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BMW Group Announces Future Strategic Realignment
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27.09.2007
BMW Group Announces Future Strategic Realignment
. New strategy focuses on increasing value
. RoCE target for Automobile segment is 26% as of 2012
. Program approved to tap euro 6 billion in efficiency potential by 2012
. Shareholders to benefit to a greater extent from company success
. Automobile retail sales to rise to significantly more than 2 million units
by 2020Munich - The BMW Group has set the course for a successful future with its strategic realignment. In their joint meeting on Thursday, the Board of Management and the Supervisory Board of BMW AG approved the cornerstones of the corporate strategy through 2020. The BMW Group's goal is to resolutely maximize profitability and increase value over the long term. The Group's strategic direction up to 2020 is clearly defined: The BMW Group is the world's leading provider of premium products and premium services for individual mobility.
This strategic realignment includes, among other items, the following measures:
Capital-Efficiency Targets
The BMW Group intends to focus even more on the return on capital employed when monitoring company performance. The company set itself the following interim targets: The BMW Group aims to achieve a return on capital employed before taxes (RoCE) of 26% in the Automobile segment as of 2012. This results in an EBIT-based return on sales of between 8% and 10% for the Automobile segment.
Program to tap into efficiency potential
In order to achieve earnings targets for 2012, the BMW Group will launch a program to increase profitability. This will encompass all divisions and apply to both performance and costs. In terms of performance, the company plans to increase revenues and earnings per vehicle, while in terms of costs, it plans to reduce development, production, sales and administration costs per vehicle to achieve a cumulative efficiency effect of about 6 billion euros by 2012. The company intends to employ less capital than today when generating further growth. To this end, the BMW Group intends to reduce its capital expenditure ratio as well as capital employed per vehicle by 2012.
Growth Targets
The BMW Group is going to continue its product initiative. The BMW Group aims to achieve retail sales of more than 1.8 million vehicles by 2012. By then, the BMW Group plans to increase deliveries in the motorcycle business by 50% to 150,000 units per annum. The company intends to increase retail sales in the automobile business to clearly more than two million vehicles by 2020.
Change in Dividend Policy/Significantly Higher Dividend Planned for 2007
The Board of Management is convinced that the BMW Group's continued strategic development will be successful over the long term. Therefore, the company plans to increase its dividend payout ratio substantially. The Board of Management will propose a first step for the business year 2007 to the Supervisory Board and the Annual General Meeting. In addition, BMW AG will keep the option of conducting a share buyback. However, this step is not planned for the next twelve months.
Funding out Pension Obligations
BMW AG will gradually fund out its pension obligations in Germany of about 4 billion euros in three steps starting in 2008.
Natural Hedging and Purchasing in US Dollars to be Expanded
In order to strengthen independence from currency fluctuations, the BMW Group will strategically step up natural hedging as well as purchasing in US dollars in particular.
Further details on the company's strategic realignment will be communicated at a press conference on Thursday, September 27, 2007, which will be held from 3:00 p.m. to 4:00 p.m., and during an analyst conference call from 5:00 p.m. to 6:00 p.m.
end of announcement euro adhoc 27.09.2007 13:18:25
Further inquiry note:
Bill McAndrews
Tel.: +49(0)89 382 22332
E-Mail: Bill.McAndrews@bmw.de
Marc Hassinger
Tel.: +49(0)89 382 23362
E-Mail: Marc.Hassinger@bmw.de
Branche: Automotive Equipment
ISIN: DE0005190003
WKN: 519000
Index: DAX, CDAX, HDAX, Prime All Share
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