Ladies and Gentlemen,
Good Morning! As Oliver Zipse already mentioned: We find ourselves in a highly unusual situation. Although we are well underway in many operational aspects, the measures regarding the Corona virus will significantly impact our business in the current year. Short-term, we are especially focusing on stabilizing liquidity and our result. I will say more about this in the forecast at the end of my speech. Basically the following applies: We are an adaptable company. Our fast and consistent action makes us stand out. Our strategic long-term goals for a stable business environment have not changed: We are targeting an EBIT margin of between 8-10% in the Automotive Segment and a free cash flow of more than three billion euros.
For now let’s start with the previous business year. In a challenging business environment, the BMW Group is actively driving the transformation of the industry. In the financial year 2019, we demonstrated once again that we can deliver a strong performance. With new, important models, we improved from quarter to quarter, as promised. The new X7 and 8 Series got off to a strong start. The launch of the 3 Series in China and Mexico in spring 2019 gives us an even broader production base in this key segment. We also successfully ramped up the new 1 Series. As planned, we significantly expanded our market share in the luxury segment. This gives us a sound financial basis for funding our electro-offensive. At the same time, we continue to utilize all levers consistently and systematically as we strive to meet our ambitious long-term profitability targets.
Our steadily improving performance during the financial year 2019 shows we are on the right track. As expected, the fourth quarter of 2019 was stronger than the third quarter. In fact, in terms of revenues, it was the strongest quarter in our history. In the Automotive Segment we continued to improve both our operating result and our profitability. Several factors contributed to this: First, vehicle sales posted another increase. Second, targeted expansion of our portfolio in the luxury segment significantly improved our vehicle mix. Our young and very attractive product portfolio is also reflected in better pricing. And, finally, our continuous efficiency improvements are also having a significant impact. Despite continuing high expenses for research and development, as well as increased manufacturing costs due to regulatory requirements, the EBIT margin in the Automotive Segment was 6.8%.
Ladies and Gentlemen, As previously announced, we steadily improved our performance after a first half year that was challenging, as expected. Group revenues climbed 7.6% in 2019 to more than 104 billion euros and exceeded 100 billion euros for the first time. This increase was driven, in particular, by improvements in volumes, mix and pricing. Adjusted for currency translation effects, revenues increased by 6.1%.As previously announced, earnings before tax were significantly lower than the previous year, at 7.12 billion euros. In April, the European Commission provided us with a Statement of Objections relating to its antitrust allegations. In accordance with IFRS standards, we recognised a provision of almost 1.4 billion euros in connection with the proceedings in the first quarter of the year. This had a significant negative impact on earnings. Consequently, the EBT margin for the financial year 2019 was 6.8%.
As expected, the financial result also saw a significant decrease. The earnings contribution of our Chinese joint venture, BBA, rose significantly by almost 180 million euros to 918 million euros.
This was offset by the earnings of the Your Now companies, value adjustments in connection with their realignment and a net interest result that was around 330 million euros lower, due to positive one-time effects in the previous year. In 2018, the acquisition of DriveNow shares from Sixt had a positive effect of 209 million euros. Net profit of the BMW Group for 2019 totalled 5.02 billion euros.
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SOURCE: BMW Group
