Financial Data and Key Metrics Changes - The company reported a strong auto free cash flow of EUR 6.9 billion at year-end 2023, despite combined CapEx and R&D expenses of EUR 10.7 billion, indicating operational robustness [37] - The payout ratio proposed for the AGM is 33.7%, marking the strongest in the company's history, with over EUR 16.5 billion returned to shareholders in dividends and share buybacks over the last three years [38] Business Line Data and Key Metrics Changes - The company is preparing to meet the 2025 CO2 targets in Europe, being approximately 20% below the current target in 2023 and expecting to undercut these targets in 2024 [14] - The company anticipates that around 20% of its global production will be battery electric vehicles (BEVs) this year, with a goal of achieving a 50% BEV share globally by 2030 [15] Market Data and Key Metrics Changes - In China, the company sold over 100,000 BEVs in 2023, doubling the sales volume during the year, and is experiencing double-digit growth for BEVs in early 2024 [50][68] - The company noted that 90% of the Chinese market for BEVs is under CNY 300,000, while it achieved over 11% BEV share with its products last year [52] Company Strategy and Development Direction - The company is focused on balancing growth and profitability in its BEV strategy, particularly in the competitive Chinese market, while also emphasizing the importance of plug-in hybrids (PHEVs) as a transitional technology [40] - The introduction of the Neue Klasse vehicles is part of the company's strategy to enhance efficiency and reduce range anxiety for customers [15][55] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the future of the automotive industry, particularly in relation to emission targets and the charging infrastructure across Europe [6] - The company is optimistic about its growth prospects in China, despite acknowledging that growth rates may not be as strong as in the past [68] Other Important Information - The company is not planning to cut R&D expenses but aims to enhance efficiency through AI applications across various processes [55] - The company has seen a significant increase in provisions for bonuses and price reductions, reflecting higher volumes in Q4 2023 compared to the previous year [46] Q&A Session Summary Question: Market environment in China and profitability impacts - Management highlighted that the market environment in China is showing both tailwinds and headwinds, with a focus on balancing profitability and growth [12] Question: Capital allocation strategy - The company discussed its capital allocation strategy, emphasizing a high payout ratio relative to free cash flow and ongoing share buyback programs [22] Question: Emissions compliance and plug-in hybrids - Management confirmed that PHEVs remain a crucial part of their offering, serving as an entry point into electro-mobility for many customers [23] Question: Inventory buildup and agency model - The company clarified that the inventory buildup is related to demand and the launch of new models, with minimal impact from the agency model at the end of 2023 [26] Question: Pricing trends and provisions - Management addressed pricing trends, indicating a strong pricing position and the absence of further dealer support payments in Q1 2024 [62] Question: Residual values and financial results - The company expects lower residual values in 2024, impacting both the Automotive and Financial Services divisions, but remains positive overall [77]
BMW(BMWYY) - 2023 Q4 - Earnings Call Transcript