BMW 2005 Annual Report Download - page 62

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to the corresponding periods one year earlier, the
sales volume of the BMW Group will grow much
more strongly in the first half of the year than in the
second.
Adverse external factors will continue to affect
reported earnings of the Automobiles segment in
2006. Nonetheless, the BMW Group aims to achieve
an improvement in the segment profit before tax,
given that the continuing positive trend in sales
vol-
umes plus the benefit of on-going efficiency improve-
ment measures will help profitability.
As far as the Motorcycles segment is concerned,
the BMW Group forecasts overall that business will
progress robustly in 2006. Numerous new models
presented in conjunction with the product initiative,
together with the engagement in new segments
and intensified work on the markets, will all have a
positive impact on sales volume. On-going projects
to raise efficiency will further strengthen competi-
tiveness, so that further profitable growth is expected
for the BMW Motorcycles segment in 2006.
The BMW Group’s financial services business
will continue to grow in 2006. Pressure on margins
due to rising refinancing costs will be countered by
further process optimisation, efficiency improve-
ments and the introduction of new products tailored
to customer requirements. Regional expansion and
a broader product range will also bolster these de-
velopments and result in a further increase in busi-
ness volume. The segment profit will continue to
climb in the light of this encouraging situation.
Reconciliations to group profit will also continue
to be influenced significantly by external factors in
2006, such as fluctuations in the fair value of the ex-
changeable bond option relating to the BMW Group
investment in Rolls-Royce plc, London.
The BMW Group will invest approximately euro
19 billion in new products and product-driven pro-
duction capacity expansion measures during the
period from 2005 to 2009. In 2006, total capital ex-
penditure will again be lower than the record figure
recorded in 2004 and will also continue to decrease
as a percentage of group revenues.
After a five-year period in which the BMW Group
has created more than 12,000 jobs worldwide on
the back of its product and market initiative, it is now
to be expected that the workforce will remain virtu-
ally constant in the near future.
Currency factors, high raw material prices and
intense competition will again affect reported earn-
ings in 2006. Although the impact of these factors
should not be as great as in 2005, they will never-
theless have an adverse impact in 2006. Amongst
other factors, this is partly due to the fact that less
favourable currency hedge rates are in place than
one year earlier; this will be felt most in the first half
of 2006. By contrast, continuous efficiency and pro-
ductivity improvements will have a positive impact
on group earnings.
On the basis of a continued robust performance
in all segments in 2006, the BMW Group expects
to achieve a higher group profit before tax than in
2005. The effective tax rate will rise again in 2006,
after deriving some benefit from a number of one-off
factors in 2005.
The BMW Group aims to continue its profitable
growth course in the coming years and, by com-
parison to the sector as a whole, will continue to
generate above-average returns.