BMW Group expands US plant in Spartanburg
Annual capacity to be increased to over 200,000 vehicles+++
Currency risks will be reduced by this step+++
Munich. The BMW Group sees further growth potential in the USA and will
therefore expand its activities in its largest single market. "We will expand
the production capacity of our US plant in Spartanburg in the medium term from
the current 140,000 to well over 200,000 vehicles per annum", stated Norbert
Reithofer, the Chairman of the Board of Management of BMW AG at the Annual
General Meeting held on Tuesday in Munich. "This is one element of our future
strategy. Taking this step will help to lower our US dollar currency risk", he
added. The adverse impact for the BMW Group from the weak US dollar and
Japanese yen in the last financial year alone totalled euro 666 million. The
group currently manufactures the Z4 and X5 in the USA. The X6, as well as a
possible successor to the X3, are to be built there in the future.
Earnings and sales volume outlook for 2007 reaffirmed
The BMW Group remains on course in terms of the targets it has set for the
current financial year: "Adjusted for the gain on the Rolls-Royce exchangeable
bond, we wish to improve on the record pre-tax profit result achieved in 2006",
Reithofer reaffirmed. All three brands are also forecast to achieve new sales
volume records. The BMW Group aims to increase sales volume for 2007 in the
high single-digit percentage range to over 1.4 million vehicles. The aim
remains to achieve an annual sales volume of approximately 1.6 million vehicles
by 2010.
Performance in the first quarter 2007 was influenced by adverse currency
factors, high raw material prices and high start-up costs for new models. The
change in reported earnings was also affected by a significant "base effect" of
euro 375 million, namely the one-off non-cash gain arising on the partial
settlement of the exchangeable bond on shares in the British aero engine
manufacturer, Rolls-Royce plc. that was recognised in the first quarter 2006.
Group revenues increased by 2.9% to euro 11,951 million (first quarter 2006:
euro 11,618 million). The pre-tax profit fell by 34.3% to euro 852 million
(first quarter 2006: euro 1,296 million). Excluding exceptional items, group
earnings fell by only 11.7%. The first-quarter profit after tax, at euro 587
million, was 38.1% lower than the previous year's figure of euro 948 million.
Despite model changes during the first three months of the year, the number of
BMW, MINI and Rolls-Royce brand cars sold edged up by 0.1% to 333,276 units
(first quarter 2006: 332,923 unit). The sales volume is expected to rise
noticeably in the coming months thanks to new models.
BMW Group achieved record earnings in 2006
Despite the difficult conditions facing the worldwide automobile industry, the
BMW Group can look back on a successful financial year 2006, achieving new high
levels for sales volume, revenues and earnings. The number of vehicles sold
increased by 3.5% to 1,373,970 units (2005: 1,327,992 units). All three brands
headed the market in their own segments. Thanks to sales volume growth, a more
favourable model sales mix and efficiency improvements, the BMW Group was again
able to a large extent to offset the impact of adverse exchange rates and high
raw material prices amounting to more than euro 1 billion.
The profit before tax rose by 25.5% to euro 4,124 million (2005: euro 3,287
million). This includes the one-time gain on the exchangeable bond referred to
above. At an operating level (i.e. excluding the exceptional gain), the pre-tax
profit improved by 3.0%. The net profit climbed by 28.4% to reach a new
all-time high level of euro 2,874 million (2005: euro 2,239 million). Earnings
per share rose to euro 4.38 (2005: euro 3.33) per share of common stock and to
euro 4.40 (2005: euro 3.35) per share of preferred stock. Group revenues
improved by 5.0% to euro 48,999 million (2005: euro 46,656 million) on the back
of a strong sales volume performance and continued strong growth in financial
services business.
Car sales volumes above previous year's level in virtually all markets
The USA continued to be the market with the largest sales volume for the BMW
Group, with a total of 313,921 cars sold in 2006, up by 2.1% on a year-on-year
basis. A total of 816,829 cars was sold in Europe, 1.7% more than in the
previous year. Germany remained by far the most important European market.
However, due partly to the restricted availability of the MINI, the sales
volume on this market was down by 2.8% to 287,715 vehicles. The BMW Group
recorded its largest growth rates in Asia. The sales volume there rose by 13.0%
to 142,084 units. Japan is the largest single market for the BMW Group in this
region, with the number of cars handed over to customers up by 5.6% to 62,115
units.
Sharp increase in dividend proposed
In the light of the high level of profitability and the positive outlook, the
Board of Management and the Supervisory Board are proposing a significant
dividend increase at the Annual General Meeting. BMW AG's unappropriated profit
available for distribution, totalling euro 458 million, will be used to pay a
dividend of euro 0.70 for each share of common stock (2005: euro 0.64) - an
increase of 9.4% over the previous year - and euro 0.72 for each share of
preferred stock (2005: euro 0.66) - an increase of 9.1% over the previous year.
Including the share buy-back, BMW AG's shareholders will therefore participate
in the success of the BMW Group by receiving an aggregate amount in excess of
euro 700 million.
New authorisation for share buy-back proposed
The Board of Management and the Supervisory Board of BMW AG are also proposing
a resolution at the Annual General Meeting to authorise the buy-back of up to
10% of the Company's share capital. The authorisation will again be valid for a
period of 18 months. The buy-back authorisation passed in the previous year is
valid until 15 November 2007. It has not yet been decided whether or to what
extent that authorisation will be applied to buy back further shares.
BMW Welt set to open in mid-October
The BMW Group will open its new delivery centre, BMW Welt, on 17 October. The
public will have the opportunity to visit this architecturally unique building
for the first time on open days on 20 and 21 October.
* * *
Norbert Reithofer's speech at the Annual General Meeting can be
downloaded from the BMW Group website at www. bmwgroup.com/ir.