The Latest: BMW Motorrad News

BMW releases 2018 annual report

Wednesday, March 20, 2019   (0 Comments)
Posted by: Wes Fleming

Selected quotes from BMW's 2018 annual report

page 27

The Motorcycles business is also clearly focused on the premium segment. The model range currently comprises motorcycles for the Sport, Tour, Roadster, Heritage, Adventure and Urban Mobility (with scooter models) segments. BMW Motorrad also offers a broad range of equipment options to enhance ride safety and comfort. The motorcycles business sales network is organised similarly to that of the automobiles business. Currently, BMW motorcycles are sold by more than 1,200 dealerships and importers in over 90 countries.

page 33

BMW motorcycles and scooters were also manufactured by the partner companies TVS Motor Company in Hosur (India) and Loncin Motor Co., Ltd in Chongqing (China).

page 38

In view of its increasing strategic importance, the Motorcycles segment adopted the operating return on sales (EBIT margin: segment-related profit / loss before financial result as a percentage of segment revenues) as a key performance indicator with effect from the financial year 2017. The long-term target range is between 8 and 10 percent. Used in combination with the number of motorcycle deliveries as a non-financial value driver, the segment can exert a greater influence on the development of RoCE. (Return on capital employed)

page 43

International motorcycle markets Motorcycle markets in the 250 cc plus class generally performed well during 2018. The number of new registrations worldwide increased 3.1 percent year-on-year. European markets in particular developed well, growing at an overall rate of 7.4 percent. Germany registered growth of 8.6 percent.

Increases in new registrations were also recorded in Italy (+ 6.3 percent) and Spain (+ 16.3 percent). The French motorcycle market was 6.0 percent up on the previous year. The US market continued to perform weakly and contracted by 4.5 percent. page 47 Deliveries to customers: in line with previous year’s level In 2018, deliveries of motorcycles reached a new record level of 165,566 units (2017: 164,153 units; + 0.9 percent).

In the Quarterly Report to 31 March 2018, a slight increase was forecast for the full twelve-month period. Due to the limited availability of products in conjunction with various model changes, deliveries in 2018 were only in line with the previous year’s level. The original forecast in the Annual Report 2017 expected a solid increase in deliveries of motorcycles. EBIT margin in target range of between 8 and 10 percent.

The EBIT margin in the Motorcycles segment (profit before financial result divided by revenues) came in at 8.1 percent (2017: 9.1 1 percent; – 1.0 percentage points). As foreseen for the financial year 2018, the EBIT margin was within the target range of between 8 and 10 percent and therefore in line with expectations.

Return on capital employed: moderate decrease

The return on capital employed (RoCE) for the Motorcycles segment in 2018 was 28.4 percent, moderately down on the previous year’s level (2017: 34.0 1 percent; – 5.6 percentage points). In the original forecast in the Annual Report 2017, a slight increase was expected. The most recent forecast in the Quarterly Report to 30 September 2018 still assumed that RoCE would be in line with the previous year’s level. The shortfall was attributable to the ramp-up situation in the segment due to various model changes. The long-term target RoCE of 26 percent for the Motorcycles segment was surpassed.

page 53

Motorcycle deliveries increase

Deliveries of motorcycles reached a new record level of 165,566 units in 2018 (2017: 164,153 units; + 0.9 percent), marking the eighth successive year of growth. Effect of model change felt particularly in Europe.

The model change in the mid-class segment had a particularly significant impact on the European market, causing motorcycle deliveries to fall slightly by 3.3 percent to 98,144 units in 2018 (2017: 101,524 units). At 23,824 units, deliveries to customers in Germany were down year-on-year (2017: 26,664 units; – 10.7 percent).

Italy saw a slight decrease, with deliveries falling to 14,110 units (2017: 14,430 units; – 2.2 percent). By contrast, volumes remained similar to the previous year’s level in Spain (11,124 units; 2017: 11,193 units; – 0.6 percent) and France (16,615 units; 2017: 16,607 units; 0.0 percent).

In the USA, BMW Motorrad reported a slight increase of 2.2 percent to 13,842 units despite difficult market conditions (2017: 13,546 units). Motorcycle production down year-on-year due to model changes A total of 162,687 motorcycles rolled off BMW Motorrad’s production lines at five locations during the year under report (2017: 185,682 units; – 12.4 percent).

Since July 2018, BMW Motorrad scooters have also been manufactured by BMW Motorrad’s partner Loncin Motor Co., Ltd in Chongqing, China. Eight new models introduced BMW Motorrad presented a total of eight new models at the international motorcycle trade shows in Cologne (INTERMOT) and Milan (EICMA), comprising the R 1250 GS, R 1250 GS Adventure, R 1250 RT, R 1250 R, R 1250 RS, C 400 GT, F 850 GS Adv. and S 1000 RR.

In the case of the third generation of the S 1000 RR, BMW Motorrad’s customers can now select a BMW M package for the first time. The R 1250 models are also equipped with new engines that generate more power, especially at lower speeds, and help improve energy efficiency.

page 69

Motorcycles segment revenues decreased slightly year-on-year, mainly due to the ramp-up situation caused by multiple model changes and compounded by a combination of product mix and currency effects. Profit before tax for the twelve-month period was significantly lower than one year earlier.

page 86

The BMW Group expects the world’s motorcycle markets in the 250 cc plus class to grow slightly in 2019. In Europe, the upward trend is expected to continue in the major markets of Germany, France, Italy and Spain. Conversely, the US motorcycle market is forecast to see a slight fall in new registrations in 2019.

page 88

Deliveries to customers: solid increase expected

The BMW Group expects business in the Motorcycles segment to develop positively in the current year. Business is predicted to benefit from the extensive measures taken to rejuvenate the segment’s product range in the previous year as well as from the array of new models presented at international motorcycle trade fairs in autumn 2018. The addition of the mid-class C 400 GT Scooter has also expanded the segment’s product range designed for the urban environment.

Overall, a solid increase in deliveries of BMW motorcycles to customers is forecast for 2019 (2018: 165,566 units). EBIT margin in target range between 8 and 10 percent expected The EBIT margin in the Motorcycles segment in 2019 is forecast to lie within the target range between 8 and 10 percent (2018: 8.1 percent).

Return on capital employed: solid increase expected

Due to the product initiatives described above, the Motorcycles segment is expected to generate a solid year-on-year increase in RoCE in 2019 (2018: 28.4 percent).

The long-term target RoCE of 26 percent for the Motorcycles segment will therefore be surpassed. page 89 Deliveries to customers in the Motorcycles segment are forecast to show a solid increase, with an EBIT margin within the target range of between 8 and 10 percent and the RoCE also showing a solid increase on the previous year.

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