Bayerische Mtrnwrk U/Adr

Good morning, ladies and gentlemen. Welcome to our annual conference. 2025 will be a milestone year for the BMW Group in many respects, as we set the course today for our success in the decades to come. Despite volatile global conditions, we remain firmly committed to growth in the current financial year. And at the same time, we are bringing our largest future-focused project, the Neue Klasse, to the roads. We have a clear plan. We remain sharply focused on innovation and sustainable growth. In 2025, we expect sales figures to rise once again. And at the same time, capital expenditure will decrease as planned. This will enable us to increase our free cash flow. And there are four reasons for our confidence. First, our strategy is robust and gives us a clear path forward. We are setting the pace in key areas. Our technology-open approach remains successful and is gaining ever more traction. Policymakers and competitors are pivoting in our direction, which we continue to pursue systematically. Second, the BMW Group is one of our industry's few true global players. Our extensive global footprint creates opportunities. It makes us resilient and it provides the flexibility we need to respond effectively to external influences. And third, with BMW Mini, Rolls-Royce and BMW Motorrad, we have four strong brands. And all of them are incredibly popular around the globe. Each has its own distinct identity and delivers emotionally compelling products for different target groups. And fourth, our Neue Klasse, no other manufacturer has a project as ambitious and groundbreaking as ours about to enter production. I will come to this in the second part of my presentation today. Let's now start with the first topic, our strategic direction. Our technology-open approach is market-orientated. It allows us to fully leverage the available potential across all markets and regions. and we make no distinctions whether we are talking about combustion engines, plug-in hybrids, all electric vehicles, or from 2028 onwards, a hydrogen powered car. We consistently implement design principles, innovation, and the latest technologies in all our vehicles. No one masters this technological diversity better than we do. Numerous national and international accolades confirm this. Our approach is also gaining increasing recognition in political circles, and even our competitors are pivoting towards our strategy. We have proven that technological openness, growth, and CO2 reductions are very much compatible. Let's take a look at 2024. we met our adjusted targets for the year. We delivered more than 2.45 million vehicles and achieved an EBIT margin of 6.3% in the automotive segment. Our vehicles with highly efficient combustion engines remain in strong demand worldwide. At the same time, battery electric vehicles continue to be our main growth driver. Several other manufacturers, including some that only produce electric cars, saw a decline in sales. But we achieved growth with our all-electric vehicles, even in challenging market conditions. In 2024, BEV sales once again climbed significantly year on year, increasing by more than 13%. Fully electric vehicles accounted for over 17% of total sales last year. And including plug-in hybrids, nearly one in four vehicles sold was electrified. We are targeting further growth in e-mobility in 2025. We will hit two major milestones this year. We will reach the total of more than 3 million electric height vehicles and over 1.5 million BEVs sold since the launch of the BMW i3 and i8. Our customers can choose among 15 BEVs across all our brands. One example is the new edition of the BMW iX. The recently presented model update boasts an impressive electric range of over 700 kilometers in the WLTP cycle with significantly more drive power. That is BMW Efficiency Dynamics. Our combination of electrified vehicles and highly efficient combustion engines also have a positive impact on our climate footprint. In 2024, the BMW Group once again outperformed its European CO2 fleet target by more than 30 grams. Based on our internal calculations, our fleet emissions fell below 100 grams per kilometer in the WLTP cycle for the first time. We will continue to ensure that our customers always have access to the latest technology across all drivetrains. And the key to achieving this lies in our production network's high level of flexibility. And that brings me to my second point. Our global footprint. The BMW Group is a true global player. Very few automotive manufacturers have such a comprehensive presence across all relevant economic regions as we do. Be it in sales, research and development, production or our supplier network. And this combination gives us a strategic advantage that sets us apart from the competition in increasingly fragmented world. We remain committed to expanding our local for local approach. We are constantly improving our access to different market regions and strengthening our resilience, especially along our supply chains. One example of this is our high-voltage battery assembly plants in the three major sales regions, Europe, the Americas and China. In total, five new assembly facilities for the next generation of high-voltage batteries are being built near our production sites worldwide, complete with a local supplier network. In this way, we are already creating the necessary conditions today for successful growth in the future. We are gradually adapting our production network to rising sales of electric vehicles. And late this year, our new plant in Debrecen, Hungary, will become our first facility to exclusively produce all-electric vehicles. Our main plant in Munich will follow in 2027. Our production follows the market and our product range aligns with demand. We build roughly the same number of vehicles in our three key market regions of Europe, the United States and China, as we sell there. This balanced distribution is another key differentiator for the BMW Group. At the same time, Germany and the United States serve as key export hubs for us. In 2024, we manufactured over one million vehicles at our plants in Germany. This represents about a quarter of the country's total car production. 56% of these vehicles are then exported outside the European Union. I think this is an impressive proof of the BMW Group's significant contribution to industrial value creation in Germany. In the United States, one out of every two vehicles from our plant in Spartanburg, South Carolina is exported. Last year, we achieved an export value of over 10 billion US dollars. This once again makes the BMW Group the largest automotive exporter in the United States by value. We benefit from an integrated global economy, and that is why we continue to advocate for open markets and free trade. Moving on to my third point, the performance of our brands. The success of the BMW Group is built on the global appeal and resonance of our four brands. At the same time, we know how to fulfill the specific needs and preferences of our customers in different markets with our products. Last year, Our core BMW brand leveraged its strength to the full. In three out of four regions, BMW grew sales and gained market share. This has enabled BMW to maintain its number one position in the global premium segment. BMW performed particularly well in Europe. Italy, Spain, France and the United Kingdom led the way with all reporting double-digit growth rates. With a 6% increase, the brand significantly outperformed the overall European market, which only grew by just over 1%. In the United States market, we achieved record sales for the second consecutive year. And here too, the strength of our market-driven approach to drivetrains is delivering its results. Thanks to our steadily growing BEV portfolio, we sold more than 50,000 electric vehicles in the United States for the first time. And with this momentum, we are optimistic about the year ahead as we celebrate 50 years of BMW North America. In our markets outside the main sales regions, we also posted growth in a declining environment overall. In this region, we led the premium segment in total for the first time ever. And the main growth drivers here included the South Korean, Australian and Indian markets. China remains a key market for the BMW Group. In 2024, we sold more than a quarter of all our vehicles there. The market is highly dynamic and characterized by increased competitive pressure. In this environment, BMW maintained nonetheless its position as number one in its segment with a market share of 3%. This put us within our target range. In 2024, we delivered over 100,000 BEVs to customers in China for the very first time. This makes China our biggest single market for electric vehicles, even though our sales performance there was damped last year by persistently low consumer sentiment. The high-margin vehicles built by BMW M once again played an important role in our market success in 2024. For the 13th consecutive year, M sales increased. Nearly one in 10 BMWs sold carried the letter M. Demand for the sportiest BMW models has continued to grow, especially in China. 2025 is the first year with a complete new MINI family available. And we will exploit this potential further. There are a total of five unique models now to choose from, three of them BEVs. The fully electric MINI models with a MINI Cooper Electric leading the way are being particularly well received. With an increase of 24% year-on-year, sales of MINI BEVs also saw highly dynamic growth last year. Nearly one in four MINIs is now powered by an electric heart. In the ultra-luxury segment, Rolls-Royce continued to set the benchmark. At more than 5,700 units, Rolls-Royce sales remained high And most notably, the all-electric Spectre exceeded expectations in its first full year of sales. Every third Rolls-Royce sold now is fully electric. BMW Motorrad also impressed in 2024, achieving a new all-time sales high of over 210,000 units. BMW Motorrad remains the undisputed number one in the global premium motorcycle segment. Ladies and gentlemen, all of this shows that the BMW Group is well positioned across all brands, drive technologies and segments to continue on its growth path. With our global approach, we have the right answers to challenges worldwide. This has often enabled us to offset fluctuations in demand in individual markets. And now it's time for Walter Mertl to present the Group Financial Statements for 2024 and look ahead to our goals for 2025. Thank you, Oliver.

Ladies and gentlemen, good morning. As Oliver emphasized, we continue to follow our course and implement our long-term strategy. At the same time, we are focused on our operational business to consistently deliver on what we say. The BMW Group proved this once again in Q4 2024. We successfully reduced inventory impacted by the integrated braking system or IBS. And we achieved a sequential improvement in retail sales and profit versus Q3. For the full year, we achieved our revised guidance in all parameters. As anticipated, we reached peak levels of R&D and capital expenditure in 2024, particularly to prepare for models of the Neue Klasse. Starting this year, both the R&D and CAPEX ratios will decrease meaningfully as we start production of the Neue Klasse and lay the foundation for the long-term success of our company with over 40 new and updated models by 2027. Through our global positioning and the flexibility of our operations, we can adapt to the geopolitical landscape and short-term market dynamics, proving our resilience. Let's take a look at the financial figures for the full year. 2024 was a year of two halves. While the first half year was in line with our original planning, Sales performance in the second half of the year was impacted by delivery stops in connection with IBS, as well as the persistent subdued demand in China. As expected, Q4 marked an improvement on the Q3 result. Group revenues totaled 142.4 billion euros. The moderate decrease compared to 2023 was mainly driven by the decline in sales volume and intense price competition in the Chinese market. Earning before tax at group level amounted to 11 billion euros, significantly under 2023, but as expected in our adjusted guidance. This resulted in a group EBT margin of 7.7% for the year. If we look at the key financial results of the individual segments. Automotive delivered an EBIT of 7.89 billion euros and EBIT margin of 6.3%. Motorrad hit an EBIT of 198 million euros, representing a margin of 6.1%. Financial services saw an EBT of 2.54 billion euros and a return on equity of 15.1%. And finally, other entities generated €837 million in EBT, while elimination amounted to a negative €146 million. So, let's take a look at the automotive segment in detail. For the full year, BMW Group delivered 2.45 million BMW Mini and Rolls-Royce vehicles to customers worldwide. This represents a slight decrease of 4% from the previous year, in line with our adjusted guidance. Market dynamics in China remain weak, which impacted sales performance. However, the BMW brand achieved growth in every other major region. In Europe, order intake in Q4 improved month by month. In the US, we experienced a strong recovery from IBS in Q4 with growth quarter over quarter of just over 50% and year over year of 8.9%. Worldwide BMW Group sales performance in Q4 saw sequential improvement over Q3. Global deliveries grew by nearly a third quarter on quarter, including double-digit growth coming from the mid and upper segment together. All electric vehicles remained a key growth driver for us. BEV deliveries totaled over 426,000 units for the year, significantly above 2023 by 13.5%. Overall, BEVs therefore made up 17.4% of total sales. Our plug-in hybrid vehicles also remained very popular, with over 166,000 units sold in 2024. Electrified vehicles, meaning all electric vehicles and plug-in hybrids, made up nearly a quarter of total sales. Revenue in the automotive segment amounted to nearly 125 billion euros, a decrease of 5.6% from 2023. Earnings before interest and taxes reached 7.9 billion euros. This resulted in an EBIT margin of 6.3%, which was within our adjusted guidance corridor of 6-7% for the full year. Excluding the 1.3 billion euros depreciation resulting from the purchase price allocation of BVA, the automotive EBIT margin came in at 7.4% for the year. looking to the operating result in detail. Compared to 2023, EBIT for full year 2024 saw a tailwind of 1 billion euros from the net balance of currency and raw material positions. Year-on-year, the net effect of volume, model mix and pricing weighed on automotive EBIT. The headwind resulted partly from the volume decrease, particularly in China. Pricing headwinds, including the effects of a highly competitive Chinese market and dealer compensation in China, amounted to more than half of the overall decrease of 4.4 billion euros. The headwind of 1.4 billion euros from other cost changes was driven by inflation in material costs and supply chain support. The effect from warranty expenses was a tailwind year-on-year. Overall, lower additions to warranty provisions for specific topics were necessary in every quarter throughout 2024 compared to the previous year. An exception was Q3 due to the impact of IBS. For the full year 2024, the P&L impact of quality issues trended in a positive direction year-on-year, as planned. Our R&D activities and investments focused on our ongoing electrification and digitalization strategy across the entire portfolio. As anticipated, R&D and capital expenditure reached peak levels in 2024, both in absolute terms and in ratio. Group expenditure for research and development for the full year reached 9.1 billion euros. compared to 7.8 billion euros in 2023. The R&D ratio, according to the German Commercial Code, was 6.4%, 1.4 percentage points more than in 2023. Group capital expenditure totaled 9.1 billion euros and increased from 8.8 billion euros in 2023. This resulted in a capex ratio of 6.4% compared to 5.7% in 2023. As we begin to roll out models of the Neue Klasse, we will see a decline in R&D and capex. This means in both absolute and relative terms, back towards our strategic corridors of between 4-5% for R&D, and less than 5% for CapEx by 2027 at the latest. Turning to free cash flow. As you know, we steer this on an annual basis. Starting with EBT delivering a full-year result of 7.5 billion euros, working capital contributed positively with 200 million euros to free cash flow. Whilst inventory levels had risen due to sales stops related to IBS in Q3, we managed to successfully reduce stock by 5 billion euros in Q4. As a result, year-end inventory reached nearly the same level as it was at the beginning of the year. For the full year, the net effect from capital expenditure and depreciation reduced free cash flow by 3.3 billion euros. The development of provisions reduced free cash flow by 700 million euros. The position other reflects several positive effects, including interest received. In line with our adjusted guidance, free cash flow reached 4.9 billion euros in 2024. This is even after we invested 18.2 billion euros. 9.1 billion euros in capex and another 9.1 billion euros in R&D, paving the way for our future and demonstrating our financial strength. This strength is underscored by our automotive net financial assets, which benefited from the strong development of free cash flow in the fourth quarter. At year-end, the automotive NFA came in at almost 46 billion euros, which is around the same level as the start of the year. Moving on to the financial services segment. New business development in the segment remained robust throughout the year. A total of almost 1.7 million new financing and leasing contracts were concluded, a solid year-on-year increase of nearly 10%. Overall, new business volume even increased significantly by 12.5% to 64.5 billion euros due to higher average financing volume per vehicle. Penetration rates for lease and loan offerings rose by 4.4 percentage points, reaching 42.6%. Without China, the penetration rate was over 50%, with growth in particular in the US and the UK. Segment earnings before tax amounted to 2.54 million euros and were therefore significantly lower than the previous year, and this was mainly due to higher credit and residual value risk costs than in 2023, but well within our expectations. We continue to see gains from the sale of off-lease vehicles, yet at lower levels due to market dynamics. The credit loss ratio of 0.26% across the entire credit portfolio was well within our expectations and below industry levels. Return on equity for the full year reached 15.1% within our adjusted guidance range of 15-18%. Ladies and gentlemen, in our BMW Group Report, you will note that we have voluntarily adopted the full European Sustainability Reporting Standards for the first time as the framework for reporting all sustainability-related disclosures in our combined non-financial statement. The BMW Group only reports on sustainability topics that have been assessed as material, according to ESS. However, this does not mean that topics which are assessed as not material are necessarily less important. We view sustainability holistically and as a competitive advantage. That is why we disclose our sustainability performance to our investors and customers. You will note that the implementation of ESIS requirements has contributed over 100 additional pages to our report. Due to the company-specific materiality assessment, comparability between companies remains limited, even within the same industry. Indeed, it can be questioned how much value the additional scope and limited comparability offer to stakeholders. Accordingly, we welcome the proposed regulatory changes in the draft of the so-called Omnibus Package and look forward to the draft updates and reduced scope of the ESRS. Ultimately, we want added value for our stakeholders, meaning relevant and concise information. It's not just about reporting and compliance. One important element of our stakeholder orientation is our shareholder return strategy, which the BMW Group remains committed to. The Board of Management and the Supervisory Board will propose a dividend of €4.30 per share of common stock and €4.32 per share of preferred stock to the Annual General Meeting. This results in a total dividend payout of 2.7 billion euros. The proposed dividend for 2024 represents a payout ratio of 36.7%. This is within our long-term strategic target range of 30-40% and notably higher than the payout ratio in 2023. On January 2nd, we began the final tranche of our ongoing second share buyback programme, which should be completed by latest April 30th. This will conclude the second programme with 2 billion euros, more than half a year earlier than initially planned. By this point in time, we will have reduced a total of 47 million shares in circulation since the start of the share buyback authorisation in 2022. This corresponds to over 7% reduction in share capital. At the upcoming AGM, the Board of Management of BMW AG plans to propose an agenda item seeking a new five-year authorization to acquire Treasury shares amounting to up to 10% of share capital. You will have noted that we have made a step change in our approach since 2021. Starting in 2022, we added Share-by-Bags as an additional instrument alongside dividend payments. We have also increasingly used the range of dividend payout corridor. And we increased the share of automotive free cash flow distributed to the shareholders from the previous year's levels to almost 100% this year. So, let's move to the outlook for 2025. Looking to the market development, due to stabilising inflation and declining interest rates in many countries, we expect to see a rise in demand. So, how will the BMW Group sales performance develop this year? Given the robust economic situation, we anticipate a solid market development in the US In Europe, we do expect growth driven by electrified vehicles. The market dynamics in China, however, will remain challenging. For the full year, revenues per vehicle in the automotive segment are expected to be in the same range as 2024. Our guidance reflects the current status of our planning, including all the tariffs increases in force as of March 12, 2025. So what do we expect for our key performance indicators in 2025? Let me focus on selected guidance parameters. In the automotive segment, we are forecasting a slight increase in deliveries of BMW Mini and Rolls-Royce vehicles. In terms of profitability, the total impact of the tariff increases in place as of March 12th amounts to approximately one percentage point on the auto EBIT margin. As a result, the EBIT margin is now expected between 5 to 7%. Consequently, return on capital employed in the automotive segment should be within a range of 9 to 13%. In the financial services segment, we anticipate a return on equity of 13-16%. The Group's pre-tax profit is expected to remain at the previous year's level. Starting January 1, 2025, we have adjusted the outlook range for group EVT guidance and the existing bandwidth was just too narrow to reflect the underlying movements in the segments. For details, please refer to the glossary of the BMW Group Report. The full outlook for 2025 for all key performance indicators is also available in the BMW Group Report. For the full year 2025, we expect a free cash flow in the automotive segment of over 5 billion euros. Ladies and gentlemen, the BMW Group remains fully focused on achieving our short-term results without compromising our long-term strategic objectives. We remain committed to our long-term target corridor of 8-10% EBIT margin in the automotive segment. To that end, we are constantly enhancing our operational business to ensure we achieve our strategic priorities and optimize our returns. So, after the peak in 2024, we not only expect to see a turnaround in R&D expenditure and CapEx in 2025, but also a turnaround in operational costs. And here I mean a cost decrease in nominal terms, covering the effects of inflation. This will become visible over the course of the year. At the BMW Group, strong brands and emotional products have long built the foundation of our success. As the technological boost from the Neue Klasse across the entire portfolio, we look forward to seeing the benefits from our investments start hitting the road later this year. you

Ladies and gentlemen, growth and innovation. These are two of the main topics we will be focusing on this year. At the same time, we stand on the threshold of a new era. Late this year, we will launch our Neue Klasse, a project that is unprecedented in both form and significance in the history of the BMW Group. With the Neue Klasse, we will be turning the mobility of the future into reality. Driving dynamics, drivetrain, battery technology, operating concept, digitalization including AI. We have refined each of these aspects and in the case of design, even skipped a generation. In this way, we are redefining not only the BMW brand, but also the future of individual mobility. Standing here next to me is the BMW Vision Neue Klasse X. The serious version of this vehicle will kick off the Neue Klasse. Production will ramp up at our new plant in Debrecen late this year. And after that, the rollout will continue in rapid succession, including a sporty sedan at the core of the BMW brand in 2026. We are deliberately starting out in high-volume segments. We want our innovations to have a broad impact, not just in niche segments. Between now and 2027, we will release more than 40 new or updated BMW models onto the market, from electric to plug-in hybrid to vehicles with combustion engines. Each of them will have the DNA of the Neue Klasse. The Neue Klasse is BMW, and BMW is the Neue Klasse. The Neue Klasse is more than just a single vehicle. It marks the beginning of a completely new generation and introduces our technology boosters for the entire brand. Regardless of the drive technology, all future BMW models will benefit from the technologies of the Neue Klasse and, of course, also from the new design language. Allow me to share a few examples of our groundbreaking advances in technology. With a BMW panoramic iDrive, we are reimagining our typical BMW driver orientation. The all-new BMW panoramic vision is the centerpiece. And this newly developed head-up display projects content across the full width of the windscreen. Seamless integration of various display and operating elements enables a completely new level of intuitive interaction. From the launch of the very first model of the Neue Klasse, all future BMW models will come with BMW panoramic iDrive. The sixth generation of our BMW eDrive technology will make e-mobility even more appealing to our customers. The new BMW round cells promise 20% higher energy density, 30% faster charging and at least 30% more range. In certain models, even more. And within just 10 minutes, enough energy for another 300 kilometers can be recharged. For the first time, the Gen 6 high-voltage batteries also feature the latest 800-volt technology and enable bidirectional charging. And compared to the current fifth generation, we have reduced the cost of the new eDrive system by 40 to 50 percent on a comparable electric range basis. The electronics architecture has also been completely newly redesigned. Going forward, its four high-performance computers will control key customer functionalities. For example, driving dynamics, automated driving and infotainment. These super brains deliver more than 20 times the in-vehicle computing power than current systems. This makes our models future-proof for software and functional updates, as well as new AI features. We've also greatly simplified the electrical system, dividing it into four zones with intelligent control. 600 meters less wiring, a 30% reduction in weight and a 20% increase in energy efficiency are just some of the few improvements we will achieve with this. And of course, we are also harnessing technical opportunities to take driving dynamics to a whole new level. The BMW Vision driving experience showcases the potential of the technologies introduced in the Neue Klasse. We are pushing driving dynamics to its physical limits. This highly emotional driving machine will thrill more than just BMW fans. The VDX is the most powerful development prototype BMW has ever built. and we are using it to test our heart of joy, one of the four super brains in the Neue Klasse. We developed the software for the driving dynamics control system entirely in-house. This will be used in all future electric BMW models, setting completely new standards for dynamic performance and efficiency at the same time. It is hard to put it into words exactly how it feels behind the wheel. You simply have to experience it. Well, I guess you can't fake that kind of enthusiasm. Our board of management already had the chance to drive the serious version of the Neue Klasse. And let me tell you, we were all equally excited about the driving experience, but not just in terms of pushing the physical limits. Most importantly, we were deeply impressed by the added value our technologies create for our customers in everyday situations. This is truly the next level of sheer driving pleasure. Ladies and gentlemen, we first announced the Neue Klasse at our annual conference back in 2021. You remember. Today, just four years later, we are entering the final stretch. Standing next to me is one of the prototype vehicles we have been producing in Deppertun since late last year. What is still hidden under camouflage foil here will be unveiled at the IAA Mobility in Munich in early September. There, we will present the production model that will be available to our customers next year. I can already reveal one key detail to you today. This BMW will be released onto the market as the BMW iX3. This is how we continue the success story of the first all-electric BMW X model that has won over BMW fans worldwide since 2020. Testing of the new BMW iX3 is in full swing. These impressions show that the next BMW iX3 is a typical X model and a BMW through and through. As I'm sure you saw at the end of the film, the final phase of development for the sporty sedan, the second Neue Klasse vehicle, is also progressing rapidly. Ladies and gentlemen, what has always set the BMW Group apart is that we keep our sights set on operational performance in the here and now. At the same time, we lay the foundation for our long-term future success. We will continue to consistently pursue our BMW path with foresight, customer focus, self-confidence, and in the knowledge of our strength. We are ready, more than ever. Thank you very much.