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63
confronted with increased refinancing costs in the
wake of higher interest rates. The Financial Services
segment will counter the resulting pressure on
earnings by purposeful expansion across all lines of
business. This strategy will be accompanied by fur-
ther geographical expansion and a wider range of
products. The BMW Group considers that financial
services will generally become more significant in
terms of vehicle sales. Overall therefore, the seg-
ment’s business volume is expected to continue its
upward trend. This growth, together with a pro-
gramme of continuous efficiency improvement,
will make a positive contribution towards improved
earnings.
With the exchangeable bond option on the
BMW Group’s investment in Rolls-Royce plc,London,
largely settled in 2006, reconciliations to group
profit will not benefit from any comparable positive
earnings impact in 2007.
The BMW Group will continue to make good use
of opportunities to achieve further growth over the
coming years and, with that aim in mind, invest in
both new products and in the further expansion of
its sales and production networks. Based on current
forecasts, total capital expenditure for the period
from 2005 to 2009 is still forecast to be in the region
of approximately euro 19 billion.
The number of people employed by the BMW
Group will remain more or less constant in 2007.
The necessary build-up of the workforce during the
product and market initiative was completed in 2005
and in the coming years, it will only be necessary to
offset normal fluctuation.
Foreign exchange rate factors and the on-going
high price levels on international commodity mar-
kets will again influence the BMW Group’s earnings
in 2007. However, it is anticipated that these exter-
nal factors will have less of an impact than in the
past and that the additional cost to the BMW Group
will be correspondingly lower than in the previous
year. Growth in the operating segments as well as
continuous efficiency and productivity improvements
will continue to have a positive impact on group
earnings.
Based on the general economic environment
and segment forecasts discussed above, the BMW
Group anticipates a continuation of its good per-
formance in 2007. Adjusted for the one-off gain on
the Rolls-Royce exchangeable bond in 2006, pre-tax
group earnings for the financial year 2007 are fore-
cast to be better than in 2006.
The extent of this improvement in earnings will
largely depend on whether opportunities arise to
improve group earnings against a background of ad-
verse currency factors, high raw material prices,
changes in interest rates and greater competition.
The BMW Group is rising to these challenges by
achieving sales volume growth and continuously
improving efficiency.
The BMW Group aims to continue its growth
course in the coming years and, in comparison to
the sector, will continue to generate above-average
returns.