BMW 2012 Annual Report Download - page 74

74
18 COMBINED GROUP AND COMPANY
MANAGEMENT REPORT
18 A Review of the Financial Year
21 General Economic Environment
24 Review of Operations
44 BMW Stock and Capital Market
47 Disclosures relevant for takeovers
and explanatory comments
50 Financial Analysis
50 Internal Management System
52 Earnings Performance
54 Financial Position
57 Net Assets Position
59 Subsequent Events Report
59 Value Added Statement
61 Key Performance Figures
62 Comments on BMW AG
65 Internal Control System and
explanatory comments
66 Risk Management
74 Outlook
The assessments contained in the “Outlook” section
are based on the forecasts made by BMW AG for the
years 2013 and 2014 and reflect the most recent status.
The basis of preparation of our forecasts, which take ac-
count of consensual opinions of leading organisations,
such as banks and economic research institutes, is set
out below. These assumptions flow into the targets set
for the segments.
Our continuous forecasting process ensures that the
BMW Group is always ready to take advantage of oppor-
tunities as they arise. The principle risks facing the busi-
ness are described in detail in the risk report.
Economic outlook for 2013
The global economy is expected to stabilise at a slower
growth rate of approximately 2 % in 2013. However, in
view of burgeoning public-sector debt in Europe, the USA
and Japan, substantial over-capacities in China and
conflict hot spots in the Middle East, the outlook is over-
shadowed by a number of major risks.
Output in the eurozone is set to stagnate in 2013 at the
previous year’s level. The German economy, the largest
in Europe, is forecast to grow again in 2013, albeit at the
modest rate of 0.7 %. The French economy is expected
to remain flat for the time being, a prediction fraught
with major uncertainty in view of the prevailing risks.
Based on forecasts, Italy’s gross domestic product (GDP)
is set to contract by approximately 1.0 %. In Spain the
downward trend is likely to continue, with economic
output down by a further 1.6 %. A growth rate of 0.9 % is
predicted for the UK, Europe’s largest market outside
the eurozone.
Again this year the recovery in the USA looks set to
continue and growth in the region is predicted to run at
around 2.0 %. The looming tax rises and expenditure
cuts previously planned for the turn of the financial
year 2013 were reduced. However, the negative impact
on purchasing power should be offset by growing
vitality on the job and property markets. Overall, how-
ever, growth is likely to remain at roughly the previous
year’s level and the US economy is set to continue its
upward trend.
The performance of the Japanese economy in 2013 will
depend largely on the policymaking skills of the newly
elected government. Having slipped back into
recession
at the end of 2012, Japan is at best likely to achieve
only modest growth of some 0.8 % in 2013, even with
the help of generous expansionary monetary and fiscal
policies.
The Chinese economy is likely to gather pace again in
the course of the current year. Positive early indicators
as well as the announcement made by the Chinese
government of further programmes to stimulate the
economy give reason to believe that GDP in China
will rise by 8.0 %. High property price levels and over-
capacities in the construction and heavy industries sec-
tor, could, however, hold down the growth rate in the
region.
The economies of India and Brazil are expected to grow
by 6.0 % and 3.5 % respectively. Russia’s GDP is likely to
expand by about 3.4 %, roughly in line with the previous
year.
Fluctuations on currency markets
High public-sector debt in Europe, the USA and Japan
are likely to cause continued fluctuations on the world’s
currency markets. The US dollar / euro exchange rate
is expected to average out at previous year’s levels. The
Chinese renminbi will probably remain coupled to the
US dollar, with only minor fluctuations between the two
currencies. The budget situation and greater expansion-
ary monetary policies in Japan could cause the Japanese
yen to drop further in value. The British pound is fore-
cast to appreciate modestly against the euro, assuming
the UK can maintain stable economic growth.
Car markets in 2013
Taken as a whole, the world’s car markets are expected
to grow by some 4.0 % in the current year to a total of
75.5 million units. High demand for replacement vehicles
after a number of weak years should boost volumes sold
in the USA by approximately 2.1 % to 14.8 million units.
The Chinese passenger car market is forecast to grow by
approximately 8.5 % to 14.4 million units. The regional
spread of sales in China is likely to shift increasingly in-
land, away from the coast towards the interior provinces,
which are now entering a catch-up phase.
The downward trend seen in Europe in recent years is
set to continue, with the market as a whole contracting
by 1.8 % to 12.3 million units. Following a period of
drastic decreases, however, the market could well now
consolidate at approximately this level. Sales volumes
Outlook