In addition to new high levels for sales volume and revenues, the BMW Group achieved record earnings for the financial year 2006, the company announced on March 8.
“The past year has been the best financial year so far in the company’s history. We were able to achieve, and in some areas, do even better than the targets we had set ourselves for 2006,” said Norbert Reithofer, chairman of the board of management of BMW AG.
The profit before tax increased by 25.5 percent to euro 4,124 million (2005: euro 3,287 million). This includes a one-off gain of euro 372 million arising on the partial settlement of an exchangeable bond on shares in the British aero engine manufacturer, Rolls-Royce plc. At an operating level (i.e. excluding the excep-tional gain on the bond), the pre-tax profit improved by 3.0 percent.
The net profit climbed by 28.4 percent to reach a new all-time high level of euro 2,874 million (2005: euro 2,239 million). Earnings per share rose to euro 4.38 (2005: euro 3.33) per share of common stock and to euro 4.40 (2005: euro 3.35) per share of preferred stock. Group revenues increased by 5.0 percent to euro 48,999 million (2005: euro 46,656 million) on the back of a strong sales volume performance and continued strong growth in the financial services business. The pre-tax return on sales at a group level rose to 8.4 percent (2005: 7.0).
The BMW Group had to contend again with high costs resulting from unfavorable developments on the foreign exchange and commodity markets in 2006. However, thanks to efficiency improvement measures, sales volume growth and an improved model mix, the BMW Group was able to offset these additional costs to a large extent.
Following the sales volume record registered in 2006, the BMW Group believes that its strong brand and product portfolio provides further potential for growth in 2007.
“We are aiming for a new sales volume record in 2007. All three brands are expected to post new sales volume records," stated Reithofer. “We fully intend to remain the world’s leading provider of premium cars in 2007."
Sharp increase in dividend proposed
In the light of the high level of profitability and the positive outlook, the board of management and the supervisory board will propose a sharp dividend increase at the annual general meeting to be held on May 15. Subject to approval, the unappropriated profit of BMW AG available for distribution totalling euro 458 million will be used to pay a dividend of euro 0.70 for each share of common stock (2005: euro 0.64), an increase of 9.4 percent over the previous year, and euro 0.72 for each share of preferred stock (2005: euro 0.66), an increase of 9.1 percent over the previous year. Including the share buy-back, shareholders will therefore partake in the success of the BMW Group by receiving an aggregate amount in excess of euro 700 million.
New authorization for share buy-back to be proposed
The board of management and the supervisory board of BMW AG will again propose a resolution at the annual general meeting to authorize the buy-back of up to 10 percent of the company’s share capital. The authorization, if resolved, will again be valid for a period of 18 months. The buy-back authorization passed in the previous year is valid until November 15. It has not yet been decided whether or to what extent that authorization will be applied to buy back further shares.
Capital expenditure increased
In 2006, the BMW Group invested primarily in the further expansion of its production and sales networks. Capital expenditure was increased by 8.0 percent to euro 4,313 million (2005: euro 3,993 million). Capitalized development costs recognized as assets in accordance with IFRS went up by 10.0 percent to euro 1,536 million (2005: euro 1,396 million) as a result of the higher level of up-front expenditure for new models. Capital expenditure for property, plant and equipment and other intangible assets increased by 6.9 percent to euro 2,777 million (2005: euro 2,597 million), partly in connection with the expansion of the production network.
Car production volume at all-time high
The BMW Group’s car production volume was also at an all-time high in 2006. In total, 1,366,838 BMW, MINI and Rolls-Royce brand cars were manufactured in 2006, 3.3 percent more than in the previous year (2005: 1,323,119 units). The BMW brand accounted for 1,179,317 cars, representing an increase of 5.1% over the previous year. Capacity expansion measures at the
