BMW 2008 Annual Report Download - page 49

50
14 Group Management Report
14 A Review of the Financial Year
16 General Economic Environment
20 Review of Operations
42 BMW Stock and Bonds
45 Disclosures pursuant to § 289 (4)
and § 315 (4) HGB
47 Financial Analysis
47
Internal Management System
49 Earnings Performance
51 Financial Position
52 Net Assets Position
55 Subsequent Events Report
55 Value Added Statement
57 Key Performance Figures
58 Comments on BMW AG
62 Risk Management
68 Outlook
penditure to implement previously announced measures
to reduce the workforce, by more pronounced adverse
currency factors and by the ongoing high prices of raw
materials.
The BMW Group recorded a net profit of euro  million
(: euro , million) for the financial year . The
post-tax return on sales was .  : . . Earnings per
share of common and preferred stock were euro . and
euro . respectively (: euro . and euro . respec-
tively).
Group revenues fell by .  compared to the previous year.
Revenues from the sale of BMW, MINI and Rolls-Royce
brand cars decreased by . , while revenues from motor-
cycles business remained at the previous year’s level.
Revenues from financial services business grew by . 
as a result of business volume growth. Revenues gen-
erated
by “Other Entities” amounted to euro  million. This
largely related to the Cirquent Group which was part of
the BMW Group up to  September . The compa-
rable
revenues figure for “Other Entities” in  was euro
 million.
Revenues declined in almost all regions. A drop of . 
was recorded in Germany and one of .  for the remain-
der of Europe. Revenues generated in the Americas region
edged up by . . For the Africa, Asia and Oceania
re-
gions, revenues fell overall by . , despite the fact that
revenues generated in China grew by . .
Cost of sales increased in absolute terms by .  on a
year-on-year comparison. Cost of sales in  include the
impact of expenses recognised for additional risk provi-
sions for residual value risks and bad debts totalling euro
, million. Unfavourable exchange rates and higher raw
material prices also contributed to the increase in cost of
sales. As a result of these adverse factors, the gross profit
fell by . , giving a gross profit margin of .  :
. . The gross profit margin recorded by the Automo-
biles segment was .  : .  and that of the
Motorcycles segment was .  : . .
Sales and administrative costs increased by .  mainly
due to the fact that most of the expenditure incurred to
reduce the size of the workforce is presented within ad-
ministrative costs (euro  million). Sales and administra-
tive costs represented .  of revenues, . percentage
points higher than in the previous year.
Research and development costs decreased by .  to
euro , million and represented .  : .  of rev-
enues. They include amortisation of capitalised develop-
ment costs amounting to euro , million (: euro ,
million). Total research and development costs amounted
to euro , million (: euro , million). This figure
comprises research costs, development costs not recog-
nised as assets and capitalised development costs. The
research and development expenditure ratio for  was
.  : . .
Depreciation and amortisation of property, plant and equip-
ment and intangible assets included in cost of sales, sales
and administrative costs and research and development
costs amounted to euro , million (: euro , mil-
lion).
The positive net amount from other operating income and
expenses increased by .  to euro  million, mainly
reflecting the higher level of income from the reversal of
provisions. In contrast, gains from the sale of assets (in
particular marketable securities) fell significantly.
The profit before financial result, at euro  million, was
euro , million or .  below the previous year’s figure.
The financial result deteriorated by euro  million. Of this
amount, euro  million relates to the line “Other financial
result”. In , this line had included a gain of euro  mil-
lion resulting from the settlement of the exchangeable
bond on shares in Rolls-Royce plc, London. Other financial
result also includes losses on other derivative financial in-
struments, in particular on stand-alone interest-rate deriva-
tives. The decrease in the fair values of these financial in-
struments reflected changes in the interest rate structure.
The result from equity accounted investments improved by
euro  million, and includes, in addition to the result from
the investment in BMW Brilliance Automotive Ltd., Shen-
yang, the Group’s share of the result of the Cirquent Group.
Net interest result improved by euro  million. Within net
interest result, the net expense from the reversal of dis-
counting on pension obligations and the income from the
expected return on pension plan assets increased by euro
 million.
Taking into account the changes in the financial result
described above, profit before tax fell by .  compared
to the previous year. The pre-tax return on sales was . 
: . .