Financial Data and Key Metrics Changes - The BMW Group reported a Group EBITDA margin of 11.3% for Q2 2023 and 12.6% for the first half of the year, exceeding the strategic target of 10% [4][8] - Group earnings before tax for the quarter totaled €4.2 billion, with pre-tax earnings for the first half decreasing by just under €6.8 billion due to a one-off profit of €7.7 billion last year [8][10] - Free cash flow in the Automotive segment was €1.2 billion for Q2, with a total of €3.1 billion for the first half of the year, and the company expects free cash flow to exceed €6 billion for the full year [20][21] Business Line Data and Key Metrics Changes - In the Automotive segment, vehicle sales increased by 11.3% year-on-year to over 626,000 units in Q2 2023, with a 6.4% increase compared to Q1 [9][10] - The EBIT margin for the Automotive segment was 9.2% in Q2 and 10.6% for the first half, with expectations for continued positive trends in the second half of the year [5][12] - The Motorcycles segment achieved record figures with sales reaching almost 65,000 units, an 8% increase year-on-year, and an EBIT margin of 16% for Q2 [27] Market Data and Key Metrics Changes - The BMW Group's BEV sales exceeded 88,000 units in Q2, totaling around 153,000 BEVs delivered in the first half, more than double the sales from the same period last year [11][12] - The company maintains a strong market position, with a high order bank and expectations for solid delivery increases in 2023 [10][28] - The BMW Group remains the number one in the global premium segment with over 20% market share, delivering more than 1.5 million vehicles in the first half of 2023, a 4.7% increase year-on-year [56][58] Company Strategy and Development Direction - The company is focusing on electromobility, digitalization, and sustainability, with significant investments planned in next-generation technologies [30][31] - The NEUE KLASSE project is a key initiative aimed at shaping the future of mobility and securing competitiveness, with production set to begin in 2025 [41][42] - The company aims to balance a profitable core business, a growth trajectory, and a clear path to lower CO2 emissions [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strength of the order bank and an expected improvement in vehicle availability, leading to an increase in delivery forecasts for 2023 [6][10] - The company anticipates a stable return on equity in the Financial Services segment, projected between 16% and 19% for the full year [26][29] - Management acknowledged the challenges posed by higher financing costs and competitive pressures but remains optimistic about maintaining profitability [22][24] Other Important Information - The company is planning for increased inventories in 2023 to meet high customer demand and ensure vehicle supply [21] - The BMW Group is actively promoting the development of charging infrastructure in collaboration with other manufacturers in North America [59] Q&A Session Summary Question: Pricing and Working Capital - The CFO clarified that pricing remains strong despite a reported 5% decrease year-on-year, attributing this to previous price increases and currency translation effects [65][70] - The majority of inventory increases are in finished goods, with confidence in fulfilling customer demands for the second half of the year [71] Question: Medium-term Capacity Outlook - The CEO discussed the growth potential from the NEUE KLASSE and the company's strategy to achieve a significant market share in electric vehicles by 2030 [67][73] Question: Free Cash Flow Guidance - The CFO explained that the free cash flow guidance was adjusted due to higher investment spending and inventories, with expectations to remain above €6 billion [75][80] Question: Competition in China - The CEO emphasized the company's strong position in the premium segment in China, with a broad product range and ongoing growth despite local competition [76][82] Question: Margin Phasing and BBA EBIT - The CFO addressed concerns about margin expectations, indicating that the company is managing headwinds from FX and inflation while maintaining stable performance from BBA [89][93] Question: Financial Services and Lease Penetration - The CFO noted a decrease in lease penetration but indicated a recovery trend, particularly in the U.S. and EU markets, while addressing the impact of local competition in China [99][102]
BMW(BMWYY) - 2023 Q2 - Earnings Call Transcript