Statement and Presentation Dr Nicolas Peter, Member of the Board of Management of BMW AG, Finance, Conference Call Quarterly Statement to 31 March 2023


Good Morning, Ladies and Gentlemen.

As expected, the BMW Group started 2023 with a solid performance.

Group earnings came in at around 5.1 billion euros – with a Group EBT
margin of 13.9%. After the first three months of the year, the
Automotive Segment delivered an EBIT margin of 12.1%.

We achieved this in the face of persistently volatile conditions. The
geopolitical and macroeconomic situation remains tense; inflation and
interest rates remain at a high level in many markets. The same
applies to material and commodity prices.

Sales of our fully-electric vehicles increased dynamically in the
first three months of the year: Just under 65,000 units were sold – an
increase of over 83% compared to the same quarter of the previous
year. BEV sales at the BMW brand saw growth of 112%. Overall,
all-electric vehicles accounted for 11% of customer deliveries.

Sales momentum also came from the market launch of vehicles in the
upper price segment, including, for example, the BMW i7*.

The BMW Group’s total vehicle sales for the first quarter were down
slightly on the previous year, with just over 588,000 vehicles sold.
While the US market posted significant growth, we saw a moderate
decrease in deliveries in China, where the aftereffects of the
coronavirus wave at the beginning of the year were being felt. Europe
remained stable overall.

In the first quarter of 2023, the operating result of our Chinese
joint venture, BBA, was integrated fully into the Automotive Segment’s
income statement. In the previous year, BBA was only fully
consolidated from 11 February.

The Automotive Segment EBIT for 2022 and 2023 therefore include
consolidation effects of differing amounts.

The previous year’s financial result also reflected the high one-time
effect from the full consolidation of BBA.

The quarterly results are therefore not directly comparable.

Ladies and Gentlemen,

Let’s start with a look at the Group’s earnings performance.

Revenues reached just over 36.9 billion euros, with a cost of sales
of around 29.1 billion euros. A key factor in these year-on-year
increases of 18.3% and 13.5%, respectively, is the full integration of
BBA’s operating business in 2023. The Automotive Segment also
benefited from positive pricing and mix effects.

The Group financial result for the first three months was slightly
negative, at -246 million euros. This represents a significant
decrease of just over 9.1 billion euros compared to the previous year.

The main factor here is the one-time revaluation effect of around 7.7
billion euros from the fair market valuation of BBA equity interests
in 2022.

In the first six weeks of last year, BBA also still contributed
approximately 300 million euros to the at-equity result. In 2023, BBA
earnings were no longer included in the at-equity result.

In the Other Entities Segment, the fair market value of interest rate
hedging transactions declined slightly in the first quarter of 2023.

In the prior-year quarter interest rate hedges had developed
positively, due to the sharp increase in interest rates. The
difference in earnings from the previous year was about 700 million euros.

At the end of the first quarter, Group earnings totalled just over
5.1 billion euros. The Group EBT margin of 13.9% was significantly
above our strategic target of at least 10%.

Our strong financial position lays the foundation for the
transformation of the BMW Group. We continue to invest in new models
and structures, with a clear focus on topics for the future:
electrification, digitalisation and automated driving.

Research and development expenditure was significantly higher than
the previous year, at just under 1.6 billion euros. Our R&D ratio
of 4.2%, according to the German Commercial Code, was within our
long-term target range of 4 to 5%.

We are funding investments from our operational cashflow. Capital
expenditure was about 200 million euros higher than the comparable
figure for 2022, at just under 1.3 billion euros.

Due to higher revenues, the capex ratio was on a par with the
previous year, at 3.6%.

We expect the ratio for the full year to be around 6%.

Let’s move on to the Automotive Segment.

The EBIT margin for the first quarter came in at 12.1%. Earnings
before financial result exceeded the previous year’s EBIT by around
60%, at just under 3.8 billion euros.

Full integration of BBA’s operating result increased both the
segment’s first-quarter revenues and its cost of sales.

With regard to BBA, segment earnings for the first quarter of 2022
were impacted by depreciation and amortisation from the purchase price
allocation and the elimination of interim profits in connection with
intra-Group deliveries, totalling around 1.2 billion euros.

In the first quarter of this year, depreciation and amortisation from
the purchase price allocation resulted in an expense of around 400
million euros. This depreciation equals about one percentage point of
EBIT margin.

In the first three months of the year, we continued to see robust
pricing for our products. The product mix also developed positively –
especially in the upper segments with products such as the new 7
Series, the updated X7, the XM* and, of course, the Rolls-Royce family.

Higher material and commodity prices, an increase in research and
development spending and a higher percentage of all-electric vehicles
also pushed up the cost of sales. In the first quarter, we were able
to compensate for these cost increases with strong pricing and an
improved product mix.

Free cashflow in the Automotive Segment for the year to the end of
March totalled just under two billion euros – despite the seasonal
increase of inventory levels.

We are therefore on track to achieve our targeted free cashflow of
around seven billion euros for the full year.

By mid-2023, BMW AG will finalize its current share buyback program
of 2 billion euros, which was launched in July 2022.

The company’s strong operating performance is the basis for
continuing our share buyback activities.

As announced yesterday, the Board of Management has therefore decided
on a second share buyback program as part of the authorization granted
by the 2022 Annual General Meeting. This programme amounts to another
2 billion euros. It will start after the end of the first program and
will be completed by December 31, 2025, at the latest.

Let’s turn now to the Financial Services Segment.

In the financing and leasing business with retail customers the
volume of new business decreased by 14.0%. This was mainly due to
price increases – stemming from higher interest rates – and intense
competition in the financial services sector. However, price
developments and an improved product mix in the automotive business
had a positive impact, resulting in a higher average financing volume
per vehicle.

Segment earnings before tax totalled 945 million euros. This moderate
year-on-year decrease of 6.2% is mainly due to higher refinancing
costs. Income from the resale of end-of-lease vehicles remains
consistently high and the risk situation is stable. The credit loss
ratio is still at the very low rate of 0.13%.

The Motorcycles Segment also got off to a successful start in 2023.

In the first three months of its centenary year, the BMW Motorrad
brand grew its sales by 1.1% year-on-year – delivering its best-ever
first-quarter sales result, with around 48,000 units sold.

This impressive performance is underpinned by an attractive product
line-up. At the end of the first quarter, the segment’s operating
earnings totalled 154 million euros, with an EBIT margin of 16.5%.

Ladies and Gentlemen,

In the first quarter of 2023, the BMW Group’s business developed
positively, despite the volatile business environment.

We continue to benefit from stable pricing in new and pre-owned car
markets. However, we do expect the competitive environment and
pre-owned car markets to gradually normalise through 2023. There is
still some uncertainty around stabilization in the Chinese market,
which is an underlying assumption for our outlook.

After a good start to 2023, as forecast, we expect the full year to
progress in line with our outlook. Therefore, our guidance remains
unchanged. This assumes that geopolitical and economic conditions do
not deteriorate significantly.

Group earnings before tax will decrease significantly – without the
tailwind from the revaluation of previously held equity interests in BBA.

In the Automotive Segment, we are planning for a slight increase in
deliveries overall. The all-electric share of total vehicle deliveries
is projected to increase significantly.

The EBIT margin in the Automotive Segment should be within the range
of 8 to 10 percent, with a segment RoCE of between 15 and 20 percent.

In the Motorcycles Segment, we anticipate a slight increase in
deliveries, with an EBIT-Marge of 8 to 10% and a RoCE of 21 to 26%.

In the Financial Services Segment, return on equity should be between
14 and 17 percent.

The size of the workforce and the share of women in management
positions are forecast to increase slightly.

Once again this year, we are targeting a slight reduction in CO₂
emissions in the new vehicle fleet, as well as in CO₂ emissions per
vehicle produced.

The macroeconomic situation remains difficult and the geopolitical
environment is volatile. Our guidance does not factor in the
possibility of a deep recession in key sales markets or further
escalation of the war between Russia and Ukraine.

Ladies and Gentlemen,

The BMW Group’s strategy remains robust, even in highly volatile
times. It is well-balanced and focused on the long term. With the
positive effects of a strong operating performance, we continue to
make targeted investments in the future competitiveness of our
company. Even during the transition to emission-free mobility, the BMW
Group will continue on its road to success.

We are determined to stay the course, proceeding at the same time
with prudence and flexibility – knowing that we can rely on our
attractive product portfolio. We remain on track to meet our goals for
the year in a volatile business environment – and are looking forward
to the rest of 2023 with confidence.

Thank you!


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