Bayerische Mtrnwrk U/Adr

Dear colleagues, ladies and gentlemen, good morning and welcome to the telephone conference of the BMW Group for the third quarter. Today we have here, as always, Oliver Zipze, Chairman of the Board of Management and our CFO, Walter Mertl. First, Walter will take you through our financial results. Oliver will then give you a general business update for the BMW Group. After a short break, we will then have time for our Q&A session. So, ladies and gentlemen, we start. Walter, please go ahead.

Good morning, ladies and gentlemen. First, I want to make clear that the sales and earning figures we are releasing today should be viewed in the light of extraordinary challenges. As you are aware, we revised our guidance for 2024 on September 10th. This was mainly due to two factors. First, temporary delivery stops and technical measures related to the integrated braking system or IBS delivered by a supplier. And second, the ongoing muted demand in China. In the case of IBS, Numerous markets have to replace the affected parts before cars can be delivered to customers. This led to temporary delivery stops that impacted sales and earnings and drove up inventory levels. In the third quarter, we fully recognized the necessary provisions for warranty obligations in the high three-digit million euro range. Looking forward, we have already made good progress with the implementation of technical measures worldwide and expect to complete them for most cars held in stock by the end of this year. So in Q4, we will see volumes well above Q3 and an improved product mix. Let's now take a look into the numbers for the third quarter. At group level, revenues were significantly lower than in the prior year quarter at 32.4 billion euros. Group EBIT totaled 1.7 billion euros. The financial result was considerably impacted by negative value measurement effects and consequently group EBT amounted to 838 million euros. The group EBT margin came in at 2.6%. Year-to-date, Group EBT totaled almost 8.9 billion euros, resulting in an EBT margin of 8.4%. The automotive EBIT margin was 2.3% for the third quarter and 6.6% for the year to the end of September. Excluding the depreciation resulting from the purchase price allocation of BVA, the automotive EBIT margin came in at 3.5% for the quarter and 7.7% for the first nine months. After nine months, the BMW Group global sales showed a slight year-on-year decrease of 4.5%. The balance sheet of the BMW Group has increased by 11 billion euros since the beginning of the year. Half of this increase is driven by the growth of our financial services portfolio and thus represents future profit potential. The remaining increase is mainly related to temporary inventory build-up. While the third quarter results were impacted impacted by extraordinary factors, it is important to highlight the positive aspects of our operational performance. Sales of our all-electric vehicles amounted to almost 300,000 vehicles in the first nine months of the year, a significant increase of 19.1%. BEVs made up 16.8% of our deliveries for the year to the end of September. Despite the temporary delivery stops, And excluding the Chinese market, the BMW brand reported worldwide growth of 4%. In Europe, the brand achieved sales growth of 7.6%. And our core brand continues to be well positioned in the US and maintained its market share. Moving to the automotive segment. In the third quarter, the BMW Group delivered around 541,000 BMW Mini and Rolls-Royce vehicles to customers worldwide. This represents a decrease of 13% compared to the same quarter of last year. However, our all-electric vehicles continued to perform well. Over 100,000 units were delivered to customers, 10.1% more than in the same quarter of last year. the share of our all-electric vehicles was 19.1% of total sales. And in fact, more than a quarter of our total sales came from electrified vehicles, that is, BEVs plus plug-in hybrids. The successful sales development of our electrified vehicles is clear proof that we are well on track to fulfilling our CO2 emission targets in the EU for 2025. Segment revenues amounted to around 28 billion euros, which was lower than in the same quarter of 2023. In Q3, revenue per unit continues to be at last year's level. EBIT for July to the end of September totaled 634 million euros. The EBIT margin came in at 2.3% for the quarter and 6.6% for the year to the end of September. That brings me to the next slide with the details of the changes in the operational results. The net balance of currency and raw material positions exceeded the previous year by 200 million euros. For the full year 2024, the net balance of currency and raw material positions should provide a tailwind of close to 1 billion euros. We expect this to nearly offset the headwinds from material costs. But we are seeing additional requests for supply chain support. The net balance of volume, model mix and pricing effects negatively impacted EBIT by 2.1 billion euros in the third quarter compared to the previous year. All three elements trended lower year on year. The volume effect reflects the sales decline I mentioned earlier. The mix was also adversely affected since the temporary delivery stops and market conditions in China had a greater impact on vehicles in the upper premium segment. This will turn in Q4, as we expect to see an improved product mix. The pricing effect reflects the ongoing challenges of a difficult price environment globally, as well as weak consumer sentiment in China. The health of our dealers' operations is strategically important to us. Therefore, in Q3, we have implemented measures jointly with our Chinese dealers to support both profitability and liquidity. Research and development expenses increased by about 100 million euros compared to the prior year quarter. Group expenditure of research and development reached approximately 6.6 billion euros in the first nine months. The R&D ratio, according to the German Commercial Code, was at 6.3% at the end of September. It is significantly higher than prior year, partly due to high expenditure, but also compounded by lower revenues. The capitalization ratio for development costs stood at 35.3% after nine months, evidence of our ongoing commitment to investing in innovation. Selling and administrative expenses for the third quarter were on par with the previous year as planned. And other cost changes include the high three-digit million euro warranty expenses related to IBS and some smaller compensating items. Overall, the negative net effect in this position amounts to 500 million euros compared to the prior year quarter. Free cash flow in the automotive segment totalled negative 2.5 billion euros in the third quarter. Earning before tax contributed around 400 billion euros. A change in working capital of 1.9 billion euros reflects the temporary increase in inventory levels, partially compensated by lower receivables. The net effect of capital expenditure and depreciation reduced free cash flow by 1.2 billion euros. Capital expenditure for July to September totaled 2.2 billion euros. This represents a CapEx ratio of 6.7% for the third quarter and 5.3% for the nine months period. A significant portion of our capital expenditure will accrue in the fourth quarter as in previous years. As a result, we still expect the CapEx ratio for the full year to be over 6%. At the end of the first nine months, free cash flow in the automotive segment totalled negative 200 million euros. In line with our guidance, we expect a free cash flow of over 4 billion euros for the full year, despite the planned peak investments in R&D and CapEx. On the one hand, we anticipate a significant sequential increase in EVT in the final quarter of the year. On the other hand, we also expect a strong positive contribution from the reduction in working capital. We are making good progress in replacing the affected IBS components worldwide. In addition, we have taken measures to adjust our production. Given these measures and the projected sales volume increase in Q4, We expect inventory to be on previous year's level by the end of 2024. Net financial assets in the automotive business totaled close to 40 billion euros as of September. The NFA position was impacted by the development of free cash flow in the third quarter. The strong free cash flow we are targeting in the fourth quarter will increase our NFA accordingly. Given our strong balance sheet, the BMW Group remains committed to its shareholder return strategy, which includes both dividend payments and share buybacks. On October 25th, we successfully completed Trunch 3 of our ongoing share buyback program. We will continue with this program following the completion of a separate buyback of common shares designated for our employee share program. We anticipate that our current program of 2 billion euros will be finalized by April next year, more than half a year earlier than initially planned. Additionally, the board of management of BMW AG plans to propose an agenda item at the upcoming AGM, seeking a new authorization to acquire treasury shares amounting to up to 10% of share capital for the next five years. Let's move on to the financial services segment. A positive trend in new business continued in the third quarter for both new and used vehicles. In the first nine months, more than 1.25 million new leasing and financing contracts were concluded. This represents a significant increase of 12.5% year on year. The volume of new business, including all new financing and leasing contracts, also saw significant growth of 13.6% to 46.5 billion euros. The total value of all contracts managed reached almost 144 billion euros at the end of September. Segment earnings for the first nine months were 12.4% lower year on year at 2.15 billion euros. This decrease resulted mainly from lower income from the resale of end of lease vehicles, as well as measurement effects related to the evaluation of interest rate derivatives. During the reporting period, the credit loss ratio stood at 0.26% across the entire credit portfolio. In the motorcycle segment, the ongoing competitive situation of core markets affected the volume development. Deliveries experienced a slight year-on-year decrease of 3.2% in the third quarter. Through September, they were on previous year's levels. The segment's third quarter EBIT totaled 27 million euros. The EBIT margin came in at 3.8% for the third quarter and 9.5% for the nine-month period. Ladies and gentlemen, in the fourth quarter, we expect the usual seasonality of fixed costs and ongoing muted demand in China. But we will also see volumes well above Q3 and an improved product mix as the completion of technical measures progresses. Therefore, we confirm the adjusted full-year guidance we communicated in September for the group and for all segments. Group earnings before tax will decrease significantly. In the automotive segment, we are planning for a slight decrease in deliveries compared to last year. A share of all electric vehicles will increase significantly. We expect to see the EBIT margin in the corridor between 6% and 7%. A return on capital employed should come in between 11% and 13%. Deliveries in the motorcycle segment are projected to be on last year's level. The EBIT margin is forecast to be in a range between 6% and 7%, with a return on capital employed between 14% and 16%. In the financial services segment, return on equity should be between 15% and 18% for the full year. Our guidance assumes that geopolitical and macroeconomic conditions will not deteriorate significantly. Ladies and gentlemen, the BMW Group remains fully focused on achieving our short-term results without compromising our long-term strategic objectives. Our flexible approach allows us to calibrate to changing market dynamics and to constantly fine tune our cost structures across the company. At the same time, we remain committed to invest in strategic projects that will secure enduring future success. Our performance in the third quarter was impacted by one time headwinds, as well as ongoing challenges in the Chinese market. However, sales development of our all electric vehicles in the third quarter clearly demonstrates the continued success in implementing our electrification strategy. This year, we are setting a decisive course for the future of our company. To that end, both research and development spending and capital expenditure will peak in 2024 as planned. Expect our R&D ratio for the full year to exceed 5% with a CapEx ratio of more than 6%. With the Neue Klasse, we will take a significant step forward in design, battery technology, software, and tech stack. This ensures that we will capitalize on the full value generation potential as it rolls out across the whole product portfolio starting at the end of next year. The Neue Klasse will shape the future of our company and deliver sustained success for the benefit of all stakeholders.

Thank you. Thank you very much, Walter. Now over to our CEO, Oliver Zitze. Oliver, please go ahead.