BMW 2005 Annual Report Download - page 9

8
Group Management Report 8
A Review of the Financial Year 8
The General Economic Environment 11
Review of operations 15
BMW Stock in 2005 38
Financial Analysis 41
--Internal Management System 41
--Earnings performance 42
--Financial position 45
--Net assets position 46
--Subsequent events report 49
--Value added statement 49
--Key performance figures 51
--Comments on BMW AG 52
Risk Management 56
Outlook 60
BMW Group successful despite difficult
environment
The BMW Group continued to perform successfully
in 2005 despite a difficult environment. It further
extended its lead in the premium segments of the
international automobile markets by recording a
sharp rise in its car sales volume. Particular chal-
lenges arose in the year under report as a result of
the co-occurrence of adverse currency factors,
above-average raw material prices and intense com-
petition on the international car markets. The BMW
Group was, however, once again able to prove its
operating strength. As a result of the sharp increase
in car sales and on-going efficiency improvement
measures, the negative impact of these external fac-
tors was almost completely offset by the year-end.
Profit before tax, at euro 3,287 million, was 8.3% be-
low the record level achieved in the previous year.
The adverse effects have particularly affected
the Automobiles segment. Compared to the record
result recorded in the previous year, the segment’s
profit before tax fell by 5.9% to euro 2,976 million.
After the temporary slow-down in the previous
year, the Motorcycles segment returned to the
growth course set in previous years and recorded
a sharp increase in sales volume. Segment profit in
2005 rose by 93.5% to euro 60 million.
Strong growth by the Financial Services seg-
ment again provided the basis for a very pleasing
improvement in earnings. At euro 605 million, seg-
ment profit surpassed the previous year’s record
result by 17.5%.
In addition to the impact from adverse operating
factors, group earnings in 2005 were also affected
by fair value gains and losses. The fair value loss
on the exchangeable bond option relating to the
BMW Group investment in Rolls-Royce plc, London,
resulted in an additional expense of euro 308 million
being recorded in 2005 compared to the previous
year.
Positive tax factors in 2005 reduced the Group’s
tax expense. The BMW Group reports a net profit
for the year of euro 2,239 million, almost matching
the previous year’s high level (– 0.1%).
Increased dividend proposed
The Board of Management and Supervisory Board
propose to the Annual General Meeting to use the
unappropriated profit available for distribution in
BMW AG, amounting to euro 424 million, to pay a
dividend of euro 0.64 for each share of common
stock (2004: euro 0.62) and euro 0.66 for each share
of preferred stock (2004: euro 0.64), each with a
nominal value of euro 1.
Programme to buy back shares of
common stock
At the Annual General Meeting of Bayerische
Motoren Werke Aktiengesellschaft on 12 May 2005,
the shareholders authorised the Board of Manage-
ment to acquire treasury shares via the stock ex-
change, up to a maximum of 10% of the share
capital issued at the date of the resolution and to
withdraw these shares from circulation without any
further resolution by the Annual General Meeting.
In conjunction with this authorisation, the Board of
Management of BMW AG resolved on 20 Septem-
ber 2005 to put a programme in place to buy back
shares via the stock exchange. Up to 20,232,722
shares of common stock (i.e. 3% of share capital)
have been acquired under this programme.The
shares have been acquired with the purpose of with-
drawing them from circulation at a later date and
reducing share capital. A total of 13,488,480 shares
of common stock had been acquired by the end of
2005, equivalent to 2% of share capital.The average
Group Management Report
A Review of the Financial Year