Approximately EUR36 billion of rated debt affected
Frankfurt am Main, September 24, 2010 -- Moody's Investors Service has today changed the ratings outlook
on Bayerische Motoren Werke Aktiengesellschaft ("BMW") and
its rated subsidiaries to stable from negative. The company's
A3 long-term ratings and Prime-2 short-term ratings
remain unchanged.
The outlook change reflects BMW's significant improvements in operating
performance and key credit metrics in the first half of 2010 compared
to previous year's period which exceeded Moody's expectations.
Furthermore, Moody's anticipates a sustainable trend of profit
and cash flow improvements based on the company's various new model
launches planned within the next two years that benefit from an improved
cost position resulting from BMW's efficiency program.
BMW's A3/P-2 ratings continue to reflect (i) the company's
leading position as premium manufacturer with a strong brand equity value
for the BMW brand in particular; (ii) the group's leading position
among premium manufacturers in reducing CO2-emissions under its
EfficientDynamics strategy; (iii) BMW's global presence although
still dominated by Europe and North America as well as (iv) its broadening
product range and rising number of model variants reducing the dependency
on the success of a single model.
BMW's rating continues to be challenged by relatively high R&D
costs per unit given its small comparative scale in order to comply with
stricter CO2-emission regulations and the development of electronic
vehicles as well as persistent pressure on residual values in Europe.
Backed by strong light vehicle demand in most markets outside Europe (especially
China), BMW Group's unit sales rose 13.1% in
the first half year 2010 compared to the same period last year.
Deliveries rose further to +12.5% from Jan-Aug
2010 compared to the previous year's period.
The company reported consolidated revenues of EUR27.8 billion in
the first half year 2010 up 13.5% from H1'09 and a
Group EBIT of EUR2.2 billion of which EUR1.6 billion have
been generated from the segment Automobiles.
The company expects a continued strong momentum and a strong Q3'10
which led the group to raise its outlook for the fiscal year 2010 EBIT
margin to above 5% for the segment Automobiles. The reported
EBIT margin in the segment Automobiles reached 6.6% in H1'10
with 9.6% in Q2'10 (2.7% in Q1'10).
Moody's also positively notes that reported free cash flow in the
segment Automobiles was EUR1.2 billion in the first six months
period despite the significant increase in production.
BMW has ongoing financing needs related to the funding of its customers
while the industrial activities should be largely self funding.
As at the end of the second quarter 2010, the company's sources
of cash included 9.3 billion in cash and marketable securities
as well as the US$8 billion headroom under its unutilized credit
facility, combined with an improvement in expected operating cash
flow. In addition, Moody's recognizes BMW's U.S.
bank subsidiary to have access to the Federal Reserve Bank's refinancing
window by pledging certain qualifying assets. In sum these available
cash sources are deemed as sufficient to cover potential needs arising
from capital expenditures, dividend payments, working capital,
day to day needs, debt maturities and the planned funding of around
1.5 billion pension obligations over the next twelve months.
Longer term, the ratings could be upgraded in case of (i) at least
stable market share development in key markets driven by the successful
renewal of existing products, the introduction of new products,
the successful penetration in emerging markets as well as a positive consumer's
perception of BMW's leading position in reducing CO2-emissions
among the premium car manufacturers; (ii) sustainable FCF generation
above 1.5 billion despite rising capital expenditure needs;
and (iii) an EBITA margin of above 7.0% as well as (iii)
interest cover (EBITA/interest Expense) above 5.0x.
Outlook Actions:
..Issuer: BMW (UK) Capital plc
....Outlook, Changed To Stable From
Negative
..Issuer: BMW Australia Finance Ltd.
....Outlook, Changed To Stable From
Negative
..Issuer: BMW COORDINATION CENTER V.O.F.
....Outlook, Changed To Stable From
Negative
..Issuer: BMW Finance N.V.
....Outlook, Changed To Stable From
Negative
..Issuer: BMW Japan Finance Corp.
....Outlook, Changed To Stable From
Negative
..Issuer: BMW Malta Finance Ltd.
....Outlook, Changed To Stable From
Negative
..Issuer: BMW US Capital, LLC
....Outlook, Changed To Stable From
Negative
..Issuer: Bayerische Motoren Werke Aktiengesellschaft
....Outlook, Changed To Stable From
Negative
The last rating action on BMW Bank was taken on April 3, 2009 when
the long- and short term debt ratings of BMW were downgraded to
A3/P-2 from A2/P-1 under review for possible downgrade.
The principal methodology used in rating BMW was Moody's "Global
Automobile Manufacturer Industry Rating Methodology", published
in December 2007 and available on www.moodys.com in the
Rating Methodologies sub-directory under the Research & Ratings
tab. Other methodologies and factors that may have been considered
in the process of rating this issuer can also be found in the Rating Methodologies
sub-directory on Moody's website.
Headquartered in Munich, Germany, BMW is the only European
car manufacturer focused entirely on the premium segment, manufacturing
and selling the BMW, MINI and Rolls-Royce brands as well
as motorcycles. The group's financial services business offers
leasing, retail and dealership financing, and holds a bank
license through its wholly owned subsidiaries BMW Bank GmbH and BMW Bank
of North America, Inc. In fiscal 2009 the group generated
revenues of 51 billion.
Frankfurt am Main
Falk Frey
Senior Vice President
Corporate Finance Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Paris
Eric de Bodard
MD - Corporate Finance
Corporate Finance Group
Moody's France SAS
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
Moody's changes outlook on BMW's A3 ratings to stable from negative.