BMW Group still on growth course with new models
August 7, 2003 - BMW AG Press Release

The activities of the BMW Group in 2003 are being dominated by the implementation of the product and market offensive. Following the launch of the MINI One D in May 2003, the Group began delivering the new BMW 5 Limousine to dealers and customers from the middle of the year. Other important milestones, such as the presentation of the BMW 6 Series Coupé and the new BMW X3, will follow in the course of 2003. In the words of Dr. Helmut Panke, Chairman of the Board of Management of BMW AG, in conjunction with the presentation of the half-year figures: "Encouraged by the excellent start made by the new models, the BMW Group is still predicting that the reduction in sales of BMW brand cars in the first half of 2003 due to product life-cycle factors be made good over the full year and that the Group will achieve volume growth for all brands compared to the previous year."

Despite this predominantly product life-cycle induced reduction in the sales volume of BMW brand cars, the BMW Group delivered 283,296 units to customers during the second quarter 2003. This was almost exactly in line with the sales volume achieved in the same quarter 2002 (283,280 units). On a half-year basis, a total of 544,869 BMW, MINI and Rolls-Royce brand cars was sold, 0.2% more than in the first half of 2002 (543,742).

Total revenues of the BMW Group in the second quarter 2003 fell by 11.7% to euro 10,241 million (second quarter 2002: euro 11,599 million) mainly as a result of currency effects. Overall, the BMW Group generated revenues of euro 20,513 million in the first half of 2003, 8.3% less than in the first half of 2002 (euro 22,367 million).

As expected, the profit from ordinary activities for the second quarter 2003 was below previous year´s figure due to the high level of expenditure for the product and market offensive, covering the relevant structure and launch costs for the introduction of new models. Altogether, the profit from ordinary activities for the second quarter 2003 fell by 7.2% to euro 947 million (second quarter 2002: euro 1,020 million). The Group's performance benefited from the positive effects of the measurement of financial instruments. The profit from ordinary activities for the first half of 2003, at euro 1,777 million, was 12.5% below that for the corresponding period in 2002 (euro 2,031 million).

The net profit of the BMW Group for the second quarter 2003 fell by 9.7% to euro 568 million (second quarter 2002: euro 629 million). The net profit for the first half of 2003 fell by 14.5% to euro 1,078 million (first half of 2002: euro 1,261 million).

At 30 June 2003, the BMW Group had a workforce of 103,335 employees, 3.9% more than at 30 June 2002 (99,464 employees). The comparable number of employees at 30 June 2002 after adjusting for disposals and transfers of group companies was 99,241, so that the increase on a comparable basis was 4.1%. The BMW Group thus created 4,094 new jobs over this period, including more than 3,300 in Germany. On an adjusted basis, the workforce increased by 2,124 employees compared to 31 December 2002, including 2,097 new employees in Germany.

So far, 1,065 new employees have been recruited for the new BMW plant in Leipzig. Most of these are currently working in the various BMW Group plants in Bavaria, preparing for their future tasks in Leipzig. By the year-end, the workforce for the new plant will increase to approximately 1,300 employees.

The BMW Group completed a number of important measures during the second quarter 2003, aimed at increasing international presence. The production and sales joint venture with the Chinese partner, Brilliance China Automotive Holdings will play a key role in this respect. Production of the BMW 3 Series will commence before the end of 2003 in Shenyang, northern China. In addition, a group sales subsidiary has been set up in Malaysia with a local partner and selling activities commenced with effect from 1 August 2003

The BMW Group also extended its network of subsidiaries in Western Europe. With effect from 1 October 2003, the BMW Group will be taking over direct market responsibility in Greece, Ireland, Denmark and Luxembourg, previously served through importers.

The performance so far in 2003 is in line with the expectations of the BMW Group. Despite the expenditure incurred in conjunction with the product and market offensive, which mainly impacts the results of the Automobiles segment, the BMW Group is still aiming, on a full year basis, to match previous year's earnings.

Revenues of the Automobiles segment for the second quarter 2003 amounted to euro 9,647 million and were thus 3.3% below the second quarter 2002 (euro 9,978 million). On a half-yearly basis, revenues fell by 2.3% to euro 19,020 million (first half of 2002: euro 19,463 million). Above all, the weakness of the US dollar against the euro had a negative impact on revenues.

The profit from ordinary activities of the Automobiles segment was again affected significantly in the second quarter 2003 by the implementation of the product and market offensive and the related high level of expenditure. The profit from ordinary activities for the second quarter 2003 decreased by 19.8% to euro 768 million (second quarter 2002: euro 958 million). For the first half of 2003, the BMW Group reports a profit from ordinary activities of euro 1,487 million, down 20.6% compared to the same period last year (euro 1,872 million).

The sales volume of BMW brand cars was again affected in the second quarter 2003 by the product life-cycle of certain BMW models. A total of 239,205 BMW brand cars was sold in the quarter, 3.8% fewer than in the second quarter 2002 (248,559 units). For the six month period, the sales volume of BMW brand cars totalled 454,972 units and was therefore 5.5% below the figure for the first half of 2002 (481,330 units).

Demand for the MINI brand continued to rise. 44,073 units (second quarter 2002: 34.721 units) were sold during the second quarter 2003, an increase of 26.9%. Altogether, 89,878 MINI brand cars were delivered to customers during the first half of 2003, and increase of 44.0% compared to the first half of 2002 (62,412 units).

Whereas the first Rolls-Royce Phantoms manufactured in Goodwood, England, were for demonstration and display purposes, the second quarter 2003 saw the first deliveries to dealers and customers. The receipt of several hundred orders for delivery in the current year underpins the high level of interest generated by the Rolls-Royce Phantom.

Revenues of the Motorcycles segment in the second quarter 2003 amounted to euro 329 million, 6.3% below the figure for the second quarter 2002 (euro 351 million). As well as a lower sales volume, the strength of the euro against the US dollar also had a negative impact. Revenues in the first half of 2003 fell by 3.1% to euro 633 million (first half of 2002: euro 653 million).

The profit from ordinary activities of the Motorcycles segment for the second quarter 2003 amounted to euro 58 million, 1.7% below the figure for the second quarter 2002 (euro 59 million). The profit from ordinary activities for the first half of 2003, at euro 88 million, fell just short (-1.1%) of the result in the equivalent period in 2002 (euro 89 million).

Most of the international motorcycle markets continued to be affected by downward trends in the second quarter 2003 and the sales volume of the Motorcycles segment, at 30,688 units was only 2.4% below the record level achieved in the second quarter 2002 (31,450 units). On a half-year basis, the sales volume of 51,589 units was down 3.0% compared to the first half of 2002 (53,186 units).

The Financial Services segment remained on growth course during the first half of 2003. On a worldwide basis, the proportion of new BMW and MINI brand cars financed or leased via the Financial Services segment increased in the first half of 2003 to 39.4% (first half-year 2002: 35.1%).

The total business volume of the Financial Services segment as disclosed in the balance sheet amounted to euro 27,493 million at 30 June 2003, an increase of 8.4% compared to the 30 June 2002 (euro: 25,356 million).

The profit from ordinary activities of the Financial Services segment in the first half of 2003 improved by 26.4% to euro 225 million (first half of 2002: euro 178 million). The profit from ordinary activities for the second quarter was euro 118 million, an 20.4% improvement over the same quarter last year (euro 98 million).
- BMW AG & the BMW Group Worldwide

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