Corporate Research Paper – BMW Group
Bayersiche Motoren Werke Group (BMW Group) is a German company whose operations are “focused on the premium segments of the international automobile markets (BMW Group)”. BMW Group was founded in 1916 and established its main plant and headquarters in Munich, Germany just after World War I in 1922. Those facilities exist as BMW’s headquarters and flagship plant to this day (BMW Group). BMW Group coordinates its activities in more than 150 countries on 6 continents and operates 29 manufacturing facilities in 13 of those countries (BMW Group). Those manufacturing facilities are concentrated in Western Europe with 9 in Germany, 2 in Austria, and 3 in the UK. Its other manufacturing facilities and joint-owned plants are scattered abroad with 3 in North America, 2 in South America, 2 in Africa, and 7 in Asia (BMW Group). With BMW, MINI, and Rolls-Royce, the BMW Group owns three premium brands in the global automobile industry. In addition to its strong position in the motorcycles market with the BMW brand, the BMW Group also offers a successful range of financial services which make up a relatively small portion of BMW Group’s total revenue (BMW Group). BMW Group reports its segmented revenues according to geographical sales. The graph below breaks BMW Group’s overall annual revenues into 4 geographic categories with 3 subcategories: Figure 1 – Overall Revenue Growth by Geographic Operating Segment
Expressed in Euros. Source: BMW Group’s 2012 Annual Report As shown in Figure 1, the European and Asian markets in particular have shown impressive sales growth since 2009 with CAGRs of 7% and 44%, respectively. BMW Group’s revenues from China alone have increased from €2.76 billion to €14.44 billion in 4 years (CAGR:51%). Huge sales growth in the Asian market has proven very lucrative for BMW Group who forecasts further growth, especially in developing markets. Figure 2 – Business Segments as % of Total Revenues
Figure 2 shows BMW Group’s segmented revenue as it relates to total annual revenue. This chart emphasizes, again, the growth of BMW Group’s Asian segment, the relatively flat percentage of sales in the Americas, and the slight decrease in total revenue coming from Europe. With the majority of BMW Group’s manufacturing facilities in Europe, we might see more facilities being built in Asian countries like China as BMW Group shifts its focus to lucrative emerging markets in the future. Figure 3 – Revenues by Segment for Reporting Purposes
For reporting purposes, BMW Group breaks their statements into categories: Automotive and Other (Motorcycles, Financial Services, Other Entities, and Eliminations). Figure 3 offers an example of the detailed breakdown with subcategories included. See Appendix A for further details.
Source: BMW Group Annual Statement
As a percentage of total revenue, Figure 3 indicates that automotive sales made up 91.4% of BMW Group’s revenue in 2012 and 91.9% in 2011. This slight downward trend can be attributed to the growth of BMW Group’s financial services sector which is relatively new having begun in 1993 (BMW Financial Services). Figure 4 – Growth of Balance Sheet Components
Source: BMW Group Annual Statement
Figure 4 offers an insightful glance at BMW Group’s Asset/Liability balance. One important note is the debt/equity ratio shown on the right side of the graph. BMW Group states its equity ratio at 23.1% in 2012 and 22% in 2011 (BMW Group). This means BMW Group chooses to finance its operations mostly with debt. To aid that decision, BMW Group has an S&P short-term credit rating of A-1 and a long-term credit rating of A+ allowing BMW Group to borrow at lower rates (BMW Group). This will be discussed further in our risk management policy overview. Another important note is the ratio of current assets/non-current assets which sits around 33%. BMW Group’s current assets...
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