BMW 2006 Annual Report Download - page 11

10 Group Management Report
10 Group Management Report
10 A Review of the Financial Year
12 General EconomicEnvironment
15 Review of operations
38 BMW Stock and Bonds
41 Disclosures pursuant to §289 (4)
and §315 (4) HGB
43 Financial Analysis
43 – Internal Management System
44 – Earnings performance
46 – Financial position
48 – Net assets position
50 – Subsequent events report
50 – Value added statement
53 – Key performance figures
54 – Comments on BMW AG
58 Risk Management
62 Outlook
BMW Group reports the most successful year
in its corporate history
The BMW Group achieved record levels for sales
volume, revenues and earnings in 2006.The past year
has therefore been the most successful in the Group’s
corporate history. In spite of adverse effects from
foreign exchange and high raw material prices hold-
ing down the increase in reported results, the BMW
Group was able to achieve, and in some areas do
even better than the targets it had set itself for 2006.
Within the automobile line of business, the total
number of BMW, MINI and Rolls-Royce brand cars
sold increased by 3.5% to a total of 1,373,970 vehi-
cles. The anticipated seasonal effect, caused by
base effects during the first half of the year and by
numerous model life-cycle factors over the course
of the year, was evident. This caused the sales
volume to increase significantly more sharply during
the first half of year than in the second half.
Within the motorcycles line of business, the
efficiency improvement measures initiated in 2005
started taking effect, bringing about the desired
improvement in competitiveness. For the first time
in its corporate history, more than 100,000 BMW
motorcycles were manufactured and sold in a single
year.
The financial services business remained on
growth course in 2006. On the one hand, higher
interest rates and the related increase in refinancing
costs had the expected adverse impact on reported
results. However, by optimising processes, expanding
the range of products and increasing regional cover-
age, it was possible to implement suitable measures
to counter the adverse impact.
Reconciliations to group profit were again in-
fluenced significantly by external factors in 2006, in
particular by the impact of the exchangeable bond
option relating to the BMW Group investment in
Rolls-Royce plc, London. In 2005, the bond had
given rise to fair value losses of euro 356 million. By
contrast, the exchangeable bond gave rise to an
accounting gain of euro 372 million in 2006, which
had a positive impact on reconciliations to group
profit and thus to the earnings of the BMW Group
for the year.
Sharp increase in earnings
Profit before tax surpassed the euro 4 billion level
for the first time in 2006. At euro 4,124 million, the
previous year’s figure was exceeded by 25.5%. Even
excluding the impact of the exchangeable bond re-
lating to the BMW Group investment in Rolls-Royce
plc, London, profit before tax improved by 3.0 % com-
pared to the previous year.
The adverse effects from foreign exchange and
high raw material prices were felt most by the Auto-
mobiles segment. The segment profit, at euro
3,012 million, was nevertheless up by 1.2% over
the previous year.
The profit before tax of the Motorcycles seg-
ment rose by 10.0% to euro 66 million. The main
factors behind this positive development were the
process optimisation and efficiency improvement
measures initiated in the previous year.
Earnings of the Financial Services segment
continued to develop well on the back of unabated
growth. Segment profit before tax amounted to euro
685 million, surpassing the previous year’s figure by
13.2%.
As a result of various positive tax factors, in
particular in Germany, the effective tax rate of the
BMW Group in 2006, at 30.3%, was just below the
previous year’s level (31.9%).
The group net profit for 2006, at euro 2,874 mil-
lion, was also at a new high level.The previous year’s
figure was surpassed by 28.4 %.
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 458 million, 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, an increase of 9.1% over the pre-
vious year (2005: euro 0.66).
Revenues at new high level
The good sales volume performance and the con-
tinued strong growth of financial services business
resulted in a sharp increase in group revenues.
These rose in 2006 by 5.0% to euro 48,999 million.
Excluding currency fluctuations, group revenues
would have increased by 5.5%.
Revenues generated by the Automobiles seg-
ment grew by 4.2% in 2006 to reach euro 47,767
million, therefore increasing marginally faster than
sales volume.
Revenues generated by the Motorcycles seg-
ment in 2006 were up by 3.4% compared to the
previous year, reaching a total of euro 1,265 million.
The current product initiative again had a positive
impact on segment revenues.
Group Management Report
A Review of the Financial Year