Today in Munich, BMW held their annual press conference lead by BMW’s CEO Dr. Norbert Reithofer. Every annual press conference is fairly long, but within the lines, you can get many information about the company, its future plans and outcome.
I will show you an introduction, then I will give you the full PDF for further reading.
Ladies and Gentlemen—
Fortune Magazine and Hay Consulting recently surveyed 4,000 global business leaders and experts to ascertain: Which are the world’s most admired companies?
The BMW Group has been ranked “most admired company” in the automotive industry for the second time in a row. Not in Germany or Europe, mind you, but worldwide. This is exactly how we see ourselves—as a global company facing global challenges and global markets.
On Fortune’s general list covering all industries, the BMW Group is the only German company ranked as one of the “Top 50 All Stars”.
However, in the current economic situation, every company has to demonstrate that it is able to overcome challenging times.
Under these exceptional circumstances, there are two crucial factors:
• First, financial stability. The combination of a sound financial footing and high liquidity is the key prerequisite for a company’s ability to act. In the short term, this applies to the economic crisis. But in the long term, it also applies to the implementation of any activities that help safeguard our future.
• And second, innovative strength. It is reflected in state-of-the-art, trendsetting and attractive products that customers expect and desire.
Today, I would like to comment on three main points:
1.) What is important to consider in the current situation?
2.) How does Strategy Number ONE secure our future success?
3.) How do we view the business development for the rest of the year?
Let’s get straight to the first point:
We took the necessary steps to enable us to soften the impact of the crisis much earlier than any other car manufacturer.
At the same time, we have been focusing our efforts on consistently implementing our Strategy Number ONE, charting our course for the future.
Our goal is to maintain the BMW Group’s independence.
Now more than ever, we see that size is not everything. To survive this current market situation, even perfectly healthy companies need to show
• a high degree of flexibility,
• the ability to stand their ground in a fiercely competitive global environment,
• as well as ideas and the strength to create and promote new forms of individual mobility.
This is why government bailouts for private businesses are a mixed blessing.
Don’t get me wrong: It is important that governments join hands with business under such exceptional circumstances and provide companies with certain instruments. However, we need to concentrate our attention on where government intervention begins—and where it should end. The key is to avoid a distortion of competition, which would weaken productive companies.
The following eight points show the BMW Group’s position in this challenging environment:
• First:In 2008, the BMW Group achieved an EBIT of € 921 million. Adjusted for the provisions for residual value risks and credit losses and additional expenses for headcount reductions, our 2008 result would have been significantly higher. Mr. Eichiner will present our annual accounts for the business year 2008 in detail. But let it be said right now: We are in a strong operating position.
• Second: The group’s financial footing is absolutely sound.
At the end of 2008, our liquidity was approx. € 8.1 billion. Obviously, liquidity and free cash-flow are top priorities in such economic times as these. Cash is king. We are in a position of financial security, which provides us with considerable room to maneuver.
• Third: We managed to reduce costs, investments and capital expenditure per vehicle. I instructed all divisions and areas to do their very best to save costs. As a result, our fixed costs in 2008 were lower than in 2007. We also managed to reduce our costs of materials significantly—thanks to our successful cooperation with suppliers. As you may know, we want to reduce material costs by € 4 billion by 2012. It is already clear that we will clearly exceed this target.