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UPDATE 2-M&A no longer taboo for new BMW chief exec
Thu Mar 15, 2007 1:13PM EDT
(Adds management comments from analyst call)
By Christiaan Hetzner
FRANKFURT, March 15 (Reuters) - BMW (BMWG.DE: Quote, Profile, Research), the world's largest luxury carmaker, will consider all options including mergers and acquisitions as part of an ongoing strategic review, its chief financial officer said on Thursday.
"(Chief Executive) Dr (Norbert) Reithofer said very clearly that every part of the business, every option, everything is being under review, we have set ourselves no limits," Stefan Krause told analysts. It was too early to answer their questions about whether M&A may play a role in the future, he said.
Since its failed acquisition of British mass market carmaker Rover in 1994 that it sold six years later, BMW has avoided any large deals, preferring to grow revenues through its brands -- BMW, Mini and Rolls-Royce.
Reithofer, who took over as CEO in September, said it was time to rethink the group's plans for the future.
"We need a strategy review because we started a strategy process in 2001 for our company and we looked ahead five-to-seven years. And now we said it's time to start again a strategy review of the BMW group and I can assure you we looked ahead into the year 2015 to 2018," he said.
Reithofer signalled BMW would develop more fuel-efficient cars that unite improved aerodynamics, lightweight construction, less thirsty engines and better energy management.
MORE LOCAL CONTENT
The plans might also encompass better transparency for capital markets, with clearer guidelines on such aspects as cash management levels and even sales volume growth on a quarterly basis to indicate earnings trends.
"The strategic review is all about how we will further financially develop the group and how we can have a positive trend in our margins and profitability," Krause said.
"The main driver that has not allowed us to show the good underlying business performance in our bottom line has mainly been the currency effect, and obviously as we have said several times to increase our natural hedging position is a topic in this discussion," he added.
BMW suffered foreign exchange headwinds of 666 million euros ($880 million) last year and 677 million in 2005.
"At the end of the day (as a) still-small car manufacturer we will have to see how we can best deal with that effect. And therefore clearly an improvement in margins and improvement of shareholder returns as well as benefits for all of our other stakeholders are part of the review," the CFO said.
Reithofer said the company must boost local content production in markets such as the United States.
"If I look two-to-three years ahead, we need a production volume in the United States of roughly 200,000 units or more and we have to buy more goods in NAFTA, that means the United States, Mexico and Canada," the CEO said.
NAFTA accounted for 9 percent of group procurement in 2006.
BMW built 105,000 vehicles in the United States last year, down from 167,000 in 2003. The U.S. market generated 22.8 percent of group vehicles sales last year.
Asked whether BMW may decide to repurchase up to 10 percent of its shares as authorised, Krause said buybacks served more as a flexible short-term tool along with its less flexible dividend policy to boost total shareholder return when the bottom line lags the group's underlying performance.
"The 10 percent is just a German rule. Whenever we announce 10 percent that doesn't mean we're thinking about it. It's just that's what the law allows you in Germany and that's why we use it. Sp that's not an indication for any intentions of this management team," the CFO answered.
Source: Reuters
UPDATE 2-M&A no longer taboo for new BMW chief exec
Thu Mar 15, 2007 1:13PM EDT
(Adds management comments from analyst call)
By Christiaan Hetzner
FRANKFURT, March 15 (Reuters) - BMW (BMWG.DE: Quote, Profile, Research), the world's largest luxury carmaker, will consider all options including mergers and acquisitions as part of an ongoing strategic review, its chief financial officer said on Thursday.
"(Chief Executive) Dr (Norbert) Reithofer said very clearly that every part of the business, every option, everything is being under review, we have set ourselves no limits," Stefan Krause told analysts. It was too early to answer their questions about whether M&A may play a role in the future, he said.
Since its failed acquisition of British mass market carmaker Rover in 1994 that it sold six years later, BMW has avoided any large deals, preferring to grow revenues through its brands -- BMW, Mini and Rolls-Royce.
Reithofer, who took over as CEO in September, said it was time to rethink the group's plans for the future.
"We need a strategy review because we started a strategy process in 2001 for our company and we looked ahead five-to-seven years. And now we said it's time to start again a strategy review of the BMW group and I can assure you we looked ahead into the year 2015 to 2018," he said.
Reithofer signalled BMW would develop more fuel-efficient cars that unite improved aerodynamics, lightweight construction, less thirsty engines and better energy management.
MORE LOCAL CONTENT
The plans might also encompass better transparency for capital markets, with clearer guidelines on such aspects as cash management levels and even sales volume growth on a quarterly basis to indicate earnings trends.
"The strategic review is all about how we will further financially develop the group and how we can have a positive trend in our margins and profitability," Krause said.
"The main driver that has not allowed us to show the good underlying business performance in our bottom line has mainly been the currency effect, and obviously as we have said several times to increase our natural hedging position is a topic in this discussion," he added.
BMW suffered foreign exchange headwinds of 666 million euros ($880 million) last year and 677 million in 2005.
"At the end of the day (as a) still-small car manufacturer we will have to see how we can best deal with that effect. And therefore clearly an improvement in margins and improvement of shareholder returns as well as benefits for all of our other stakeholders are part of the review," the CFO said.
Reithofer said the company must boost local content production in markets such as the United States.
"If I look two-to-three years ahead, we need a production volume in the United States of roughly 200,000 units or more and we have to buy more goods in NAFTA, that means the United States, Mexico and Canada," the CEO said.
NAFTA accounted for 9 percent of group procurement in 2006.
BMW built 105,000 vehicles in the United States last year, down from 167,000 in 2003. The U.S. market generated 22.8 percent of group vehicles sales last year.
Asked whether BMW may decide to repurchase up to 10 percent of its shares as authorised, Krause said buybacks served more as a flexible short-term tool along with its less flexible dividend policy to boost total shareholder return when the bottom line lags the group's underlying performance.
"The 10 percent is just a German rule. Whenever we announce 10 percent that doesn't mean we're thinking about it. It's just that's what the law allows you in Germany and that's why we use it. Sp that's not an indication for any intentions of this management team," the CFO answered.
Source: Reuters
