Bayerische Mtrnwrk U/Adr

Dear colleagues, ladies and gentlemen, good morning and welcome to the telephone conference of the BMW Group for the first 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. Walter, please, you are the first. Go ahead.

Many thanks, Max. Ladies and gentlemen, good morning. In a highly dynamic environment, the BMW Group has delivered sales and profitability for the first quarter in line with expectations. Our core business has a strong foundation of highly attractive products and is well diversified. With a balanced presence in our sales regions, we have a strong competitive position and are able to deliver a consistent performance. In the first quarter, the BMW Group proved this once again. Let's take a look into the key figures for the first quarter. Group earnings before tax totaled over 3.1 billion euros. Based on group revenues of 33.8 billion euros, this resulted in a group EBIT margin of 9.2%. The EBIT margin in the automotive segment came in at the upper end of our 2025 annual target corridor with 6.9%. Excluding the depreciation resulting from the purchase price allocation of BVA, the margin was 8.1%. Global retail sales decreased slightly by 1.4% compared to last year's first quarter. Sales of all electric vehicles, meaning BAF, increased by 32.4%, which represents a share of 18.7% of total sales. Let's come to more details of the automotive segment performed across key matrix. In the first quarter, the BMW Group delivered just over 586,000 BMW, Mini and Rolls-Royce vehicles to customers, a slight decrease of 1.4% compared to last year's first quarter. While the BMW brand was slightly down 2% year-on-year, the Mini brand benefited from the full availability of all models and reported a growth of 4.1%. Group sales grew across all regions, except China. Here, as expected, the lower run rate of the second half of 2024 has carried over into the first quarter of 2025. The sales development in the Chinese market in Q1 was also impacted by the model changeover of our important BMW X3 and operational challenges in certain areas of the dealer network. In Europe, the BMW Group increased retail sales solidly by 6.2%. The order intake for BMW vehicles in the region across our entire product portfolio is strong, with an order bank reaching well into the third quarter. In particular, BEV retail sales grew by 64.2% in Europe, confirming the region's crucial role in driving our electrification strategy. In the US, year-on-year retail sales grew by 4%. Our commitment to electrification remains an important cornerstone of our strategy, and the demand for our all-electric vehicles remains strong. In the first three months, the BMW Group delivered almost 110,000 all-electric vehicles to customers worldwide, representing a significant growth of almost a third. The share of our all-electric vehicles amount to 18.7% of total sales. Our electrified vehicles, meaning baths and plug-in hybrids, accounted for almost 27% of total sales. With our comprehensive and compelling lineup of electrified vehicles, we remain confident that we will meet our CO2 emission targets in the EU of 2025. Automotive segment revenues amounted to 29.2 billion euros and were moderately lower than in the same quarter of 2024, mainly due to lower vehicle sales to dealers. Segment EBIT for the first three months was over 2 billion euros with an EBIT margin of 6.9%. Let's now have a detailed look at the year-on-year changes in the operational results on the next slide. Auto Avid declined by around 700 million euros compared to the first quarter of 2024. Changes in currency and raw material positions accounted for a positive impact of around 100 million euros. A net balance of volume, model mix and pricing effects was a headwind of 900 million euros compared to the first quarter of 2024. A combined effect from volume and mix was neutral. The pricing headwind compared to Q1 2024 reflects the global price environment and especially the challenges of the highly competitive Chinese market. In China, the price levels of the second half of 2024 continued into the first quarter, as expected and explained at the annual conference in March 25. Accordingly, Q1 revenues per vehicle in the automotive segment are below the level of Q1 2024. But for the full year, they are expected to be in line with last year's level. Ladies and gentlemen, I emphasized at our annual conference that for the year 2025, not only R&D expenditure and capex, but also operational costs will decrease compared to 2024. Our Q1 results provide first evidence for this cost decrease in nominal terms, covering the effects of inflation. So research and development expenses were around 200 billion euros lower than in Q1 2024. Based on group R&D expenditure, the R&D ratio according to the German Commercial Code came in at 5.9%. Sales and administrative expenses also decreased year-on-year by about 200 million euros, mainly due to lower IT costs. In other cost changes, the headwind of 300 million euros essentially results from two topics. The income from the resale of end-of-lease vehicles was lower than in the first quarter of 2024, yet remains positive on average across the portfolio. And The anti-subsidy tariffs imposed by the EU Commission on Electrified Vehicles from China impacted EBIT in the low three-digit million euros range in Q1. The other tariff increases only started to come into effect from early March and therefore had minimal impact on the Q1 results. Free cash flow in the automotive segment totaled about 400 million euros in the first quarter of 2025. Segment EVT amounted to 1.9 billion euros, which is 800 million euros lower than in the first three months of 2024. The net change in working capital contributed around 100 million euros to free cash flow. Inventories rose during the first quarter as production exceeded retail sales and wholesale volumes. While this is typically first quarter seasonality, this year's Q1 stock increase is much less pronounced than in previous years. The impact of increased inventories, as well as of higher trade receivables, was compensated by the development of trade payables, which increased also due to higher production levels. A net effect from capital expenditure and depreciation reduced free cash flow by 600 million euros. but this includes a positive component that invests lower than depreciation in the first quarter. On the other hand, it also incorporates a higher cash outflow of €964 million in Q1, which is related to the capex peak in the last quarter of 2024. Capital expenditure for January to March amounted to around €1.2 billion, a year-on-year reduction of around €100 million. The capex ratio for the first quarter was 3.6%. For the full year 2025, capex will decrease compared to 2024, with an expected capex ratio below 6%. The development of provisions reduced free cash flow by 200 million euros. And the change in the position other, which includes regular tax payments, led to a reduction in free cash flow of around 800 million euros. For the full year, the BMW Group is targeting a free cash flow above €5 billion in the automotive segment. At the end of the first quarter, the automotive net financial assets came in at €45.5 billion, which is around the same level as at the end of 2024. This provides a solid foundation to navigate the current challenges in global markets. And it enables us to distribute our automotive free cash flow via dividends and share buybacks. Ladies and gentlemen, the BMW Group remains committed to its shareholder return strategy, which includes both dividend payments and share buybacks. On April 3rd, we successfully concluded the fourth and final tranche of our second share buyback program. With completion of this program, we have repurchased shares valued at €4 billion since the start of our share buyback authorizations in 2022. This corresponds to a reduction in share capital of 7.27%. At the upcoming AGM, the Board of Management of BMW HG will propose an agenda item seeking a new five-year authorization to acquire treasury shares amounting to up to 10% of share capital. Moving on to the financial services segment. A number of new contracts concluded with retail customers decreased slightly by 4.6% year-on-year to reach almost 403,000 contracts. For new vehicles, new business units were on par with last year's quarter. Consequently, the penetration rate for lease and loan offerings increased by 1.2 percentage points to 43%. For used vehicles, new business units decreased moderately due to the lower number of end of lease vehicles that were returned compared to the first quarter of 2024. New business volume grew by 2.4% to 16 billion euros, driven by a higher average financing amount per contract. Segment earnings for the first quarter amounted to 650 million euros, a year-on-year decrease of 80 million euros. This results mainly from two factors, a lower income from the resale of end-of-lease vehicles due to reduced average gains per unit, and the lower number of returned vehicles compared to 2024. A credit loss ratio across the entire loan portfolio remained at a low rate of 0.23%. In the motorcycle segment, first quarter deliveries decreased slightly by 3.9% year on year. EBIT for the first three months totaled 76 million euros with an EBIT margin of 9.4%. Ladies and gentlemen, let's move to our outlook for 2025. Our guidance given at the annual conference on March 14th included all the tariff increases in force as of March 12th already. Since then, political and macroeconomic volatility has increased even further. Due to ongoing developments and negotiations, the expected effects from tariffs on 2025 results can only be estimated based on certain assumptions. So, we have taken the latest impact as of May 5th. meaning tariffs on U.S. imports of CBU and non-U.S. MCA components at an additional 25%. But on the other hand, the executive order from last week regarding non-stacking and the eligibility of 3.7% of MSRP for the Spartanburg production volume has some positive impact given our strong local footprint in the U.S. And The extremely high tariffs for imports from the US to China is neglectable. Here we also have a strong local footprint in China. In particular, the localization of the X5 in 2022 helps mitigating. And still, the tariff increases that started to come into effect from early March will have a notable impact on the Q2 results. We assume that some of the tariff increases as of May 5th or up to May 5th will be temporary and that there will be reductions from July 2025. Our guidance also includes measures to mitigate the impact of higher tariffs. Based on all these assumptions and footprints, our guidance parameters for the full year remain unchanged. So group earnings before tax are expected to be at previous year's level. In the automotive segment, we are forecasting a slight increase in deliveries. The EBIT margin is expected in a corridor between 5% and 7%. The EBIT margin in the motorcycle segment should come in at between 5.5% and 7.5%. And in the financial services segment, we are targeting a return on equity in the range of 13% to 16% for the full year. Ladies and gentlemen, the BMW Group delivered as expected in the first quarter with an EBIT margin at the upper end of our full-year target corridor. The geopolitical and macroeconomic uncertainty has reached a level we have rarely seen before, but we are closely monitoring the impact of the current macroeconomic conditions and consumer sentiment. It is therefore all the more important that we continue to follow our long-term strategic plan. This includes using the flexibility of our global network to mitigate the impact of the current developments. And it includes disciplined spending, be it R&D, CapEx, or operating costs. As we walk the talk, nominal cost reductions are already visible in our Q1 figures. Our clear long-term strategy, our strong brands and products, And the high level of cross-discipline throughout our entire organization remain the basis for our long-term financial success. Many thanks.

Thank you, Walter. Now over to our CEO, Oliver Zipser, please.

Ladies and gentlemen, as a global player, the BW Group operates within the current tensions of world politics. Like many sectors of the global economy, we are adjusting to a new reality, one in which abrupt changes in external conditions often have far-reaching consequences, not just for our industry. In these circumstances, it is critical not to get caught up in the public frenzy or rush into hasty actions. That is why we continue to focus on our long-term strategic course with pragmatism and flexibility. And this approach is providing its value. Despite the volatile conditions, the BMW Group has started 2025 in line with our high expectations. There are three main reasons for this. First, our fresh and attractive product lineup across all drive technologies. which helped us achieve a robust performance, especially in Europe and the United States of America. Secondly, continued strong sales growth for our all-electric vehicles. And third, a high standard of cost discipline across the company. All of this meant that, despite various influencing factors, our profitability for the first quarter was in the upper half of our guidance. Let's now take a closer look at the details. In all major sales regions outside of China, we increased our sales compared to the same period of last year. Excluding China, sales grew by almost 6%. This confirms the effectiveness not only of our product strategy, but also of our technology open approach. Our vehicles are in demand across all types of drivetrains. We saw particularly good growth in Europe and the United States, with sales in Europe up solidly by more than 6% and an increase of 4% in the United States. We are growing steadily across the entire Americas region with growth of over 5%. We are also growing overall in our markets outside of Europe, America and China by 15%. Thanks to our strong performance in other markets, we were able to nearly offset the persistent challenges in the Chinese market. We have the right products on the market at the right time. A wide range of all electric vehicles across all brands allows us to take full advantage of the growing demand for pure electric vehicles. The more than 32% increase in BEV sales underlines the strong appeal for power electric vehicles. Above all, high demand in Europe fueled this growth in BEPS. Here, sales of fully electric vehicles climbed by more than 64% year on year. E-mobility made by BMW is also gaining popularity in the United States with sales up by more than 23%. Now, nearly one in five vehicles sold by the BMW Group is now fully electric. The total share of electric vehicles, that is pure electric cars plus plug-in hybrids, now exceeds 25%. MINI, in particular, is benefiting from the strong demand for all electric vehicles. Today, an electric heart beats in one out of every three vehicles built by the brand. With all models of the new MINI family now fully available, the brand recorded sales growth of 4%, And in China, locally built electric models played a key role in the brand's growth of over 18%. The share of fully electric vehicles in total sales is especially important for meeting European CO2 targets. In 2024, the BMW Group once again significantly outperformed its European CO2 fleet target. Based on internal calculations, our numbers came in at under 100 grams per kilometer in the WLTP cycle for the first time. And we are confident that we will meet the original legal requirements this year as well. In addition to the growth in all electric vehicles, we also benefited from continued high demand for our sporty BMW M models, with sales up 5% in the first quarter. High-performance models such as the new BMW M5 variants and the BMW M3 were the main growth drivers. Ladies and gentlemen, the first quarter of 2025 highlighted our company's ability to seize opportunities in a challenging environment and to successfully defend our position in the marketplace. Looking ahead, new orders across all drive technologies give us every reason for confidence. especially in Germany, where we are seeing significant growth. Nevertheless, 2025 remains a year of high volatility. We are closely monitoring developments and preparing for different scenarios. This will enable us to respond flexibly and swiftly to changing circumstances. We remain firmly committed to deliver robust results and to meet our ambitious annual targets. Free trade and international cooperation are important drivers of growth and progress. They have always guided our actions. In trade conflicts, on the other hand, nobody wins. All sides should therefore avoid a spiral of isolation and trade barriers and instead promote growth, progress and innovation worldwide. We're advocating for this at various political levels in our markets. And thanks to our international footprint and strong long-term commitment in various countries, we enjoy a high level of credibility. That is why people listen to us attentively and our arguments are well received. Ladies and gentlemen, it is especially important in challenging times that we continually assess the situation in our markets and regions. That is why I have spent significant time in the past few weeks gathering information about the situation on the ground in our most important markets. Just two weeks ago, I was at Auto Shanghai. This trade show provides a valuable indicator for current trends, especially for the Chinese markets. One of the highlights of the show was the world premiere of our BMW Vision Driving Experience, or VDX for short. This is the most powerful development prototype BMW has ever built. The key data speaks for itself. 18,000 Newton meter of torque, 1.2 tons of downforce, lateral forces of up to 3G. These are the kind of numbers you usually only see in top of the range racing cars. The VDX is a pure test vehicle designed to push the limits of driving physics. However, many of its technologies will be used in our Neue Klasse. In particular, the VDX showcases the performance capabilities of our Heart of Joy, one of our four high-performance computers that will control key functionalities, such as driving dynamics, automated driving, and infotainment in our NOE cluster. The Heart of Joy clusters all drive train and driving dynamics function in a single standardized electronic control unit. In combination with our dynamic performance control system, which was developed entirely in-house, we are redefining the BMW brand's most fundamental core characteristic. We are creating nothing else than the next level of sheer driving pleasure. We demonstrated exactly what this means with an incredible live performance in Shanghai. And for this purpose, we built our own test track with a massive ramp. The public and trade press were more than impressed with the performance and possibilities unleashed when we combine our decades of experience in driving dynamics with cutting-edge control technology. This is something only we at BMW can do. Our customers will benefit directly from this, because a system that can manage forces like these can also handle everyday operations with ease, not just in terms of agility and product stability, but also efficiency and comfort. Towards the end of the year, serious production of the Neue Klasse will begin at our new plant in Debrecen in Hungary, starting with the brand new BMW iX3, which will celebrate its world premiere at the IAA Mobility in Munich in September. And after that, the rollout will continue in rapid succession. In 2026 already, production of a sporty sedan at the heart of the BMW brand will get underway at our main plant here in Munich. We have deliberately launched the Neue Klasse in high-volume segments so that our innovations can immediately have a broad impact. Between now and 2027, we will release more than 40 new or updated BMW models onto the market, from BEVs to plug-in hybrids to vehicles with combustion engines. And all of these will benefit from the technologies we develop of the NOE-Klasse. And of course, from the new design language as well. No other manufacturer has a project as comprehensive and groundbreaking as ours ready for production. Ladies and gentlemen, with its broad product portfolio across all brands, its technology-open approach and highly flexible production network, the BMW crew is in an excellent position to exploit growth opportunities as they arise. Thanks to our global footprint, we are also able to respond quickly to changes in individual regions as well as challenges around the world. We will continue to build on this typical BMW strength in the future. Thank you. Yes, thank you very much, Oliver.