SUSTAINABILITY AT THE BMW GROUP September 2017
SUSTAINABILITY AT THE BMW GROUP. Sustainability at the BMW Group, September 2017 Page 2
BMW GROUP S CORPORATE STRATEGY NUMBER ONE NEXT IS THE ANSWER TO THE CHALLENGES OF SUSTAINABLE MOBILITY AND CHANGING MARKET CONDITIONS. We are Number ONE. We inspire people on the move: We shape tomorrow s individual premium mobility. Sustainability at the BMW Group, September 2017 Page 3
SUSTAINABILITY AT THE BMW GROUP. The new era of mobility will be characterized by sustainability, connectivity and automated driving. HARALD KRÜGER, CEO BMW GROUP Sustainability at the BMW Group, September 2017 Page 4
SUSTAINABILITY IS FULLY INTEGRATED IN THE BMW GROUP AND LEADS TO TOP RATINGS. 1973 First environmental manager in the automotive industry. 2000 Executive Board resolution Sustainability is a guiding principle of the BMW Group s corporate strategy. 2009 Establishment of Sustainability Circle and Board. Corporate sustainability is declared as corporate target. TOP RATINGS Dow Jones Sustainability Indices: BMW Group has been a Sustainability Leader in the Automotive Industry for over 15 years. Carbon Disclosure Project: Industry leader 2011, 2012, 2013, 2014, 2015, 2016. FTSE4Good: Listed in the FTSE4Good Index. Oekom: Corporate Responsibility Rating oekom, Status: Prime. Sustainalytics: Ranked No. 1 in the DAX 30 Sustainalytics (no update since 2011). Sustainability at the BMW Group, September 2017 Page 5
SUSTAINABILITY IS INTEGRATED THROUGHOUT THE ENTIRE VALUE CHAIN. Supply Chain Research & Development Production Disposal & Recycling Logistics & Transportation Sales & Utilization Sustainability at the BMW Group, September 2017 Page 6
ORGANIZATION OF SUSTAINABILITY IN THE BMW GROUP. SUSTAINABILITY BOARD Entire Board of Management Chairman: Chairman of the Board of Management Responsible for strategic alignment Sustainability is established as corporate target and anchored in the BMW Group Balanced Scorecard SUSTAINABILITY CIRCLE Department heads from all divisions Responsible for preliminary work to support decisionmaking SPECIALIST DIVISIONS Implement measures and processes needed for the BMW Group to achieve its sustainability goals Division targets Division targets Division targets Sustainability at the BMW Group, September 2017 Page 7
SUSTAINABILITY AS A REMUNERATION FACTOR. COMPENSATION OF THE MEMBERS OF THE BOARD OF MANAGEMENT IN 2016. Quantitative Criteria based on: Group net profit Group post-tax return on sales 77.1% VARIABLE COMPENSATION 50% Earningsrelated bonus 50% Performancerelated bonus Qualitative Criteria to measure contribution to sustainable and long-term performance. Includes: CO2 emissions Leadership skills 2.1% SHARE-BASED COMPENSATION 20.8% FIXED SALARY 20% of total bonus must be invested in common stock and held for 4 years. Sustainability at the BMW Group, September 2017 Page 8
FINANCIAL SUSTAINABILITY. Sustainability at the BMW Group, September 2017 Page 9
BMW GROUP H1-2017. STRONG RESULTS IN FIRST HALF OF 2017. BMW GROUP REMAINS ON COURSE FOR SUSTAINED SUCCESS. BMW Group H1-2017 H1-2016 Change in % Earnings before tax Group (in m ) 6,060 5,166 +17.3 EBT margin (in %) Group 12.3 11.3 +1.0 pp Automotive Segment Automotive sales (units) 1,220,819 1,163,139 +5.0 Earnings before interest and tax (EBIT) (in m ) 4,109 3,941 +4.3 EBIT margin (in %) 9.4 9.5-0.1 pp Net financial assets (m )* 18,880 16,486 +14.5 Motorcycles Segment Sales (units) 88,389 80,754 +9.5 Earnings before interest and tax (EBIT) (in m ) 229 192 +19.3 EBIT margin (in %) 17.4 16.0 +1.4 pp Financial Services Earnings before tax (EBT) (in m ) 1,184 1,073 +10.3 Penetration rate (in %) 47.6 47.4 +0.2 pp Credit loss ratio (in %) 0.31 0.29 +0.02 pp Sustainability at the BMW Group, September 2017 *As of June 30 th 2016/2017 Page 10
EBIT MARGIN IN THE AUTOMOTIVE SEGMENT WITHIN OR ABOVE TARGET RANGE OF 8-10% SINCE 2010. EBIT margin development automotive segment [in %] 15.0 14.4 14.0 13.0 12.0 11.9 11.9 11.6 11.6 11.7 11.0 10.0 9.0 8.0 7.0 9.6 8.1 10.2 9.2 9.6 10.5 9.9 9.6 9.0 9.1 9.5 9.4 8.2 9.5 8.4 9.1 9.6 9.4 9.5 8.5 8.3 9.0 9.7 Target corridor: 8-10 % Sustainability at the BMW Group, September 2017 Page 11
BMW GROUP SALES CONTINUE TO GROW THROUGH AUGUST 2017. 1,571,467 +4.2% 1,338,475 +4.4% 230,925 +3.1% 2,067-7.5% 113,728 +9.5% Sustainability at the BMW Group, September 2017 Sales figures August 2017 Page 12
BMW GROUP AUTOMOTIVE: BALANCED SALES DISTRIBUTION AND SOLID YTD 08/2017 GROWTH OF +4.2% TO A NEW RECORD OF 1,571,467 VEHICLES. Americas Europe Mainland China Asia (w/o China) & Rest of World +1.6% +16.4% -3.7% +4.8% 18% 44% 25% 13% 287,709 units 696,204 units 383,976 units 203,578 units Sustainability at the BMW Group, September 2017 Rolls Royce is included in Rest of World, YTD August 2017 (figures may not add to 100% due to rounding) Page 13
OUTLOOK FOR 2017. POSITIVE BUSINESS DEVELOPMENT EXPECTED DESPITE CHALLENGES. BMW Group Slight increase in EBT compared with previous year Automotive Segment Slight increase in deliveries compared with previous year Solid increase in revenues compared with previous year EBIT margin in the target range of 8-10% Financial Services Segment Return on equity of at least 18%, slight decrease compared with previous year Motorcycles Segment Significant increase in deliveries compared with previous year EBIT margin in the target range of 8-10% Sustainability at the BMW Group, September 2017 Page 14
FINANCIAL TARGETS 2020: SUSTAINABLE GROWTH AND SOLID PROFITABILITY DESPITE CHALLENGES. BMW Group EBT margin Investment ratio* Research and development ratio Payout ratio Automotive Segment EBIT margin Free Cashflow Motorcycles Segment Sales volume EBIT margin Financial Services Segment Return on Equity 2016 10.3% 4.0% 5.5% 33.3% 8.9% 5.8 bn 145,032 units 9.0% 21.2% 2020 >10% <5.0% 5.0-5.5% 30-40% 8-10% >3 bn > 200,000 units 8-10% >18% * Investments in property, plant and equipment and other intangible assets (without capitalized development costs). Sustainability at the BMW Group, September 2017 Page 15
SUSTAINABILITY STRATEGY AND TARGETS. Sustainability at the BMW Group, September 2017 Page 16
THE BMW GROUP HAS SET ITSELF TEN STRATEGIC SUSTAINABILITY GOALS THROUGH TO 2020. Sustainability at the BMW Group, September 2017 Page 17
WE OFFER THE MOST SUSTAINABLE PRODUCTS AND SERVICES. PRODUCTS & SERVICES CO 2 EMISSIONS E-MOBILITY MOBILITY SERVICES By 2020, the BMW Group will have reduced CO ² emissions in the European new vehicle fleet (EU-28) by at least 50% compared to the base year 1995. The BMW Group is the leader in taking a holistic approach to premium electro mobility. The BMW Group will have permanently changed mobility patterns in selected metropolitan areas by 2020 through the introduction of integrated mobility services. Sustainability at the BMW Group, September 2017 Page 18
ACES ARE A CORE ELEMENT OF STRATEGY NUMBER ONE > NEXT. PRODUCTS & SERVICES AUTONOMOUS CONNECTED ELECTRIFIED CUSTOMER FOCUS SHARED / SERVICES Sustainability at the BMW Group, September 2017 Page 19
CONSISTENT REDUCTION OF OUR CO 2 FLEET EMISSIONS TO MEET STRICT REGULATIONS. PRODUCTS & SERVICES Fleet emissions EU-28 in g CO 2 /km - 40% since1995 145 143 133 130 127 124 2011 2012 2013 2014 2015 2016 Sustainability at the BMW Group, September 2017 Page 20
BMW GROUP S ELECTRIFICATION PATHWAY. PRODUCTS & SERVICES Roll-out BMW i Performance Upgrade BMW i3 BMW i Vision Dynamics LCI BMW i3, new BMW i3s MINI Electric (PHEV) MINI BEV BMW X3 BEV BMW inext Building-up expertise Technology innovation Project i I. PIONEERING II. ELECTRIFICATION OF CORE PORTFOLIO III. SCALABILITY AND FLEXIBILITY Battery Electric Vehicles (BEV) Sustainability at the BMW Group, September 2017 Plug-in Hybrid Vehicles (PHEV) Page 21 Life Cycle Impulse (LCI)
SIGNIFICANT NUMBER OF ELECTRIFIED MODELS ARE ALREADY ON THE STREET AND MORE TO COME. PRODUCTS & SERVICES BATTERY ELECTRIC VEHICLES BMW i3 60 Ah BMW i3 94 Ah LCI BMW i3 & i3s MINI BEV BMW X3 BEV BMW i Vision Dynamics BMW inext 2013 2014 2015 2016 2017 2018 2019 2020 2021 PLUG-IN HYBRIDS BMW i8 BMW 530Le* BMW 225xe iperformance BMW X1 xdrive25le iperformance* BMW i8 Roadster BMW X5 xdrive40e iperformance BMW 330e iperformance BMW 530e iperformance BMW 530Le iperformance* BMW 740e / 740Le iperformance MINI Cooper S E Countryman ALL4 * Only available in China Sustainability at the BMW Group, September 2017 LCI: Life Cycle Impulse Page 22
MORE THAN 170,000 ELECTRIFIED BMW GROUP VEHICLES SOLD BY 08/17. WELL ON TRACK FOR 100,000 ELECTRIFIED VEHICLES IN 2017. PRODUCTS & SERVICES 530e iperformance 200,000 180,000 160,000 i3 accumulated i8 accumulated BMW & MINI PHEV accumulated 225xe iperformance i3 94 Ah 740e / 740Le iperformance BMW X1 xdrive25le iperformance* MINI Cooper S E Countryman 140,000 120,000 100,000 X5 xdrive40e iperformance 330e iperformance 80,000 530Le* 60,000 40,000 20,000 i3 60 Ah i8 YTD 08/2017 57,895 electrified vehicles sold 0 *Only available in China Sustainability at the BMW Group, September 2017 Figures represent cumulative sales of Battery Electric Vehicles (BEV) and Plug-in Hybrid Vehicles (PHEV) Page 23 iperformance = Plug-in Hybrid Vehicles (PHEV)
THE NEXT STEPS ARE HIGHLY AND FULLY AUTONOMOUS DRIVING. PRODUCTS & SERVICES 0 1 2 3 4 5 Driver Feet off Hands off Eyes off Mind off Passenger No assistance Assisted Partially automated Highly automated Fully automated Autonomous Human Transfer of responsibility Machine Sustainability at the BMW Group, September 2017 Page 24
HD-MAP, SENSORS, AI/ENVIRONMENT MODEL AND MOTION CONTROL PLAY A KEY ROLE IN THE ARCHITECTURE OF AUTOMATED DRIVING. HD-MAP BACKEND SENSORS AI / ENVIRONMENT MODEL VEHICLE INTEGRATION centimeter precision real-time capable highly available and reliable camera radar lidar ultra-sonic inertial sensor object fusion free space detection road model prediction driving strategy / planning motion control safe vehicle management up to the limits fail operational architecture Cross-industry Cooperation. Cooperation for development of autonomous driving platform * System Integrator Sustainability at the BMW Group, September 2017 *Regulatory approval outstanding for NavInfo, GIC and Tencent Page 25
DRIVE NOW. PREMIUM, FREE FLOATING CAR SHARING SERVICE FROM BMW GROUP. PRODUCTS & SERVICES DriveNow Customers are BMW Group s youngest & most modern target group 15% share of electric vehicles 900,000 customers in 13 cities 5,700+ cars in the fleets Sustainability at the BMW Group, September 2017 Page 26
CAR SHARING EXPERIENCE ON A NEW LEVEL. REACH NOW TO INTRODUCE UNIQUE FEATURES TO THE CUSTOMERS. PRODUCTS & SERVICES Launch in April 2016 in Seattle Followed by Portland and Brooklyn (NY) 50,000 members 15% share of electric vehicles New features piloted since end 2016: Ride: Car with driver Reserve: For long period use of vehicles and delivery of car Fleet Solutions: Individualized CarSharing offering for residential areas Share: Renting out your own car Sustainability at the BMW Group, September 2017 Page 27
PREMIUM MOBILITY SERVICES CHARGENOW AND PARKNOW MAKE CHARGING AND PARKING EASIER THAN EVER. PRODUCTS & SERVICES 65,000 charging points in 29 countries On- and off-street parking car integration starting with all new BMW 5 Series Cashless 45 cities in Germany, Austria, France & Switzerland Sustainability at the BMW Group, September 2017 Page 28
SUSTAINABILITY IS INTEGRATED THROUGHOUT THE ENTIRE PRODUCTION AND VALUE CHAIN. PRODUCTION & VALUE CHAIN RESOURCE EFFICIENCY RENEWABLE ENERGY SUSTAINABLE, RESOURCE- EFFICIENT SUPPLY CHAIN The BMW Group will reduce its resource consumption (energy, water, waste, solvents) per vehicle produced by 45 % by 2020 (base year 2006). By 2020, the BMW Group will be the leader in the use of renewable energy in production and value creation. The BMW Group will significantly increase transparency and resource efficiency in the supply chain by 2020. Sustainability at the BMW Group, September 2017 Page 29
SINCE 2006 UTILISATION OF RECOURSES AND EMISSIONS PER VEHICLE PRODUCED WERE REDUCED BY AN AVERAGE OF 50%. PRODUCTION & VALUE CHAIN -35% -49% -82% ENERGY CONSUMPTION CO2 EMISSIONS WASTE FOR DISPOSAL -31% -49% -55% WATER CONSUMPTION PROCESS WASTE WATER SOLVENT EMISSIONS Sustainability at the BMW Group, September 2017 Page 30
BMW PLANT MEXIKO WILL BE THE BMW GROUP S MOST RESOURCE-EFFICIENT PRODUCTION LOCATION WORLDWIDE. PRODUCTION & VALUE CHAIN BMW Group s first paint shop to produce zero process wastewater 100% CO2-free electricity with mainly solar panels Lead plant for set-up and training Sustainability at the BMW Group, September 2017 Page 31
THE BMW GROUP AIMS TO MEET 100 PER CENT OF ITS ENERGY NEEDS FROM RENEWABLE SOURCES. PRODUCTION & VALUE CHAIN Biomass project BMW Group Plant Rosslyn, South Africa Gas to energy project BMW Group Plant Spartanburg, USA Wind turbines BMW Group Plant Leipzig, Germany Solar installation on the roof of the MINI Plant Oxford, UK Sustainability at the BMW Group, September 2017 Page 32
SUSTAINABLE SUPPLIER NETWORK MANAGEMENT. PRODUCTION & VALUE CHAIN SUPPLIER SUSTAINABILITY STANDARDS SUSTAINABILITY RISK MANAGEMENT SUSTAINABILITY TRAINING PARTICIPATION IN INITIATIVES & NETWORKS Sustainability at the BMW Group, September 2017 Page 33
SUSTAINABLE, RESOURCE EFFICIENT SUPPLY CHAIN. THREE-STEP PROCESS TO MINIMIZE RISKS. PRODUCTION & VALUE CHAIN 1. IDENTIFY RISKS 2. ASSESSMENTS 3. AUDITS AND ACTION PLANS Identify high risk supplier locations based on BMW specific sustainability risk filter Sustainability Questionnaire of Automotive companies (OEMs) BMW specific modular self-assessment questionnaire Sustainability audit conducted by independent external auditors Identify and analyze high risk suppliers based on mediascreening Internal on-site visits to verify and develop suppliers sustainability performance Corrective action plan based on audit result Sustainability at the BMW Group, September 2017 Page 34
THE SUCCESS OF THE BMW GROUP IS BASED ON THE PERFORMANCE OF ITS EMPLOYEES. EMPLOYEES & SOCIETY HEALTH AND PERFORMANCE LONG-TERM EMPLOYEE DEVELOPMENT DIVERSITY INTERCULTURAL UNDERSTANDING To preserve the health and the performance of our employees in the long term, we promote personal responsibility and an appropriately designed work environment. The BMW Group ensures longterm employee development by fostering its employees abilities, making the most of their talents, developing potential and ensuring employability. Through its diverse workforce, the BMW Group increases its competitiveness and enhances its innovative strength. The BMW Group is a leader in intercultural understanding. Sustainability at the BMW Group, September 2017 Page 35
CULTURE We create the future: We combine operational excellence and fresh thinking. EMPLOYEES & SOCIETY RESPONSIBILITY APPRECIATION TRANSPARENCY TRUST OPENNESS Sustainability at the BMW Group, September 2017 Page 36
NEW DEVELOPMENT CENTRE FOR AUTONOMOUS DRIVING IN MUNICH. EMPLOYEES & SOCIETY More than 2,000 employees will work at the new location. Next steps towards fully-automated driving, from software development to road testing. Agile teams, short distances and short decision-making processes. ACT LIKE A START-UP DELIVER LIKE A GROWN-UP. Klaus Fröhlich, member of the Board of Management of BMW AG, Development Sustainability at the BMW Group, September 2017 Page 37
BMW GROUP EMPLOYER ATTRACTIVENESS: TOP AUTOMOTIVE MANUFACTURER WORLDWIDE. EMPLOYEES & SOCIETY Most respected global study: students surveyed in 2016 Engineers / IT worldwide Top automotive manufacturer Only automobile manufacturer in top 10 4 th place overall Engineers / IT Europe Top automotive manufacturer 4 th place overall Sustainability at the BMW Group, September 2017 Page 38
BMW GROUP INVESTOR RELATIONS. CONTACTS. Torsten Schüssler Head of Investor Relations Bernd Daser Debt & Equity IR Patrick Neumayer Debt & Equity IR USA +49-89-382-25387 torsten.schuessler@bmw.de +49-89-382-31684 bernd.daser@bmw.de +1-201-307-4210 patrick.neumayer@bmwna.com Tanja Seiler Equity & SRI IR Andreas Stöffler Equity IR +49-89-382-75161 tanja.seiler@bmw.de +49-89-382-17944 andreas.stoeffler@bmw.de http://www.bmwgroup.com/ir IR Contact BMW Group Investor Relations Petuelring 130 80788 Munich ir@bmwgroup.com Sustainability at the BMW Group, September 2017 Page 39
BMW GROUP INVESTOR RELATIONS. FINANCIAL CALENDAR 2017 & 2018. 07.11.2017 Quarterly Report to 30 September 2017 21.03.2018 Annual Accounts Press Conference 22.03.2018 Analyst and Investor Conference 04.05.2018 Quarterly Report to 31 March 2018 17.05.2018 Annual General Meeting 2018 02.08.2018 Quarterly Report to 30 June 2018 http://www.bmwgroup.com/ir Sustainability at the BMW Group, September 2017 Page 40
DISCLAIMER. This document contains forward-looking statements that reflect BMW Group s current views about future events. The words anticipate, assume, believe, estimate, expect, intend, may, can, could, plan, project, should and similar expressions are used to identify forward-looking statements. These statements are subject to many risks and uncertainties or may be affected by factors outside BMW Group s control, including adverse developments in global economic conditions resulting in a decline in demand in BMW Group s key markets, including China, North America and Europe; a deterioration in credit and financial markets; a shift in consumer preferences affecting demand for BMW Group s products; changes in the prices of fuel or raw materials; disruption of production due to shortages of materials, labor strikes or supplier insolvencies; the effective implementation of BMW Group s strategic goals and targets; changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety; and other risks and uncertainties, including those described under the heading Report on Risks and Opportunities in BMW Group s most recent Annual Report. If any of these risks and uncertainties materializes or if the assumptions underlying any of BMW Group s forward-looking statements prove to be incorrect, actual results may be materially different from those BMW Group expresses or implies by such statements. BMW Group does not intend or assume any obligation to update these forward-looking statements. Sustainability at the BMW Group, September 2017 Page 41