BMW 2007 Annual Report Download - page 72

70 Group Management Report
10 Group Management Report
10 A Review of the Financial Year
13 General Economic Environment
17 Review of Operations
41 BMW Stock and Bonds
44 Disclosures relating to Takeover
Regulations and Explanatory Report
47 Financial Analysis
47 – Internal Management System
49 – Earnings Performance
51 – Financial Position
52 – Net Assets Position
55 – Subsequent Events Report
55 – Value Added Statement
57 – Key Performance Figures
58 – Comments on BMW AG
62 Risk Management
68 Outlook
Within an intensely competitive environment,
personnel expense management takes on an ever-
greater significance. Substantial efficiency improve-
ments, particularly in production, will enable person-
nel capacities to be reduced, resulting in lower per-
sonnel expenditure. In this context, any opportunities
to improve flexibility are made use of in close coop-
eration with employee representatives. This includes
reducing the number of temporary personnel, the
use of early retirement models and fluctuation.
In addition to the earnings factors described
above, the BMW Group also intends to achieve better
capital efficiency – return on capital employed – as
part of its strategy to increase the value of the busi-
ness in the long term. The BMW Group is therefore
committed to making more use of performance in-
dicators that allow better management of capital em-
ployed.
Segments all expected to perform well
In the coming years, the BMW Group will continue to
take full advantage of opportunities to achieve profit-
able growth in all segments.
Adverse external factors caused by unfavourable
exchange rates and high commodity prices will again
affect the Automobiles segment’s earnings during
the financial year 2008. Nonetheless, the BMW Group
is targeting a further improvement in segment earn-
ings, with sales volumes continuing to develop posi-
tively and the efficiency improvement measures
described above beginning to bear fruit. The seg-
ment should also achieve a higher return on capital
employed.
The BMW Group’s Motorcycles segment will
continue with its model initiative in 2008. An increase
in motorcycle sales is forecasted for all regions. This
includes a reversal of the negative trends previously
witnessed in Germany and the USA. Segment
revenues and earnings will be slightly higher than in
2007.
The Financial Services segment will continue
to grow in 2008. Market activities in the segment’s
established lines of business will be intensified by
expanding the product range and paying even greater
attention to the needs of dealers, dealer groups
and retail customers. The process of geographical
expansion will also be continued, particularly in
Eastern Europe and Asia.
Multi-brand financial services business will be
strengthened, particularly in the area of direct channel
operations. In this context, the up2drive brand
name will be additionally promoted. Within the fleet
business, the integration of the acquired fleet manage-
ment company, DEKRA SüdLeasing Services GmbH
(renamed to: BMW Fuhrparkmanagement Be teili-
gungs GmbH), will be completed and organic growth
continued. All lines of business will continue to be
developed in 2008, building on the high quality of
service offered by the Financial Services segment in
order to strengthen its outstanding market position.
The various measures described above will result in
a further increase in the volume of financial services
business. Simultaneously, continuous measures will
be implemented in conjunction with a global project
to improve process efficiency. All of these factors
give good reason to expect a further increase in seg-
ment earnings in 2008.
Overall positive outlook for 2008
External factors will continue to have an adverse im-
pact on the BMW Group’s earnings during the finan-
cial year 2008. Currency factors (in particular the
continuing weakness of the US dollar and the Japa-
nese yen), higher raw material costs and less favour-
able refinancing conditions as a consequence of
the credit crisis still remain the principal challenges
to future earnings.
By contrast, the efficiency and productivity im-
provements described above will have a positive
impact on Group earnings. On top of this, the BMW
Group forecasts further stable growth for its operat-
ing segments which will, in turn, create further impe-
tus for earnings in 2008. Overall, the BMW Group
is aiming to improve the quality of earnings in 2008.