the roads. In Italy too, new registrations are set to rise by 5.0% to
17
46 Financial Calendar 47 Contacts
1.4 million units. We expect new registrations in the UK to consolidate somewhat in 2015 (2.5 million units; +0.5%). In sharp contrast, the Spanish market is predicted to grow dynamically again in 2015, with new registrations surging by 18.9% to around 1.0 million units.
In the USA, first-time registrations are expected to climb by 2.9% to around the 17-million mark. China continues to consolidate its position as the largest automobile market worldwide, even though momentum is likely to be somewhat weaker at 7.3% (20.3 million units) this year. By contrast, the Japanese market is exhibiting a distinct downward trend in 2015, with new registrations forecast to fall by 8.9% to 4.9 million units.
Registration figures in Russia are set to drop at an even more pronounced rate. The current recession is hitting the automobile market hard and is likely to cause the market to shrink by more than one third to 1.5 million units (–37.7%). The automobile market is also contracting in Brazil, albeit at a significantly lower pace, to a predicted 3.3 million units in 2015 (–2.0%).
The markets for 500 cc plus motorcycles should continue to recover slightly in 2015. Registrations are expected to rise slightly across Europe, including increases on a similar scale for the major motorcycle markets in Germany, Spain, Italy and France. The USA is also likely to see a continuation of the positive trend.
The massive supply of money currently being orchestrated by central banks is bringing down the cost of financing public-sector debt, thus providing greater scope for public spending, but at the same time reducing the pressure to consolidate budgets. In the USA, the Federal Reserve Bank is expected to begin tightening its monetary policy by the end of the year. For the eurozone we predict a continuation of the current expansive policy, which means interest rates are liable to remain stable throughout 2015. Influenced by long-term low inflation rates and the increase in the value of the British pound, reference interest rates in the UK are also likely to remain unchanged. Looser monetary policies in Australia, Japan and Canada can also not be ruled out. These countries are particularly impacted by slowing demand from China and the low price of oil. Interest rates on money and capital markets should remain relatively stable overall in 2015, assuming there is no further deterioration of political conditions in the eurozone and Russia.
Vehicle residual values are expected to remain stable in most markets over the course of 2015. After a stabilising phase in Southern Europe in recent years, there are now signs of a slight upward market trend, with volumes still at a low level.
Future developments on international automobile markets also have a direct impact on the BMW Group. After the uncertainties that have dominated recent years, we now expect Europe to build on its modest recovery. North America is likely to see a continuation of the positive trend in 2015. The pace of growth in China, however, is expected to be less dynamic than in recent years. The situation on the Russian car market is likely to remain tense over the forecast period.
The BMW Group is well positioned to remain on course in 2015 and forecasts a solid rise in Group profit before tax compared to the preceding year (2014: € 8,707 million). However, the scale of the increase during the forecast period is likely to be held down by fierce competition on automobile markets, rising personnel costs, continued high levels of upfront expenditure to safeguard business viability going forward and future challenges arising in the wake of the normalisation of the Chinese market. A number of risks will also have to be faced, including the precarious state of the Russian market and macroeconomic uncertainties in Europe. We expect our attractive model range to generate positive momentum, which will help us achieve our target of balanced growth on all major markets.
The BMW Group will continue to recruit staff in 2015 and, based on our latest forecasts, we expect a solid increase in the size of the workforce (2014: 116,324 employees), driven by automobile and motorcycle sales growth and the rapid pace of innovation.
We expect the pace of growth in the Automotive segment to remain high in 2015. Assuming economic conditions continue to be stable, we predict a solid rise in deliveries to customers (2014: 2,117,965 units) to a new high level, which will, in all probability, enable the BMW Group
19
to maintain its position as the world's foremost premium car manufacturer in 2015.
Attractive new models and dynamic market conditions, particularly in North America, should have a positive impact on car sales. After some negative developments in recent years, European automobile markets are expected to stage a slight recovery overall. Nevertheless, the sector environment is likely to remain challenging. The automobile market in China is expected to "normalise" to an increasing extent.
The new 2 Series Convertible was added to the BMW 2 Series with effect from the end of February. The four-wheeldrive BMW X5 M and X6 M models have been available since March. These high-powered models combine the characteristic features of the successful BMW X family – exclusivity, robustness, agility and everyday usability – with the commitment to high performance that defines an M vehicle. The new, facelifted BMW 1 Series, unveiled at the Geneva Motor Show, will provide additional sales momentum and has also been available since March. With a fully revamped engine range and additional features that reduce fuel consumption and emissions, the new BMW 1 Series will again be playing a pioneering role in the introduction of newly developed BMW EfficientDynamics technologies. Revised models of the BMW 6 Series and M6 vehicles were brought onto markets during the same month. In April, the new MINI John Cooper Works appeared in MINI showrooms for the first time. The high-performance model is powered by a 4-cylinder turbo engine and features the unrivalled driving pleasure expected of this brand.
The seven-seater BMW 2 Series Gran Tourer made its world debut at the Geneva International Motor Show. With this vehicle, the BMW Group is again making its mark in a new automobile segment. With its generous interior spaciousness, versatility and flexibility, the BMW 2 Series Gran Tourer is the first BMW to be launched in the multi-purpose vehicle segment. The highly efficient BMW X5 xDrive40e will come onto the market in autumn. It is the first BMW brand Sports Activity Vehicle to combine the intelligent BMW xDrive all-wheel-drive system with a more advanced plug-in hybrid system and represents a further important step in the transfer of innovative drivetrain systems from BMW i models to the BMW Group's core brand.
We also expect the MINI brand to generate new sales impetus in 2015, driven, among other factors, by the low average age of its model range (2.5 years). The new MINI Clubman will be presented in 2015 and feature a wide range of high-value details, plenty of room as well as functionality, and carefully selected materials.
Carbon fleet emissions* : slight decrease expected We will continue to work hard this year to reduce carbon emissions across the entire fleet. Overall, we expect fleet emissions to decrease slightly in 2015 (2014: 130 g CO2 /km).
The generally positive trend in business predicted for the BMW Group is also expected to have a positive impact on Automotive segment revenues. Due to exchange rate factors, we expect a significant rise in revenues over the forecast period (2014: € 75,173 million). In the Annual Report 2014 a "solid rise" in revenues was predicted.
EBIT margin in target range between 8 and 10% expected The Automotive segment continues to target an EBIT margin within a range of between 8 and 10% (2014: 9.6%).
We expect to see a moderate drop in segment RoCE (2014: 61.7%). However, the long-term target RoCE of at least 26% for the Automotive segment will be clearly surpassed.
Deliveries to customers: solid increase expected We expect the Motorcycles segment's upward trend to continue, helped by a positive contribution from the new models – R1200 R, R1200 RS, S1000 RR, S1000 XR and F 800 R – all of which were launched in time for the start of the season. Within a positive market environment, we forecast solid growth in BMW motorcycle sales over the forecast period (2014: 123,495 units).
Return on capital employed (RoCE) in line with last year's level expected
We expect the impetus provided by new models to help keep segment RoCE in line with last year's level (2014: 21.8%).
Return on equity (RoE) expected in line with last year's level Based on our assessment, the Financial Services segment will continue to perform well in 2015. Despite rising equity capital requirements worldwide, we forecast RoE in line with last year's level (2014: 19.4%), thus remaining ahead of the target of at least 18%.
* EU-28.
20
Report on Outlook, Risks and Opportunities Report on Risks and Opportunities
46 Financial Calendar 47 Contacts
We forecast a continuation of the upward trend in 2015 and expect to achieve profitable growth on the back of a range of factors, including the introduction of numerous new models. Despite the aforementioned challenges, Group profit before tax is forecast to rise solidly, thus reflecting the anticipated solid growth in sales volume. Automotive segment revenues, however, are expected to rise significantly due to exchange rate factors. At the same time, we foresee a slight decrease in carbon emissions1 from our fleet of vehicles. We aim to achieve profitable growth through a solid increase in the size of the workforce across the Group. The Automotive segment's EBIT margin is set to remain within the target range of between 8 and 10%. Based on the planned level of capital expenditure, we expect a moderate decrease in the Automotive segment's RoCE. The Financial Services segment's RoE should remain in line with last year's level. Nevertheless, both performance indicators will be higher than their long-term targets of 26% and 18% respectively. For the Motorcycles segment, we forecast a solid increase in sales volume and RoCE in line with last year's level. Depending on the political and economic situation actual business performance could, however, differ from our current expectations.
As a globally operating enterprise, the BMW Group is constantly confronted with a broad range of risks, but also with numerous opportunities. Making full use of the opportunities that present themselves is the basis for its corporate success. Risks are also taken consciously in order to achieve growth, profitability, greater efficiency and sustainable levels of future business. There have been no material changes to the overall risk profile compared to that described in the Group Management Report 2014. Further information on risks and opportunities, and on the methods employed to manage them, can also be found in the "Report on risks and opportunities" section of the Annual Report 2014 (page 70 et seq.).
| Principal performance indicators | ||||
|---|---|---|---|---|
| 2014 | 2015 Outlook |
|||
| BMW Group Workforce at end of year |
116,324 | solid increase | ||
| Profit before tax | € million | 8,707 | solid increase | |
| Automotive segment Sales volume2 |
units | 2,117,965 | solid increase | |
| Fleet emissions1 | g CO2/ km | 130 | slight decrease | |
| Revenues | € million | 75,173 | significant increase | |
| EBIT margin | % | 9.6 | unchanged between 8 and 10 | |
| Return on capital employed | % | 61.7 | moderate decrease | |
| Motorcycles segment Sales volume |
units | 123,495 | solid increase | |
| Return on capital employed | % | 21.8 | in line with last year's level | |
| Financial Services segment Return on equity |
% | 19.4 | in line with last year's level |
1 EU-28.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units).
BMW Stock and Capital Markets
BMW stock and capital markets in first quarter 2015
After a volatile year in 2014, stock markets have performed extremely well during the first quarter 2015. The buoyant mood in European financial centres is primarily attributable to the monetary policies being pursued by the ECB. The interest rate for the Eurosystem's main refinancing operations is currently at an historic low. In addition, the ECB started its previously announced bond-buying programme in March. These measures, combined with the sharp loss in value of the euro against the US dollar, were the primary drivers behind the gains made by European stock indices.
The German stock index (DAX) finished the first quarter at 11,966 points, only slightly below the historical high it reached in mid-March (12,168 points). The index nevertheless remains at a high level, standing on 31 March 2015 a full 22.0% above its level at the end of the financial year 2014 and just 1.7% below its all-time high. The Prime Automobile Performance Index followed a similar trend at the beginning of the first quarter and rose initially to 2,039 points, thus creating a new record. The index finished the first quarter at 1,934 points, 29.8% higher than at the end of the financial year 2014.
Both categories of BMW stock recorded new highs during the first quarter. BMW common stock reached a new all-time high of € 122.60 on 16 March. It was unable to maintain this level, however, and closed on 31 March 2015 at € 116.45, 29.7% higher than three months earlier. BMW preferred stock recorded a new high of € 92.19 in March before closing at the end of
the first quarter at € 86.21, 27.1% higher than at the end of the financial year 2014 and 6.5% below its historical high.
Income Statements for Group and Segments for the period from 1 January to 31 March 2015 Statement of Comprehensive Income for Group for the period from 1 January to 31 March 2015
| 4 | INTERIM GROUP MANAGEMENT REPORT |
|---|---|
| 4 | General Information |
| 5 | Report on Economic Position |
| 16 Events after the End of the Reporting Period |
|
| 17 Report on Outlook, Risks and Opportunities |
|
| 21 BMW Stock and Capital Markets |
|
| 22 | INTERIM GROUP |
FINANCIAL STATEMENTS 22 Income Statements for
Group and Segments 22 Statement of Comprehensive
26 Cash Flow Statements
for Group and Segments 28 Group Statement of
30 Notes to the Group Financial Statements
46 OTHER INFORMATION
| in € million | |||||
|---|---|---|---|---|---|
| Note | Group | Automotive | |||
| 2015 | 2014* | 2015 | 2014 | ||
| Revenues | 5 | 20,917 | 18,235 | 18,893 | 16,559 |
| Cost of sales | 6 | –16,561 | –14,371 | –15,508 | –13,440 |
| Gross profit | 4,356 | 3,864 | 3,385 | 3,119 | |
| Selling and administrative expenses | 7 | –1,884 | –1,758 | –1,590 | –1,495 |
| Other operating income | 8 | 295 | 154 | 238 | 111 |
| Other operating expenses | 8 | –246 | –170 | –239 | –155 |
| Profit before financial result | 2,521 | 2,090 | 1,794 | 1,580 | |
| Result from equity accounted investments | 9 | 128 | 225 | 128 | 225 |
| Interest and similar income | 10 | 42 | 43 | 91 | 76 |
| Interest and similar expenses | 10 | –122 | –93 | –140 | –101 |
| Other financial result | 11 | –300 | –106 | –239 | –137 |
| Financial result | –252 | 69 | –160 | 63 | |
| Profit before tax | 2,269 | 2,159 | 1,634 | 1,643 | |
| Income taxes | 12 | –753 | –701 | –551 | –534 |
| Net profit/loss | 1,516 | 1,458 | 1,083 | 1,109 | |
| Attributable to minority interest | 4 | 4 | –1 | 2 | |
| Attributable to shareholders of BMW AG | 1,512 | 1,454 | 1,084 | 1,107 | |
| Basic earnings per share of common stock in € | 13 | 2.30 | 2.22 | ||
| Basic earnings per share of preferred stock in € | 13 | 2.30 | 2.22 | ||
| Dilutive effects | 13 | – | – | ||
| Diluted earnings per share of common stock in € | 13 | 2.30 | 2.22 | ||
| Diluted earnings per share of preferred stock in € | 13 | 2.30 | 2.22 |
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
| Eliminations | Other Entities |
Financial Services |
Motorcycles | |||||
|---|---|---|---|---|---|---|---|---|
| 2014 | 2015 | 2014 | 2015 | 2014* | 2015 | 2014 | 2015 | |
| Revenues | –3,688 | –4,603 | 2 | 2 | 4,890 | 6,058 | 472 | 567 |
| Cost of sales | 3,659 | 4,601 | – | – | –4,232 | –5,251 | –358 | –403 |
| Gross profit | –29 | –2 | 2 | 2 | 658 | 807 | 114 | 164 |
| Selling and administrative expenses | 5 | 6 | –4 | –4 | –214 | –247 | –50 | –49 |
| Other operating income | –17 | –3 | 28 | 57 | 32 | 3 | – | – |
| Other operating expenses | 12 | 16 | –16 | –15 | –11 | –8 | – | – |
| Profit before financial result | –29 | 17 | 10 | 40 | 465 | 555 | 64 | 115 |
| Result from equity accounted investments | – | – | – | – | – | – | – | – |
| Interest and similar income | –344 | –340 | 310 | 289 | 1 | 2 | – | – |
| Interest and similar expenses | 316 | 308 | –300 | –288 | –7 | –1 | –1 | –1 |
| Other financial result | – | – | 37 | –64 | –6 | 3 | – | – |
| Financial result | –28 | –32 | 47 | –63 | –12 | 4 | –1 | –1 |
| Profit before tax | –57 | –15 | 57 | –23 | 453 | 559 | 63 | 114 |
| Income taxes | 16 | 4 | –23 | 6 | –140 | –175 | –20 | –37 |
| Net profit/loss | –41 | –11 | 34 | –17 | 313 | 384 | 43 | 77 |
| Attributable to minority interest | – | – | – | – | 2 | 5 | – | – |
| Attributable to shareholders of BMW AG | –41 | –11 | 34 | –17 | 311 | 379 | 43 | 77 |
| 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 € |
Balance Sheets for Group and Segments to 31 March 2015
4 INTERIM GROUP MANAGEMENT REPORT 4 General Information 5 Report on Economic Position 16 Events after the End of the Reporting Period 17 Report on Outlook, Risks and Opportunities 21 BMW Stock and Capital Markets
| Assets | ||||||
|---|---|---|---|---|---|---|
| Note | Group | Automotive | ||||
| in € million | 31.3.2015 | 31.12.2014 | 31.3.2015 | 31.12.2014 | ||
| Intangible assets | 15 | 6,453 | 6,499 | 5,959 | 5,999 | |
| Property, plant and equipment | 16 | 17,303 | 17,182 | 16,990 | 16,863 | |
| Leased products | 17 | 32,506 | 30,165 | 1 | 3 | |
| Investments accounted for using the equity method | 18 | 1,117 | 1,088 | 1,117 | 1,088 | |
| Other investments | 18 | 385 | 408 | 5,140 | 5,110 | |
| Receivables from sales financing | 19 | 41,307 | 37,438 | – | – | |
| Financial assets | 20 | 2,051 | 2,024 | 414 | 447 | |
| Deferred tax | 21 | 3,195 | 2,061 | 5,598 | 3,253 | |
| Other assets | 22 | 1,500 | 1,094 | 4,037 | 3,662 | |
| Non-current assets | 105,817 | 97,959 | 39,256 | 36,425 | ||
| Inventories | 23 | 12,814 | 11,089 | 12,387 | 10,698 | |
| Trade receivables | 2,757 | 2,153 | 2,354 | 1,887 | ||
| Receivables from sales financing | 19 | 24,992 | 23,586 | – | – | |
| Financial assets | 20 | 6,588 | 5,384 | 5,170 | 3,952 | |
| Current tax | 21 | 1,943 | 1,906 | 1,164 | 1,186 | |
| Other assets | 22 | 4,965 | 5,038 | 19,119 | 19,231 | |
| Cash and cash equivalents | 6,214 | 7,688 | 4,734 | 5,752 | ||
| Current assets | 60,273 | 56,844 | 44,928 | 42,706 | ||
| Total assets | 166,090 | 154,803 | 84,184 | 79,131 |
| Equity and liabilities | ||||||
|---|---|---|---|---|---|---|
| Note | Group | Automotive | ||||
| in € million | 31.3.2015 | 31.12.2014 | 31.3.2015 | 31.12.2014 | ||
| Subscribed capital | 24 | 656 | 656 | |||
| Capital reserves | 24 | 2,005 | 2,005 | |||
| Revenue reserves | 24 | 36,114 | 35,621 | |||
| Accumulated other equity | 24 | –2,894 | –1,062 | |||
| Equity attributable to shareholders of BMWAG | 24 | 35,881 | 37,220 | |||
| Minority interest | 24 | 246 | 217 | |||
| Equity | 36,127 | 37,437 | 29,149 | 31,045 | ||
| Pension provisions | 6,159 | 4,604 | 3,978 | 2,741 | ||
| Other provisions | 25 | 4,690 | 4,268 | 4,157 | 3,777 | |
| Deferred tax | 26 | 1,574 | 1,974 | 651 | 421 | |
| Financial liabilities | 27 | 47,730 | 43,167 | 4,433 | 1,933 | |
| Other liabilities | 28 | 4,495 | 4,275 | 5,927 | 5,445 | |
| Non-current provisions and liabilities | 64,648 | 58,288 | 19,146 | 14,317 | ||
| Other provisions | 25 | 4,783 | 4,522 | 4,073 | 3,746 | |
| Current tax | 26 | 1,508 | 1,590 | 890 | 1,050 | |
| Financial liabilities | 27 | 42,054 | 37,482 | 5,286 | 3,250 | |
| Trade payables | 8,393 | 7,709 | 7,568 | 6,929 | ||
| Other liabilities | 28 | 8,577 | 7,775 | 18,072 | 18,794 | |
| Current provisions and liabilities | 65,315 | 59,078 | 35,889 | 33,769 | ||
| Total equity and liabilities | 166,090 | 154,803 | 84,184 | 79,131 |
| Assets | ||||||||
|---|---|---|---|---|---|---|---|---|
| Motorcycles | Financial Services | Other Entities | Eliminations | |||||
| 31.3.2015 | 31.12.2014 | 31.3.2015 | 31.12.2014 | 31.3.2015 | 31.12.2014 | 31.3.2015 | 31.12.2014 | |
| 53 | 54 | 440 | 445 | 1 | 1 | – | – | Intangible assets |
| 279 | 285 | 34 | 34 | – | – | – | – | Property, plant and equipment |
| – | – | 38,049 | 35,366 | – | – | –5,544 | –5,204 | Leased products |
| – | – | – | – | – | – | – | – | Investments accounted for using the equity method |
| – | – | 6 | 6 | 5,755 | 5,808 | –10,516 | –10,516 | Other investments |
| – | – | 41,307 | 37,438 | – | – | – | – | Receivables from sales financing |
| – | – | 223 | 210 | 2,592 | 1,751 | –1,178 | –384 | Financial assets |
| – | – | 308 | 287 | 429 | 367 | –3,140 | –1,846 | Deferred tax |
| 20 | 20 | 2,131 | 1,913 | 22,683 | 21,895 | –27,371 | –26,396 | Other assets |
| 352 | 359 | 82,498 | 75,699 | 31,460 | 29,822 | –47,749 | –44,346 | Non-current assets |
| 417 | 383 | 10 | 8 | – | – | – | – | Inventories |
| 208 | 128 | 194 | 137 | 1 | 1 | – | – | Trade receivables |
| – | – | 24,992 | 23,586 | – | – | – | – | Receivables from sales financing |
| – | – | 1,020 | 1,048 | 1,665 | 898 | –1,267 | –514 | Financial assets |
| – | – | 100 | 102 | 679 | 618 | – | – | Current tax |
| – | – | 3,969 | 3,953 | 38,010 | 36,682 | –56,133 | –54,828 | Other assets |
| – | – | 1,391 | 1,783 | 89 | 153 | – | – | Cash and cash equivalents |
| 625 | 511 | 31,676 | 30,617 | 40,444 | 38,352 | –57,400 | –55,342 | Current assets |
| 977 | 870 | 114,174 | 106,316 | 71,904 | 68,174 | –105,149 | –99,688 | Total assets |
| Motorcycles Financial Services Other Entities Eliminations 31.12.2014 31.3.2015 31.12.2014 31.3.2015 31.12.2014 31.3.2015 31.12.2014 31.3.2015 31.12.2014 Subscribed capital Capital reserves Revenue reserves Accumulated other equity Minority interest 31,045 – – 10,232 9,357 12,060 12,031 –15,314 –14,996 Equity 2,741 78 78 85 75 2,018 1,710 – – Pension provisions 3,777 163 160 309 273 61 58 – – Other provisions 421 – 5,078 13 –3,538 Deferred tax – 5,737 22 –4,836 1,933 – – 15,579 14,695 28,896 26,923 –1,178 –384 Financial liabilities 5,445 400 357 24,347 23,680 55 51 –26,234 –25,258 Other liabilities 14,317 641 595 46,057 43,801 31,052 28,755 –32,248 –29,180 Non-current provisions and liabilities 3,746 64 62 438 432 208 282 – – Other provisions 1,050 – – 204 162 414 378 – – Current tax 3,250 – 19,122 15,624 –514 Financial liabilities – 21,604 16,431 –1,267 6,929 230 192 593 571 2 17 – – Trade payables 18,794 42 21 35,046 32,871 11,737 11,087 –56,320 –54,998 Other liabilities 33,769 336 275 57,885 53,158 28,792 27,388 –57,587 –55,512 Current provisions and liabilities 79,131 977 870 114,174 106,316 71,904 68,174 –105,149 –99,688 Total equity and liabilities |
Equity and liabilities | ||||
|---|---|---|---|---|---|
| Equity attributable to shareholders of BMWAG | |||||
Condensed Cash Flow Statements for Group and Segments for the period from 1 January to 31 March 2015
| BMW GROUP IN FIGURES | Group | ||
|---|---|---|---|
| in € million | 2015 | 2014* | |
| Net profit | 1,516 | 1,458 | |
| Depreciation and amortisation of tangible, intangible and investment assets | 1,106 | 957 | |
| Change in provisions | –12 | 267 | |
| Change in leased products and receivables from sales financing | –930 | –900 | |
| Change in deferred taxes | 186 | 217 | |
| Changes in working capital | –1,055 | –942 | |
| Other | 178 | 344 | |
| Cash inflow/outflow from operating activities | 989 | 1,401 | |
| Investment in intangible assets and property, plant and equipment | –794 | –1,240 | |
| Net investment in marketable securities and term deposits | –994 | 11 | |
| Other | 76 | 15 | |
| Cash inflow/outflow from investing activities | –1,712 | –1,214 | |
| Cash inflow/outflow from financing activities | –931 | –338 | |
| Effect of exchange rate on cash and cash equivalents | 180 | –21 | |
| Effect of changes in composition of Group on cash and cash equivalents | – | 2 | |
| Change in cash and cash equivalents | –1,474 | –170 | |
| Cash and cash equivalents as at 1January | 7,688 | 7,671 | |
| Cash and cash equivalents as at 31March | 6,214 | 7,501 | |
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
| Automotive | Financial Services | |||
|---|---|---|---|---|
| 2015 | 2014* | 2015 | 2014* | |
| 1,083 | 1,109 | 384 | 313 | Net profit |
| 1,083 | 935 | 8 | 6 | Depreciation and amortisation of tangible, intangible and investment assets |
| 144 | 327 | –17 | –18 | Change in provisions |
| 3 | –6 | –930 | –937 | Change in leased products and receivables from sales financing |
| 267 | 197 | 12 | 9 | Change in deferred taxes |
| –914 | –918 | –49 | 32 | Changes in working capital |
| 164 | 298 | –790 | 584 | Other |
| 1,830 | 1,942 | –1,382 | –11 | Cash inflow/outflow from operating activities |
| –785 | –1,227 | –1 | –1 | Investment in intangible assets and property, plant and equipment |
| –927 | –19 | 10 | 31 | Net investment in marketable securities and term deposits |
| 15 | 17 | – | – | Other |
| –1,697 | –1,229 | 9 | 30 | Cash inflow/outflow from investing activities |
| –1,232 | –1,078 | 992 | 99 | Cash inflow/outflow from financing activities |
| 81 | –9 | –11 | –11 | Effect of exchange rate on cash and cash equivalents |
| – | 2 | – | – | Effect of changes in composition of Group on cash and cash equivalents |
| –1,018 | –372 | –392 | 107 | Change in cash and cash equivalents |
| 5,752 | 6,775 | 1,783 | 879 | Cash and cash equivalents as at 1January |
| 4,734 | 6,403 | 1,391 | 986 | Cash and cash equivalents as at 31March |
Group Statement of Changes in Equity to 31 March 2015
| in € million | Note | Subscribed | Capital | Revenue reserves | Accumulated other equity | Equity | Minority Total |
|
|---|---|---|---|---|---|---|---|---|
| capital | reserves | attributable to shareholders |
interest | |||||
| of BMW AG | ||||||||
| Translation Securities differences |
Derivative financial |
|||||||
| instruments | ||||||||
| 1 January 2014* | 24 | 656 | 1,990 | 33,122 | –1,627 | 135 1,136 |
35,412 | 188 35,600 |
| Net profit | – | – | 1,454 | – | – – |
1,454 | 4 1,458 |
|
| Other comprehensive income for the period after tax | – | – | –165 | –30 | –21 64 |
–152 | – –152 |
|
| Comprehensive income 31 March 2014* | – | – | 1,289 | –30 | –21 64 |
1,302 | 4 1,306 |
|
| Other changes 31 March 2014* |
24 | – 656 |
– 1,990 |
– 34,411 |
7 –1,650 |
– – 114 1,200 |
7 36,721 |
–3 4 189 36,910 |
| * Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014. | ||||||||
| in € million | Note | Subscribed | Capital | Revenue reserves | Accumulated other equity | Equity | Minority Total |
|
| capital | reserves | attributable to shareholders |
interest | |||||
| of BMW AG | ||||||||
| Translation Securities differences |
Derivative financial |
|||||||
| instruments | ||||||||
| 1 January 2015 | 24 | 656 | 2,005 | 35,621 | –723 | 141 –480 |
37,220 | 217 37,437 |
| Net profit | – | – | 1,512 | – | – – |
1,512 | 4 1,516 |
Other comprehensive income for the period after tax – – –1,019 1,545 26 –3,403 –2,851 – –2,851 Other comprehensive income for the period after tax Comprehensive income 31 March 2015 – – 493 1,545 26 –3,403 –1,339 4 –1,335 Comprehensive income 31 March 2015
Other changes – – – – – – – 25 25 Other changes 31 March 2015 24 656 2,005 36,114 822 167 –3,883 35,881 246 36,127 31 March 2015
| Translation differences |
Accumulated other equity Securities |
Derivative financial instruments |
Equity attributable to shareholders of BMW AG |
Minority interest |
Total | |
|---|---|---|---|---|---|---|
| –1,627 | 135 | 1,136 | 35,412 | 188 | 35,600 | 1 January 2014* |
| – | – | – | 1,454 | 4 | 1,458 | Net profit |
| –30 | –21 | 64 | –152 | – | –152 | Other comprehensive income for the period after tax |
| –30 | –21 | 64 | 1,302 | 4 | 1,306 | Comprehensive income 31 March 2014* |
| 7 | – | – | 7 | –3 | 4 | Other changes |
| –1,650 | 114 | 1,200 | 36,721 | 189 | 36,910 | 31 March 2014* |
| Total | Minority interest |
Equity attributable to shareholders |
Accumulated other equity | |||
|---|---|---|---|---|---|---|
| of BMW AG | Derivative financial instruments |
Securities | Translation differences |
|||
| 1 January 2015 | 37,437 | 217 | 37,220 | –480 | 141 | –723 |
| Net profit | 1,516 | 4 | 1,512 | – | – | – |
| Other comprehensive income for the period after tax | –2,851 | – | –2,851 | –3,403 | 26 | 1,545 |
| Comprehensive income 31 March 2015 | –1,335 | 4 | –1,339 | –3,403 | 26 | 1,545 |
| Other changes | 25 | 25 | – | – | – | – |
| 31 March 2015 | 36,127 | 246 | 35,881 | –3,883 | 167 | 822 |
30
Notes to the Group Financial Statement to 31 March 2015 Accounting Principles and Policies
The Group Financial Statements of BMWAG at 31 December 2014 were drawn up in accordance with International Financial Reporting Standards (IFRSs), as applicable in the European Union (EU) at that date. The interim Group Financial Statements (Interim Report) at 31 March 2015, 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 2014 Group Financial Statements. The BMW Group applies the option of publishing condensed group financial statements. All Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) which are mandatory at 31 March 2015 have also been applied. The Interim Report also complies with German Accounting Standard No. 16 (GAS 16) – Interim Financial Reporting – issued by the German Accounting Standards Committee e. V. (GASC).
Further information regarding the Group's accounting principles and policies is contained in the Group Financial Statements at 31 December 2014.
In order to improve clarity, various items are aggregated in the income statement and balance sheet. These items are disclosed and analysed separately in the notes.
A Statement of Comprehensive Income is presented at Group level reconciling the net profit to comprehensive income for the periods under report.
In order to provide a better insight into the net assets, financial position and earnings performance of the BMW Group and going beyond the requirements of IFRS 8 (Operating Segments), the Group Financial Statements also include balance sheets and income statements for the Automotive, Motorcycles, Financial Services and Other Entities segments. The Group Cash Flow Statement is supplemented by statements of cash flows for the Automotive and Financial Services segments.
In order to facilitate the sale of its products, the BMW Group provides various financial services – mainly loan and lease financing – to both retail customers and dealers. The inclusion of the financial services activities of the Group therefore has an impact on the Interim Group Financial Statements.
Inter-segment transactions – relating primarily to internal sales of products, the provision of funds and the
related interest – are eliminated in the "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 2014.
In conjunction with the refinancing of financial services business, a significant volume of receivables arising from retail customer and dealer financing is sold. Similarly, rights and obligations relating to leases are sold. The sale of receivables is a well-established instrument used by industrial companies. These transactions usually take the form of asset-backed financing transactions involving the sale of a portfolio of receivables to a trust which, in turn, issues marketable securities to refinance the purchase price. The BMW Group continues to "service" the receivables and receives an appropriate fee for these services. In accordance with IFRS 10 (Consolidated Financial Statements) such assets remain in the Group Financial Statements although they have been legally sold, since all the conditions relevant for control are met. Gains and losses relating to the sale of such assets are not recognised until the assets are removed from the Group balance sheet on transfer of the related significant risks and rewards. The balance sheet value of the assets sold at 31 March 2015 totalled € 11.5 billion (31 December 2014: € 10.9 billion).
In addition to credit financing and leasing contracts, the Financial Services segment also brokers insurance business via cooperation arrangements entered into with local insurance companies. These activities are not material to the BMW Group as a whole.
The Interim Group Financial Statements at 31 March 2015 have neither been audited nor reviewed by the Group auditors, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin.
The Group currency is the euro. All amounts are disclosed in millions of euros (€ million) unless stated otherwise.
The preparation of the Interim Group Financial Statements requires management to make certain assumptions and judgements and to use estimations that can affect the reported amounts of assets and liabilities, revenues and expenses and contingent liabilities. All assumptions and estimates are based on factors known at the end of the reporting period. They are determined on the basis of the most likely outcome of future business developments. Actual amounts could differ from those assumptions and estimates if business conditions
The BMW Group Financial Statements for the first quarter 2015 include, besides BMWAG, 21 German and 167 foreign subsidiaries. This includes one special purpose securities fund and 30 special purpose trusts, almost all of which are used for asset backed financing. In addition, three joint operations are consolidated proportionately.
LARGUS Grundstücks-Verwaltungsgesellschaft mbH & Co. KG was merged with LARGUS Grundstücks-Verwaltungsgesellschaft mbH and ceased to be a separate consolidated company in the first quarter 2015.
The exchange rates applied for currency translation purposes in accordance with the modified closing rate develop differently to the Group's expectations at the end of the reporting period. Estimates and underlying assumptions are checked regularly.
Compared to the corresponding period last year, three subsidiaries and six special purpose trusts have been consolidated for the first time. Six subsidiaries and eight special purpose trusts ceased to be consolidated companies compared to the same period last year.
The changes to the composition of the Group do not have a material impact on the results of operations, financial position or net assets of the Group.
method, and which have a material impact on the Group Financial Statements, were as follows:
| Closing rate | Average rate | |||
|---|---|---|---|---|
| 31.3.2015 | 31.12.2014 | 1st quarter 2015 |
1st quarter 2014 |
|
| US Dollar | 1.07 | 1.21 | 1.13 | 1.37 |
| British Pound | 0.72 | 0.78 | 0.74 | 0.83 |
| Chinese Renminbi | 6.66 | 7.53 | 7.02 | 8.36 |
| Japanese Yen | 128.79 | 144.95 | 134.10 | 140.83 |
| Russian Rouble | 62.44 | 70.98 | 70.88 | 48.05 |
For further information regarding foreign currency translation, reference is made to note 5 of the Group Financial Statements of BMWAG for the year ended 31 December 2014.
(a) Financial reporting rules applied for the first time in the first quarter 2015 The following Standards, Revised Standards, Amendments and Interpretations were applied for the first time in the first quarter 2015:
| Standard/ Interpretation | Date of issue by IASB |
Date of mandatory application IASB |
Date of mandatory application EU |
Impact on BMW Group |
|
|---|---|---|---|---|---|
| IAS 19 | Employment Benefits: Employee Contributions (Amendments to IAS 19) |
21.11.2013 | 1.7.2014 | 1.2.20151 | Insignificant |
| IFRIC 21 | Levies | 20.5.2013 | 1.1.2014 | 17.6.20142 | Insignificant |
| Annual Improvements to IFRS 2010 –2012 | 12.12.2013 | 1.7.2014 | 1.2.20151 | Insignificant | |
| Annual Improvements to IFRS 2011 –2013 | 12.12.2013 | 1.7.2014 | 1.1.2015 | Insignificant |
1 Mandatory application in annual periods beginning on or after 1 February 2015.
2 Mandatory application in annual periods beginning on or after 17 June 2014.
| 4 4 5 |
INTERIM GROUP MANAGEMENT REPORT General Information Report on Economic Position |
Standard/ Interpretation | Date of issue by IASB |
Date of mandatory application IASB |
Date of mandatory application EU |
Expected impact on BMW Group |
|
|---|---|---|---|---|---|---|---|
| 22 | 16 Events after the End of the Reporting Period 17 Report on Outlook, Risks and Opportunities 21 BMW Stock and Capital Markets INTERIM GROUP FINANCIAL STATEMENTS |
IFRS 9 | Financial Instruments | 12.11. 2009 / 28.10.2010 / 16.12.2011 / 19.11.2013 / 24.7.2014 |
1.1.2018 | No | Significant in principle |
| 22 Income Statements for Group and Segments 22 Statement of Comprehensive Income for Group |
IFRS 10/ IAS 28 |
Sale or Contribution of Assets between an Investor and an Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) |
11.9.2014 | 1.1.2016 | No | Insignificant | |
| 24 Balance Sheets for Group and Segments 26 Cash Flow Statements for Group and Segments 28 Group Statement of |
IFRS10/ IFRS12/ IAS 28 |
Investment Entities: Applying the Consolidation Exception (Amendments to IFRS10, IFRS12 and IAS 28) |
18.12.2014 | 1.1.2016 | No | Insignificant | |
| 30 | Changes in Equity Notes to the Group Financial Statements |
IFRS 11 | Acquisition of an Interest in a Joint Operation (Amendments to IFRS 11) |
6.5.2014 | 1.1.2016 | No | Insignificant |
| 46 | OTHER INFORMATION | IFRS 14 | Regulatory Deferral Accounts | 30.1.2014 | 1.1.2016 | No | Insignificant |
| 46 Financial Calendar 47 Contacts |
IFRS 15 | Revenue from Contracts with Customers | 28.5.2014 | 1.1.2017 | No | Significant in principle | |
| IAS1 | Presentation of Financial Statements (Initiative to Improve Disclosure Require ments – Amendments to IAS 1) |
18.12.2014 | 1.1.2016 | No | Significant in principle | ||
| IAS 16/ IAS 38 |
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) |
12.5.2014 | 1.1.2016 | No | Insignificant | ||
| IAS 16/ IAS 41 |
Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) |
30.6.2014 | 1.1.2016 | No | None | ||
| IAS 27 | Equity Method in Separate Financial Statements (Amendments to IAS 27) |
12.8.2014 | 1.1.2016 | No | None | ||
| Annual Improvements to IFRS 2012–2014 | 25.9.2014 | 1.1.2016 | No | Insignificant |
In November 2009 the IASB issued IFRS 9 (Financial Instruments) as part of a project to revise the accounting for financial instruments. This Standard marks the first of three phases of the IASB project to replace the existing IAS 39 (Financial Instruments: Recognition and Measurement). The first phase deals initially only with financial assets. IFRS 9 amends the recognition and measurement requirements for financial assets, including various hybrid contracts.
Financial assets are measured at either amortised cost or fair value. IFRS 9 harmonises the various rules contained in IAS 39 and reduces the number of valuation categories for financial instruments on the assets side of the balance sheet.
The new categorisation is based partly on the entity's business model and partly on the contractual cash flow characteristics.
In October 2010, additional rules for financial liabilities were added to IFRS 9. The requirements for financial liabilities contained in IAS 39 remain unchanged with the exception of new requirements relating to the measurement of an entity's own credit risk at fair value. A package of amendments to IFRS 9 was announced on 19 November 2013. On the one hand, the amendments overhaul the requirements for hedge accounting by introducing a new hedge accounting model. They also enable entities to change the accounting for liabilities they have elected to measure at fair value, such that fair value changes due to changes in "own credit risk" would not require to be recognised in profit or loss. The mandatory effective date of 1 January 2015 was removed and a new application date of 1 January 2018 set. The impact of adoption of the Standard on the Group Financial Statements is currently being assessed.
33
In May 2014 the IASB issued IFRS 15 (Revenue from Contracts with Customers) together with the Financial Accounting Standards Board. The objective of the new Standard is to assimilate all the various existing requirements and Interpretations relating to revenue recognition (IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers, SIC-31 Revenue – Barter Transactions involving Advertising Services) in a single Standard. The new Standard also stipulates uniform revenue recognition principles for all sectors and all categories.
The new Standard is based on a five-step model, which sets out the rules for revenue from contracts with customers. Lease arrangements, insurance contracts, financial instruments and specified contractual rights and obligations relating to non-monetary transactions between entities within the same sector are excluded from the scope of the Standard. Revenue can be recognised either over time or at a specific point in time. The fivestep model describes the five steps necessary to recognise revenue on the basis of the transfer of control:
In the case of multi-component transactions or transactions with variable consideration, it is possible that revenue may have to be recognised earlier or later under IFRS 15 compared with the previous Standard.
A major difference to the previous Standard is the increased scope of discretion for estimates and the introduction of thresholds that could influence the amount and timing of revenue recognition.
The Standard is mandatory for the first time for annual periods beginning on or after 1 January 2017. Early adoption is permitted under IFRS. The impact of adoption of the new requirements on the Group Financial Statements is currently being assessed.
In December 2014, the IASB issued Amendments to IAS 1 as part of its disclosure initiative. The amendments relate primarily to clarifications relating to the presentation of financial reports.
Firstly, disclosures are only required to be made in the notes if their inclusion is material for users of the financial statements. This also applies when an IFRS Standard explicitly specifies a minimum list of disclosures. Secondly, items to be presented in the balance sheet, income statement and comprehensive income can be aggregated or disaggregated by using subtotals. Thirdly, it clarifies that an entity's share of other comprehensive income of equity-accounted entities is required to be analysed – within the Statement of Comprehensive Income – to show "components, which will be subsequently reclassified to profit and loss" and "components, which will be not subsequently reclassified to profit and loss". Fourthly, it is stressed that there is no requirement to use the standard template for the notes and that the emphasis should be on structuring the notes based on the relevance for the specific reporting entity.
The Standard is mandatory for the first time for annual periods beginning on or after 1 January 2016. Early adoption is permitted. The potential impact of adoption of the new requirements on the Group Financial Statements is currently being assessed.
Notes to the Group Financial Statement to 31 March 2015 Notes to the Income Statement
Revenues by activity comprise the following:
| 4 | INTERIM GROUP |
|---|---|
| MANAGEMENT REPORT | |
| 4 | General Information |
| 5 | Report on Economic |
| Position | |
| 16 Events after the End of | |
| the Reporting Period | |
| 17 Report on Outlook, Risks | |
| and Opportunities |
FINANCIAL STATEMENTS 22 Income Statements for
Group and Segments 26 Cash Flow Statements
An analysis of revenues by segment is shown in the segment information in note 31.
Cost of sales includes € 9,267 million (2014: € 8,145 million) in the first quarter relating to manufacturing costs.
Cost of sales includes € 4,964 million (2014: € 3,945 million) in the first quarter relating to financial services business.
First-quarter cost of sales includes research and development expenses of € 937 million (2014: € 987 million), comprising all research costs and development costs not recognised as assets as well as the amortisation of capitalised development costs amounting to € 257 million (2014: € 265 million).
Selling expenses, comprising mainly marketing, advertising and sales personnel costs, amounted to € 1,254 million for the three-month period to 31 March 2015 (2014: € 1,207 million).
Other operating income in the first quarter totalled € 295 million (2014: € 154 million), while other operating expenses amounted to € 246 million (2014: € 170 mil-
The result from equity accounted investments in the first quarter was a positive amount of € 128 million (2014: € 225 million). These figures include the results of
Administrative expenses, comprising expenses for administration not attributable to development, production or sales functions, amounted to € 630 million in the first quarter (2014: € 551 million).
lion). These items principally include exchange gains and losses, gains and losses on the disposal of assets, write-downs and income / expense from the reversal of, and allocation to, provisions.
the joint ventures BMW Brilliance Automotive Ltd., Shenyang, DriveNow GmbH & Co. KG, Munich, and DriveNow Verwaltungs GmbH, Munich.
| in € million | 1st quarter 2015 |
1st quarter 2014* |
|---|---|---|
| Interest and similar income | 42 | 43 |
| Interest and similar expenses | –122 | –93 |
| Net interest result | –80 | –50 |
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
| in € million | 1st quarter 2015 |
1st quarter 2014 |
|---|---|---|
| Result on investments | – | –1 |
| Sundry other financial result | –300 | –105 |
| Other financial result | –300 | –106 |
Taxes on income comprise the following:
| in € million | 1st quarter 2015 |
1st quarter 2014* |
|---|---|---|
| Current tax expense | 567 | 482 |
| Deferred tax expense | 186 | 219 |
| Income taxes | 753 | 701 |
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
The effective tax rate for the three-month period to 31 March 2015 was 33.2% (2014: 32.5%) and corresponds to the best estimate of the weighted average annual income tax rate for the full year. This tax rate has been applied to the pre-tax profit for the interim reporting periods.
The computation of earnings per share is based on the following figures:
| 1st quarter 2015 |
1st quarter 2014* |
||
|---|---|---|---|
| Profit attributable to shareholders of BMW AG | € million | 1,511.7 | 1,454.0 |
| Profit attributable to common stock | € million | 1,386.2 | 1,333.8 |
| Profit attributable to preferred stock | € million | 125.5 | 120.2 |
| Average number of common stock shares in circulation | number | 601,995,196 | 601,995,196 |
| Average number of preferred stock shares in circulation | number | 54,499,544 | 54,259,787 |
| Basic earnings per share of common stock | € | 2.30 | 2.22 |
| Basic earnings per share of preferred stock | € | 2.30 | 2.22 |
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
Basic earnings per share are calculated for common and preferred stock by dividing the net profit after minority interests, as attributable to each category of stock, by the average number of shares in circulation.
In computing earnings per share of preferred stock, earnings to cover the additional dividend of € 0.02 per share of preferred stock are spread over the four quarters of the corresponding financial year. Earnings per share of preferred stock are computed on the basis of the number of preferred stock shares entitled to receive a dividend in each of the relevant financial years. As in the previous year, diluted earnings per share correspond to basic earnings per share.
Notes to the Group Financial Statement to 31 March 2015 Notes to the Statement of Comprehensive Income
Other comprehensive income for the period after tax comprises the following:
| 4 | INTERIM GROUP | |
|---|---|---|
| MANAGEMENT REPORT | ||
| 4 | General Information | |
| 5 | Report on Economic | |
| Position | ||
| 16 Events after the End of the Reporting Period |
||
| 17 Report on Outlook, Risks | ||
| and Opportunities | ||
| 21 BMW Stock and Capital | ||
| Markets | ||
| 22 | INTERIM GROUP FINANCIAL STATEMENTS |
|
| 22 Income Statements for | ||
| Group and Segments 22 Statement of |
||
| Comprehensive | ||
| Income for Group | ||
| 24 Balance Sheets for | ||
| Group and Segments | ||
| 26 Cash Flow Statements for Group and Segments |
| in € million | 1st quarter 2015 |
1st quarter 2014 |
|
|---|---|---|---|
| Remeasurement of the net liability for defined benefit pension plans | –1,604 | –280 | |
| Deferred taxes | 585 | 115 | |
| Items not expected to be reclassified to the income statement in the future | –1,019 | –165 | |
| Available-for-sale securities | 27 | –9 | |
| thereof gains / losses arising in the period under report | 90 | 1 | |
| thereof reclassifications to the income statement | –63 | –10 | |
| Financial instruments used for hedging purposes | –4,637 | 44 | |
| thereof gains / losses arising in the period under report | –4,878 | 153 | |
| thereof reclassifications to the income statement | 241 | –109 | |
| Other comprehensive income from equity accounted investments | –130 | –9 | |
| Deferred taxes | 1,561 | –15 | |
| Currency translation foreign operations | 1,347 | 2 | |
| Items expected to be reclassified to the income statement in the future | –1,832 | 13 | |
| Other comprehensive income for the period after tax | –2,851 | –152 |
| in € million | 1stquarter 2015 | 1st quarter 2014 | |||||
|---|---|---|---|---|---|---|---|
| Before tax |
Deferred tax expense/ income |
After tax |
Before tax |
Deferred tax expense/ income |
After tax |
||
| Remeasurement of the net liability for defined benefit pension plans | –1,604 | 585 | –1,019 | –280 | 115 | –165 | |
| Available-for-sale securities | 27 | –1 | 26 | –9 | –12 | –21 | |
| Financial instruments used for hedging purposes | –4,637 | 1,480 | –3,157 | 44 | 3 | 47 | |
| Other comprehensive income from equity accounted investments | –130 | 82 | –48 | –9 | –6 | –15 | |
| Currency translation foreign operations | 1,347 | – | 1,347 | 2 | – | 2 | |
| Other comprehensive income | –4,997 | 2,146 | –2,851 | –252 | 100 | –152 |
Notes to the Group Financial Statement to 31 March 2015 Notes to the Balance Sheet
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 acquired customer lists. Capitalised development costs amounted to € 5,442 million at the end of the reporting period (31 December 2014: € 5,453 million). Additions to development costs in the first quarter 2015 totalled € 246 million (2014: € 271 million). The amortisation expense for the period was € 257 million (2014: € 265 million).
At 31 March 2015 other intangible assets amounted to € 647 million (31 December 2014: € 682 million), including a brand-name right with a carrying amount of € 50 million (31 December 2014: € 46 million) and con-
Capital expenditure for property, plant and equipment in the first three months of 2015 totalled € 545 million (2014: € 967 million). The depreciation expense for the period amounted to € 806 million (2014: € 647 million), while disposals amounted to € 10 million (2014: € 15 million).
Additions to leased products and depreciation thereon amounted to € 3,936 million (2014: € 2,992 million) and € 899 million (2014: € 879 million) respectively. Disposals amounted to € 2,629 million (2014: € 1,837 mil-
Investments accounted for using the equity method relate to the joint ventures BMW Brilliance Automotive Ltd., Shenyang, DriveNow GmbH & Co. KG, Munich, and DriveNow Verwaltungs GmbH, Munich.
Receivables from sales financing totalling € 66,299 million (31 December 2014: € 61,024 million) relate to credit financing for retail customers and dealers and to finance leases.
cessions, protected rights and licenses with a carrying amount of € 365 million (31 December 2014: € 394 million). During the first three months of 2015, € 3 million (2014: € 2 million) was invested in other intangible assets. Amortisation on other intangible assets in the first quarter totalled € 43 million (2014: € 45 million).
In addition, intangible assets include goodwill of € 33 million (31 December 2014: € 33 million) allocated to the Automotive cash-generating unit and goodwill of € 331 million (31 December 2014: € 331 million) allocated to the Financial Services cash-generating unit.
Intangible assets amounting to € 50 million (31 December 2014: € 46 million) are subject to restrictions on title.
Purchase commitments for property, plant and equipment totalled € 2,386 million at the end of the reporting period (31 December 2014: € 2,247 million).
lion). The translation of foreign currency financial statements resulted in a net positive translation difference of € 1,933 million (2014: net negative translation difference of € 65 million).
Other investments relate primarily to investments in non-consolidated subsidiaries, joint ventures, joint operations and associated companies, participations and non-current marketable securities. No impairment losses were recognised on investments during the first three months of the year.
Receivables from sales financing include € 41,307 million (31 December 2014: € 37,438 million) with a remaining term of more than one year.
37
| 4 | INTERIM GROUP |
|---|---|
| MANAGEMENT REPORT |
Position 16 Events after the End of the Reporting Period 17 Report on Outlook, Risks
FINANCIAL STATEMENTS 22 Income Statements for
Financial assets comprise:
| in € million | 31.3.2015 | 31.12.2014 |
|---|---|---|
| Derivative instruments | 3,007 | 2,888 |
| Marketable securities and investment funds | 4,125 | 3,972 |
| Loans to third parties | 14 | 12 |
| Credit card receivables | 258 | 239 |
| Other | 1,235 | 297 |
| Financial assets | 8,639 | 7,408 |
| thereof non-current | 2,051 | 2,024 |
| thereof current | 6,588 | 5,384 |
A description of the measurement of derivatives is provided in note 29.
Income tax assets totalling € 1,943 million (31 December 2014: € 1,906 million) include claims amounting to € 483 million (31 December 2014: € 653 million) which
are expected to be settled after more than twelve months. Some of the claims may be settled earlier than this depending on the timing of proceedings.
Other assets comprise the following items:
| in € million | 31.3.2015 | 31.12.2014 |
|---|---|---|
| Other taxes | 1,047 | 1,078 |
| Receivables from subsidiaries | 719 | 721 |
| Receivables from other companies in which an investment is held | 980 | 1,055 |
| Prepayments | 1,533 | 1,323 |
| Collateral receivables | 418 | 412 |
| Sundry other assets | 1,768 | 1,543 |
| Other assets | 6,465 | 6,132 |
| thereof non-current | 1,500 | 1,094 |
| thereof current | 4,965 | 5,038 |
Inventories comprise the following:
| in € million | 31.3.2015 | 31.12.2014 |
|---|---|---|
| Raw materials and supplies | 1,055 | 918 |
| Work in progress, unbilled contracts | 1,071 | 944 |
| Finished goods and goods for resale | 10,688 | 9,227 |
| Inventories | 12,814 | 11,089 |
The Group Statement of Changes in Equity is shown on pages 28 and 29.
At 31 March 2015 common stock issued by BMWAG was divided, as at the end of the previous year, into 601,995,196 shares of common stock with a par-value of € 1. Preferred stock issued by BMWAG was divided at the end of the reporting period – also unchanged from 31 December 2014 – into 54,499,544 shares with a parvalue 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.
The shareholders passed a resolution at the 2014 Annual General Meeting authorising the Board of Management, with the approval of the Supervisory Board, to increase the Company's share capital by up to € 5 million prior to 14 May 2019 by the issuance of new shares of non-voting preferred stock, carrying the same rights as existing non-voting preferred stock, in return for cash contributions. Based on this authorisation, 239,757 shares of preferred stock have been issued to employees up to the reporting date. Authorised Capital therefore stands at € 4.8 million at the end of the reporting period. The BMW Group did not hold any treasury shares at 31 March 2015.
Capital reserves include premiums arising from the issue of shares and were unchanged from 31 December 2014 at € 2,005 million.
Other provisions, at € 9,473 million (31 December 2014: € 8,790 million) primarily include employee and socialrelated obligations as well as obligations for ongoing operational expenses.
Revenue reserves comprise the post-acquisition and non-distributed earnings of consolidated companies. In addition, revenue reserves include both positive and negative goodwill arising on the consolidation of Group companies prior to 31 December 1994.
Revenue reserves increased during the three-month period to stand at € 36,114 million at 31 March 2015 (31 December 2014: € 35,621 million). Revenue reserves increased during the first quarter 2015 by the net profit attributable to the shareholders of BMWAG amounting to € 1,512 million (2014* : € 1,454 million) and was reduced by € 1,019 million (2014: decreased by € 165 million) for remeasurements of net defined benefit liability for pension plans, net of related deferred tax recognised directly in equity.
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.
Equity attributable to minority interests amounted to € 246 million (31 December 2014: € 217 million). This includes a minority interest of € 4 million in the results for the period (31 December 2014: € 19 million).
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
Current other provisions amounted to € 4,783 million at the end of the reporting period (31 December 2014: € 4,522 million).
39
4 INTERIM GROUP MANAGEMENT REPORT
Income tax liabilities totalling € 1,508 million (31 December 2014: € 1,590 million) include obligations amounting to € 754 million (31 December 2014: € 956 million) which are 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 tax liabilities comprise € 212 million (31 December 2014: € 151 million) for taxes payable and € 1,296 million (31 December 2014: € 1,439 million) for tax provisions.
Financial liabilities include all obligations of the BMW Group relating to financing activities. Financial liabilities comprise the following:
| in € million | 31.3.2015 | 31.12.2014 |
|---|---|---|
| Bonds | 37,741 | 35,489 |
| Liabilities to banks | 12,279 | 11,554 |
| Liabilities from customer deposits (banking) | 13,580 | 12,466 |
| Commercial paper | 3,971 | 5,599 |
| Asset backed financing transactions | 11,537 | 10,884 |
| Derivative instruments | 9,139 | 3,143 |
| Other | 1,537 | 1,514 |
| Financial liabilities | 89,784 | 80,649 |
| thereof non-current | 47,730 | 43,167 |
| thereof current | 42,054 | 37,482 |
During the first quarter 2015, a number of bonds were issued in various currencies with a total volume of € 2,884 million (2014: € 3,371 million). Repayments during the three-month period amounted to € 1,801 million (2014: € 1,957 million). Currency translation differences accounted for most of the remainder of the change in bonds.
Further information relating to the change in other items within financial liabilities is provided in the Interim Group Management Report. A description of the measurement of derivatives is provided in note 29.
Other liabilities comprise the following items:
| in € million | 31.3.2015 | 31.12.2014 |
|---|---|---|
| Other taxes | 1,073 | 943 |
| Social security | 73 | 78 |
| Advance payments from customers | 563 | 565 |
| Deposits received | 888 | 768 |
| Payables to subsidiaries | 84 | 162 |
| Payables to other companies in which an investment is held | 276 | 5 |
| Deferred income | 6,024 | 5,488 |
| Other | 4,091 | 4,041 |
| Other liabilities | 13,072 | 12,050 |
| thereof non-current | 4,495 | 4,275 |
| thereof current | 8,577 | 7,775 |
The fair values shown are computed using market information available at the balance sheet date, on the basis of prices quoted by the contract partners or using appropriate measurement methods e. g. discounted cash flow models. In the latter case, amounts were discounted at 31 March 2015 on the basis of the following interest rates:
| ISO Code in % |
EUR | USD | GBP | JPY | CNY |
|---|---|---|---|---|---|
| Interest rate for six months | 0.05 | 0.32 | 0.73 | 0.01 | 4.80 |
| Interest rate for one year | 0.08 | 0.46 | 0.71 | 0.15 | 4.57 |
| Interest rate for five years | 0.25 | 1.54 | 1.34 | 0.28 | 4.37 |
| Interest rate for ten years | 0.57 | 2.06 | 1.69 | 0.58 | 4.43 |
The interest rates derived from interest-rate structures are adjusted, where necessary, to take account of the credit quality and risk of the underlying financial instrument.
Derivative financial instruments are measured at their fair value. The fair values of derivative financial instruments are determined using measurement models, as a consequence of which there is a risk that the amounts calculated could differ from realisable market prices on disposal. Observable financial market price spreads are taken into account in the measurement of derivative financial instruments. The supply of data to the model used to calculate fair values also takes account of tenor and currency basis spreads, thus helping to minimise differences between the carrying amounts of the instruments and the amounts that can be realised on the financial markets on their disposal. In addition, the Group's own default risk and that of counterparties is taken into account in the form of credit default swap contracts
which have matching terms and which can be observed on the market.
Financial instruments measured at fair value are allocated to different measurement levels in accordance with IFRS 13 (Fair Value Measurement). This includes financial instruments that are
The following table shows the amounts allocated to each measurement level at the end of the reporting period:
| 31 March 2015 in € million |
Level 1 | Level hierarchy in accordance with IFRS 13 Level 2 |
Level 3 |
|---|---|---|---|
| Marketable securities, investment fund shares and collateral assets – available-for-sale | 4,025 | – | – |
| Other investments – available-for-sale | 256 | – | – |
| Derivative instruments (assets) | |||
| Cash flow hedges | – | 408 | – |
| Fair value hedges | – | 1,396 | – |
| Other derivative instruments | – | 1,203 | – |
| Derivative instruments (liabilities) | |||
| Cash flow hedges | – | 5,404 | – |
| Fair value hedges | – | 1,250 | – |
| Other derivative instruments | – | 2,485 | – |
Notes to the Group Financial Statement to 31 March 2015 Other disclosures
| 2 | BMW GROUP IN FIGURES | 31 December 2014 | Level hierarchy in accordance with IFRS 13 | ||
|---|---|---|---|---|---|
| 4 | INTERIM GROUP MANAGEMENT REPORT |
in € million | Level 1 | Level 2 | Level 3 |
| 4 | General Information | Marketable securities, investment fund shares and collateral assets – available-for-sale | 3,772 | – | – |
| 5 | Report on Economic Position |
Other investments – available-for-sale | 231 | – | – |
| 16 Events after the End of | Derivative instruments (assets) | ||||
| the Reporting Period 17 Report on Outlook, Risks |
Cash flow hedges | – | 708 | – | |
| and Opportunities | Fair value hedges | – | 1,294 | – | |
| 21 BMW Stock and Capital Markets |
Other derivative instruments | – | 886 | – | |
| Derivative instruments (liabilities) | |||||
| 22 | INTERIM GROUP FINANCIAL STATEMENTS |
Cash flow hedges | – | 1,302 | – |
| 22 Income Statements for | Fair value hedges | – | 721 | – | |
| Group and Segments 22 Statement of Comprehensive |
Other derivative instruments | – | 1,120 | – | |
| Income for Group 24 Balance Sheets for |
As in the financial year 2014, there were no reclassifications within the level hierarchy during the first quarter of 2015.
In situations where a fair value was required to be measured for a financial instrument only for disclosure purposes, this was achieved 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.
In the case of financial instruments held by the BMW Group which are not measured at fair value, the carrying amounts of such instruments correspond as a general rule to fair values. The following items are the main exceptions to this general rule:
| in € million | Fair value | 31.3.2015 Carrying amount |
Fair value | 31.12.2014 Carrying amount |
|
|---|---|---|---|---|---|
| Loans and receivables – Receivables from sales financing | 68,286 | 66,299 | 62,642 | 61,024 | |
| Other liabilities – Bonds | 38,360 | 37,741 | 36,083 | 35,489 |
In accordance with IAS 24 (Related Party Disclosures), related individuals or entities which have the ability to control the BMW Group or which are controlled by the BMW Group, must be disclosed unless such parties are already included in the Group Financial Statements of BMWAG as consolidated companies. Under the control concept established in IFRS 10, an investor controls another entity when it is exposed to or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
In addition, the disclosure requirements of IAS 24 also cover transactions with associated companies, joint ventures, joint operations and individuals that have the ability to exercise significant influence over the financial and operating policies of the BMW Group. This also includes close relatives and intermediary entities. Significant influence over the financial and operating policies of the BMW Group is presumed when a party holds 20% or more of the voting power of BMWAG. In addition, the requirements contained in IAS 24 relating to
key management personnel and close members of their families or intermediary entities are also applied. In the case of the BMW Group, this applies to members of the Board of Management and Supervisory Board.
For the first three months of 2015, the disclosure requirements contained in IAS 24 affect the BMW Group with regard to business relationships with affiliated, non-consolidated subsidiaries, joint ventures, joint operations and associated companies as well as with members of the Board of Management and Supervisory Board of BMWAG.
The BMW Group maintains normal business relationships with non-consolidated subsidiaries. Transactions with these companies are small in scale, arise in the normal course of business and are conducted on the basis of arm's length principles.
Transactions of BMW Group companies with the joint venture BMW Brilliance Automotive Ltd., Shenyang, all arise in the normal course of business and are conducted on the basis of arm's length principles. Group
companies sold goods and services to BMW Brilliance Automotive Ltd., Shenyang, during the first quarter 2015 for an amount of € 1,149 million (2014: € 1,118 million). At 31 March 2015, receivables of Group companies from BMW Brilliance Automotive Ltd., Shenyang, totalled € 845 million (31 December 2014: € 943 million). Payables of Group companies to BMW Brilliance Automotive Ltd., Shenyang, amounted to € 271 million (31 December 2014: € – million). Group companies received goods and services from BMW Brilliance Automotive Ltd., Shenyang, during the first three months of 2015 for an amount of € 4 million (2014: € 1 million).
All relationships of BMW Group entities with the joint ventures DriveNow GmbH & Co. KG, Munich, and DriveNow Verwaltungs GmbH, Munich, are conducted on the basis of arm's length principles. Transactions with these entities arise in the normal course of business and are small in scale.
Transactions of Group companies with SGL Automotive Carbon Fibers GmbH & Co. KG, Munich, SGL Automotive Carbon Fibers Verwaltungs GmbH, Munich, and SGL Automotive Carbon Fibers LLC, Dover, DE, are proportionately consolidated on the basis of 49% shareholdings (joint operations). The remaining 51% of the transactions continue to be reported in the Group Financial Statements (non-consolidated portion) and are described below. All relationships with the joint operations are attributable to the ordinary activities of the entities concerned. All transactions were conducted on the basis of arm's length principles. At 31 March 2015, loans receivable from the joint operations amounted to € 134 million (31 December 2014: € 111 million). Interest income recognised on these loans in the first quarter 2015 amounted to € 0.9 million (2014: € 0.3 million). Goods and services received by Group companies from the joint operations totalled € 13 million (2014: € 11 million). Amounts payable to the joint operations at the end of the reporting period totalled € 5 million (31 December 2014: € 5 million).
Business transactions between BMW Group entities and associated companies are small in scale, all arise in the normal course of business and are conducted on the basis of arm's length principles.
Stefan Quandt 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 three months of 2015. In addition, companies of the DELTON Group used vehicles provided by the BMW Group, mostly in the form of leasing contracts. Stefan Quandt is also the indirect majority shareholder of Solarwatt GmbH, Dresden. Cooperation arrangements are in place between BMW AG and Solarwatt GmbH, Dresden, within the field of electromobility. The focus of this collaboration is on providing complete photovoltaic solutions for rooftop systems and carports to BMW i customers. During the first quarter 2015 Solarwatt GmbH, Dresden, leased vehicles from the BMW Group. The service, cooperation and lease contracts referred to above are not material for the BMW Group. They all arise in the normal course of business and are conducted on the basis of arm's length principles.
Susanne Klatten is a shareholder and member of the Supervisory Board of BMWAG and also a shareholder and Deputy Chairman of the Supervisory Board of Altana AG, Wesel. Altana AG, Wesel, acquired vehicles from the BMW Group during the first three months of 2015, mostly in the form of lease contracts. These contracts are not material for the BMW Group, arise in the course of ordinary activities and are made, without exception, on the basis of arm's length principles.
Apart from vehicle lease contracts concluded on an arm's length basis, 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, administers assets on a trustee basis to secure obligations relating to pensions and pre-retirement part-time work arrangements in Germany and is therefore a related party of the BMW Group in accordance with IAS 24. This entity, which is a registered association (eingetragener Verein) under German law, does not have any assets of its own. It did not have any income or expenses during the period under report. BMWAG bears expenses on a minor scale and renders services on behalf of BMW Trust e. V., Munich.
For information on the basis used for identifying and assessing the performance of reportable segments along internal management lines, reference is made to the Group Financial Statements of BMW AG for the year ended 31 December 2014. No changes have been made
either in the accounting policies applied or in the basis used for identifying reportable segments as compared to 31 December 2014.
Segment information by operating segment for the first quarter is as follows:
| Automotive | Motorcycles | |||
|---|---|---|---|---|
| in € million | 2015 | 2014 | 2015 | 2014 |
| External revenues | 14,655 | 13,253 | 565 | 469 |
| Inter-segment revenues | 4,238 | 3,306 | 2 | 3 |
| Total revenues | 18,893 | 16,559 | 567 | 472 |
| Segment result | 1,794 | 1,580 | 115 | 64 |
| Result from equity accounted investments | 128 | 225 | – | – |
| Capital expenditure on non-current assets | 785 | 1,227 | 8 | 12 |
| Depreciation and amortisation on non-current assets | 1,083 | 935 | 16 | 16 |
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
| Automotive | Motorcycles | |
|---|---|---|
| in € million | 31.3.2015 31.12.2014 |
31.3.2015 31.12.2014 |
| Investments accounted for using the equity method Segment assets |
1,117 1,088 11,598 11,489 |
– – 621 575 |
| in € million | 1st quarter 2015 |
1st quarter 2014* |
|---|---|---|
| Reconciliation of segment result | ||
| Total for reportable segments Financial result of Automotive segment and Motorcycles segment |
2,445 –161 |
2,154 62 |
| Elimination of inter-segment items | –15 | –57 |
| Group profit before tax | 2,269 | 2,159 |
| Reconciliation of capital expenditure on non-current assets | ||
| Total for reportable segments | 5,909 | 5,147 |
| Elimination of inter-segment items | –1,179 | –951 |
| Total Group capital expenditure on non-current assets | 4,730 | 4,196 |
| Reconciliation of depreciation and amortisation on non-current assets | ||
| Total for reportable segments | 3,207 | 2,754 |
| Elimination of inter-segment items | –1,202 | –918 |
| Total Group depreciation and amortisation on non-current assets | 2,005 | 1,836 |
* Prior year figures have been adjusted in accordance with IAS 8, in line with the changes described in note 9 to the Group Financial Statements for the financial year 2014.
4 INTERIM GROUP MANAGEMENT REPORT 4 General Information 5 Report on Economic Position 16 Events after the End of the Reporting Period 17 Report on Outlook, Risks and Opportunities 21 BMW Stock and Capital Markets 22 INTERIM GROUP FINANCIAL STATEMENTS 22 Income Statements for Group and Segments 22 Statement of Comprehensive Income for Group 24 Balance Sheets for Group and Segments 26 Cash Flow Statements for Group and Segments 28 Group Statement of Changes in Equity 30 Notes to the Group Financial Statements 46 OTHER INFORMATION 46 Financial Calendar 47 Contacts
| Automotive Motorcycles |
Financial Services |
Other Entities | Reconciliation to Group figures |
Group | |||||
|---|---|---|---|---|---|---|---|---|---|
| 2015 2014 2015 2014 |
2015 | 2014* | 2015 | 2014 | 2015 | 2014 | 2015 | 2014* | |
| 14,655 13,253 565 469 |
5,696 | 4,512 | 1 | 1 | – | – | 20,917 | 18,235 | External revenues |
| 2 3 |
362 | 378 | 1 | 1 | –4,603 | –3,688 | – | – | Inter-segment revenues |
| 472 | 6,058 | 4,890 | 2 | 2 | –4,603 | –3,688 | 20,917 | 18,235 | Total revenues |
| 64 | 559 | 453 | –23 | 57 | –176 | 5 | 2,269 | 2,159 | Segment result |
| – | – | – | – | – | – | – | 128 | 225 | Result from equity accounted investments |
| 12 | 5,116 | 3,908 | – | – | –1,179 | –951 | 4,730 | 4,196 | Capital expenditure on non-current assets |
| 16 | 2,108 | 1,803 | – | – | –1,202 | –918 | 2,005 | 1,836 | Depreciation and amortisation on non-current assets |
| Financial Services |
Other Entities | Reconciliation to Group figures |
Group | |||
|---|---|---|---|---|---|---|
| 31.3.2015 | 31.12.2014 31.3.2015 |
31.12.2014 31.3.2015 |
31.12.2014 31.3.2015 |
31.12.2014 | ||
| – | – – |
– – |
– 1,117 |
1,088 | Investments accounted for using the equity method | |
| 10,232 | 9,357 65,124 |
61,516 78,515 |
71,866 166,090 |
154,803 | Segment assets |
| in € million | 31.3.2015 | 31.12.2014 |
|---|---|---|
| Reconciliation of segment assets | ||
| Total for reportable segments | 87,575 | 82,937 |
| Non-operating assets – Other Entities segment | 6,780 | 6,658 |
| Operating liabilities – Financial Services segment | 103,942 | 96,959 |
| Interest-bearing assets – Automotive and Motorcycles segments | 43,225 | 39,449 |
| Liabilities of Automotive and Motorcycles segments not subject to interest | 29,717 | 28,488 |
| Elimination of inter-segment items | –105,149 | –99,688 |
| Total Group assets | 166,090 | 154,803 |
Financial Calendar
46 Financial Calendar 47 Contacts
| Annual General Meeting | 13 May 2015 |
|---|---|
| Quarterly Report to 30 June 2015 | 4 August 2015 |
| Quarterly Report to 30 September 2015 | 3 November 2015 |
| Annual Report 2015 | 16 March 2016 |
| Annual Accounts Press Conference | 16 March 2016 |
| Analyst and Investor Conference | 17 March 2016 |
| Quarterly Report to 31 March 2016 | 3 May 2016 |
| Annual General Meeting | 12 May 2016 |
| Quarterly Report to 30 June 2016 | 2 August 2016 |
| Quarterly Report to 30 September 2016 | 4 November 2016 |
Contacts
| Business and Finance Press Telephone |
+49 89 382-2 45 44 |
|---|---|
| +49 89 382-2 98 64 | |
| Fax | +49 89 382-2 44 18 |
| [email protected] | |
| Investor Relations | |
| Telephone | +49 89 382-2 42 72 +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.
PUBLISHED BY Bayerische Motoren Werke Aktiengesellschaft 80788 Munich Germany Tel. +49 89 382-0
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