Financial Data and Key Metrics Changes - Group revenues for Q1 2022 increased by 16.3% to €31.14 billion, significantly impacted by the full consolidation of BMW Brilliance Automotive (BBA) [13][29] - Earnings before tax (EBT) totaled €12.23 billion, resulting in an EBT margin of 39.2%. Excluding the revaluation of the existing stake in BBA, the EBT margin was 18.4% [14][22] - Research and development (R&D) expenses rose by 9.4% year-on-year to €1.57 billion, with an R&D ratio of 4.5% [16] - Capital expenditure (CapEx) increased to €1.1 billion, representing a CapEx ratio of 3.5% [17] Business Line Data and Key Metrics Changes - Automotive segment revenues rose by 17.4% to over €26.73 billion, driven by the inclusion of BBA revenues and favorable model mix [17][18] - The cost of sales in the Automotive segment increased by 20.9% to €22.63 billion, influenced by rising energy and raw material costs [19] - The Financial Services segment saw a decrease in new contracts by 11.4% due to supply issues, but earnings before tax reached over €1 billion, a new all-time high [25][26] - The Motorcycles segment reported over 47,000 units sold, achieving double-digit growth and an EBIT margin of 13.5% [27] Market Data and Key Metrics Changes - Vehicle sales decreased by 7.8% in Europe and 9.2% in China, while US sales grew by 3.7% [7] - Sales of electrified vehicles increased by 28% to over 89,000 units, with fully electric vehicle sales more than doubling to over 35,000 units [51] - The company expects to see a significant year-on-year increase in both group pretax earnings and employee numbers due to the full consolidation of BBA [29] Company Strategy and Development Direction - The company is focusing on electrification and digitalization, with plans to launch multiple fully electric models, including the BMW i3 tailored for the Chinese market [9][15] - The strategy includes increasing localization in China and expanding production capacity to meet local demand [39][40] - The company aims to achieve climate neutrality by 2050 and reduce its products' total carbon footprint by 40% by 2030 [56] Management's Comments on Operating Environment and Future Outlook - The management acknowledged growing uncertainties due to geopolitical tensions, rising inflation, and high energy prices but confirmed guidance for the full year [28][30] - The semiconductor supply situation is expected to improve in the second half of 2022, but challenges remain due to the pandemic and geopolitical issues [31][46] - The company remains optimistic about strong demand for its products, particularly in the electric vehicle segment [32] Other Important Information - The company extended its contract with the Chinese joint venture BBA until 2040 and increased its stake from 50% to 75%, fully consolidating BBA in its financial statements [10] - The company is investing in e-mobility and digitalization to secure future sustainability while maintaining strong operating performance [38] Q&A Session Summary Question: Model mix evolution and BEV pivot - Management discussed the balance between supply shortages and new model capacity, expressing confidence in improving the mix and profitability across all segments [68][70][71] Question: Share buybacks and i7 revenue - Management indicated that share buyback proposals are pending AGM approval and confirmed that revenue from Amazon Prime in the i7 would follow standard revenue methodologies [77][79][80] Question: EV order bank and i3 performance - Management clarified that high order banks exist across all vehicle types, not just BEVs, and expressed confidence in the i3's market fit in China despite competitive pressures [82][85][86] Question: Financial Services competitive pressure - Management acknowledged increased competition in the Financial Services sector but noted strong credit quality and operational momentum [94][96] Question: Software and battery technology investments - Management emphasized the critical nature of digitalization and ongoing investments in battery technology, including local production strategies [100][108]
BMW(BMWYY) - 2022 Q1 - Earnings Call Transcript