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Annual Report 2018
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Summarised by Tags
What does RoCE actually mean? And what is RoE? We went through the Annual Report for you, looking for key terms from EBIT margin to research & development and compiled the relevant sections.
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EBIT – Earnings before interest and taxes
Abbreviation for “earnings before interest and taxes”, equivalent in the BMW Group income statement to “Profit / loss before financial result”.
Glossary, p. 250
Profit before financial result (EBIT) fell by € 778 million to € 9,121 million (2017: € 9,899 million).
Combined Management Report, p. 67
EBIT margin
Profit / loss before financial result as a percentage of revenues.
Glossary, p. 250
The EBIT margin for the Automotive segment came in at 7.2 % (2017: 9.2 * %; – 2.0 percentage points).
* Prior year figures have been adjusted due to the first-time application of IFRS 15.
Combined Management Report, p. 46
Outlook 2019: Against the background of the challenges referred to above, an EBIT margin within a range of 6 to 8 % is expected for the Automotive segment – the core business of the BMW Group – for the 2019 financial year (2018: 7.2 %).
Combined Management Report, p. 88
The EBIT margin in the Motorcycles segment came in at 8.1 % (2017: 9.1* %; – 1.0 percentage points).
Combined Management Report, p. 47
Outlook 2019: The EBIT margin in the Motorcycles segment in 2019 is forecast to lie within the target range between 8 and 10 % (2018: 8.1 %).
Combined Management Report, p. 88
Group profit before tax (EBT)
Group profit before tax provides a comprehensive measure of the Group’s overall performance after consolidation effects and a transparent basis for comparing performance, particularly over time.
Combined Management Report, p. 39
At € 9,815 million, Group profit before tax in 2018 was the second-best figure in the company’s history and moderately down on the previous year’s record level (2017: € 10,675* million; – 8.1 %).
* Prior year figures have been adjusted due to the first-time application of IFRS 15.
Combined Management Report, p. 45
Outlook 2019: Profit before tax: significant decrease expected
Competition on international automobile markets is set to remain fierce in 2019. Furthermore, political and economic developments in Europe remain increasingly uncertain. Above all, this is due to the currently unforeseeable impact of Brexit. In addition, it is difficult to predict how trade tensions between the USA and the EU on the one hand and the USA and China on the other are likely to develop. Volatilities on international currency and raw materials markets could also have a negative impact on Group profit before tax.
Combined Management Report, p. 87
Return on capital employed (RoCE)
RoCE in the Automotive and Motorcycles segments is measured on the basis of relevant segment profit before financial result and the average amount of capital employed in the segment concerned. Capital employed corresponds to the sum of all current and non-current operational assets, less liabilities that do not incur interest.
Glossary, p. 251
The Automobile segment’s RoCE in 2018 fell to 49.8 % (2017: 77.7 * %; – 27.9 percentage points), mainly reflecting earnings developments.
The main reasons for the decrease were higher investments in the electrification of the BMW Group’s vehicle fleet, digitalisation and the expansion and rejuvenation of the model portfolio as well as the expansion of the production network. However, the long-term target RoCE for the Automotive segment was well above the minimum target of 26 %.
* Prior year figures have been adjusted due to the first-time application of IFRS 15.
Combined Management Report, p. 46
Outlook 2019: The Automotive segment’s RoCE is expected to drop significantly in 2019 (2018: 49.8 %).
The decrease is partly due to the introduction of IFRS 16 (Leases). Further reasons are higher investments in the electrification of the vehicle fleet, digitalisation, the expansion and rejuvenation of the model portfolio and the expansion of the production network. Furthermore, the segment’s earnings trend is likely to have a dampening effect on RoCE. However, the long-term target RoCE of at least 26 % for the Automotive segment will be surpassed.
Combined Management Report, p. 88
The return on capital employed (RoCE) for the Motorcycles segment in 2018 was 28.4 %, moderately down on the previous year’s level (2017: 34.0 * %; – 5.6 percentage points).
The shortfall was attributable to the ramp-up situation in the segment due to various model changes. The long-term target RoCE of 26 % for the Motorcycles segment was surpassed.
* Prior year figures have been adjusted due to the first-time application of IFRS 15.
Combined Management Report, p. 47
Outlook 2019: Due to the product initiatives described above, the Motorcycles segment is expected to generate a solid year-on-year increase in RoCE in 2019 (2018: 28.4 %).
The long-term target RoCE of 26 % for the Motorcycles segment will therefore be surpassed.
Combined Management Report, p. 88
RoE – Return on Equity
As is common practice in the banking sector, the Financial Services segment is managed on the basis of return on equity. RoE is defined as segment profit before tax, divided by the average amount of equity capital in the Financial Services segment.
Combined Management Report, p. 38
The RoE in 2018 was slightly lower than one year earlier at 14.8 % (2017: 18.1 %; – 3.3 percentage points).
The decrease was due to more stringent regulatory requirements for equity capital. Nevertheless, the internal RoE target of at least 14 % was achieved.
Combined Management Report, p. 47
Outlook 2019: RoE for the Financial Services segment is expected to remain at the previous year’s level.
The BMW Group forecasts a stable business performance for the Financial Services segment in the financial year 2019. The return on equity is expected to remain at the previous year’s level (2018: 14.8 %).
Combined Management Report, p. 88
Despite the decrease, Group earnings before tax and annual net profit in 2018 were both the second-highest in Group history
After deducting the expense for taxes, the Company reported a net profit of € 7,207 million, compared to € 8,675 million in the previous year.
Combined Management Report, p. 65
Earnings per share
Basic earnings per share are calculated for common and preferred stock by dividing the net profit after minority interests, as attributable to each category of stock, by the average number of shares in circulation. Earnings per share of preferred stock are computed on the basis of the number of preferred stock shares entitled to receive a dividend in each of the relevant financial years.
Glossary, p. 250
Common and preferred stock reached €10.82 and €10.84, respectively, the second highest figures in Company history, just as the net profit result.
A major factor in the success of the BMW Group is its consistent focus on the future. A long tradition of innovation is an integral part of its corporate philosophy.
The BMW Group’s R&D activities include the following five key topics: Design, Autonomous, Connected, Electrified und Services.
At 31 December 2018, over 15,000 people at 16 locations in five countries were working in the BMW Group’s global research and innovations network.
Year-on-year, research and development expenditure rose significantly to € 6,890 million (2017: € 6,108 million; + 12.8 %).
Combined Management Report, p. 29
The five levels of autonomous driving
00
Hands on
the wheel
01
Hands on
the wheel
02
Hands and
eyes temporarily
off
Technological
quantum
leap
03
Hands off,
eyes off
Technological
Moonshot
04
Hands off,
mind off
05
Passenger