Bayerische Motoren Werke Aktiengesellschaft (BMW) Earnings Call Transcript & Summary

Ladies and gentlemen, dear shareholders, I hereby open the 100th Ordinary Annual General Meeting of Bayerische Motoren Werke Aktiengesellschaft, which we broadcast in its entirety this year live on the internet from BMW Welt in Munich. My name is Norbert Reithofer, and as the Chairman of the Supervisory Board and a Statutory Chairman of this AGM, welcome to all of you on behalf of the Supervisory Board and the Board of Management. All members of the Board of management take part in this AGM here at BMW Welt. And in addition to this, all Supervisory Board members follow this AGM, most of them are present here at BMW Welt. The other members of the Supervisory Board who, due to the current circumstances couldn't travel to Munich, use the live stream. So accordion will come also to you. This AGM is a very special one in 2 ways. On the one hand side, we have a round anniversary as this is the 100th Ordinary AGM. Now many of you will remember that we already celebrated our 100th anniversary of the company 4 years ago. But during the changeful history of the past century, not every year an Annual General Meeting could take part due to the [ wars ]. And this leads to the fact that today, 104th year of the company, we have our 100th Ordinary Annual General Meeting. You've just seen 6 of our fascinating vehicles, linking our past and our future. Innovative spirit, passion, independence in thought and not the least, the trust into our attractive products, have made it possible that we could master some major challenges in the past. If you're familiar with your company, then you know that the BMW associates are often able to put up special efforts in challenging situations. Thanks to the loyalty of our employees and thanks to the low fluctuation, we can rely on a high degree of experience in the core areas of this company and all hierarchy levels. And that is valuable also when it comes to overcoming crisis. And that is something that we can rely on together. It's exactly this strength of BMW that lets me look optimistic into the future. We will also master the current challenges. Individual mobility will have a future even after COVID-19. There will still be sheer driving pleasure, and there will still be passionate BMW drivers. I'm deeply convinced of that. Now talking about the present and talking about corona. We come to the second way in which this AGM is different because the 100th Ordinary AGM is the first one in the history of BMW AGMs, that is a purely virtual one, which means that you, dear shareholders, can follow our AGM only on the Internet, and unfortunately, cannot be present here in Munich, here in the BMW Welt on in the area, which we call premier. In addition to the members of the Board of Management and the Supervisory Board, we only have the voting representatives of the company present as representatives of the shareholders. The German regulator enabled this special form of an AGM without the physical presence of shareholders in the framework of special regulation only a few weeks ago, and we're glad that we can make use of this option because handling a major event wouldn't be permitted in the current situation to avoid any infection risks. In the past, more than 5,000 people took part in the BMW Annual General Meetings. So sticking to the traditional form of this event would have meant that we would have had to postpone this AGM indefinitely. And then the important resolutions that we'll be voting about today couldn't have been taken in a timely fashion. That is why we're convinced that this would not have been in the interest of our shareholders. For this reason, we, as the Supervisory Board, approved of the decision of the Board of Management to perform this AGM as a virtual AGM. The Annual General Meeting was convened in due form by publication in the Federal Gazette on the 6th of April 2020. The documentation of this publication is present to notary public, [ Dr. Fascias ], who will take the minutes here on site. All documents for the shareholders have been made available to the shareholders ever since the invocation on the website of the BMW AG. And there, you can also find explanations to the rights of shareholders. That I would like you to familiarize yourself with. This AGM will be broadcast in its entire length live on the Internet. The speeches of the Chairman of the Supervisory and Management Board and of the CFO will be broadcast for the interested public without any access restrictions. Registered shareholders can then follow the whole AGM on -- via the online service and the necessary login data for the online service can be found in the registration confirmation at the top right. Registered shareholders can also cast their votes by absentee vote in the -- via the online service during the AGM or give proxy with instructions to the voting representatives of the company. Through the online service up to 2 days ago at 12 o'clock, you could ask your questions to the Board of Management regarding today's agenda and the questions received will be answered later on during the AGM. In the online service, you also have the opportunity until the end of this AGM to raise objections to be entered into the minutes by the notary public if you deem a resolution of the AGM to be void or unlawful. A precondition for this is that you exercise your voting right or have given the necessary authorization. We would ask you for your understanding that for organizational reasons, we cannot receive any motions of shareholders to votings during this AGM because that would not be fair to other shareholders who've already cast their votes or have handed in the instructions and wouldn't be familiar with such a vote. And in addition to this, it's not -- it wouldn't be secured that an adoption of the voting possibilities during this AGM would be technologically possible and understandable for all shareholders. It was, however, possible to file motions to amend the agenda before the AGM, and we haven't received any such motions. In for as counter motions were handed in by shareholders in due time, we published them according to the general rules on our website to let you inform -- let you know about these. And I will come back to this later on during the ballots. We haven't -- have not used to the possibility to reduce the convocation period to make sure that and/or the registration process would be secured for our shareholders. As in the past, audio and video recordings of our AGM are not permitted. I would ask you for your understanding for this, and we will also not take any verbatim minutes of the AGM. Ladies and gentlemen, if you've ever been present personally at one of our BMW AGMs, you know that traditionally we honor the deceased of our company before we enter into the agenda. This year, however, we don't want to just honor the deceased colleagues here at BMW because the pandemic for us is not just a global economic catastrophe, but we are well familiar with the fact that for many people, it is also human tragedy. That is why I would ask everyone present here to stand for a moment of remembrance. BMW is an international company. We cooperate with colleagues and business partners, and we have customers in many countries around the world. It was with great sadness that over weeks, we've followed the daily news about how many people have been affected with COVID-19 and how many could not be saved. This is why we want to express our sympathy and a close solidarity to the relatives of the deceased all over the world. We remember the deceased BMW colleagues with gratitude. Ladies and gentlemen, you've honored the deceased and their families and I would like to thank you for that. Let me now give you a short overview about what's been planned for this AGM. First of all, I will report to you about the work of the Supervisory Board in the past business year. Following that, our Chairman of the Board, Mr. Zipse, will report on the past fiscal year and give you an outlook. Of course, Mr. Zipse will also talk about the effects of the COVID-19 pandemic onto the BMW Group and the company's response to that. After that, our CFO, Dr. Peter, will inform you about the utilization of authorized preferred capital since our last AGM. Following that, we will answer the questions of the shareholders that we received in due time. After answering the questions, I will announce the start of the vote here in the assembly hall. This will then be the last possible point in time to hand any votes or proxies with instructions to the voting representatives of the company via the online service. Following that, we will then have the vote on the resolution and election proposals here in the assembly hall. The list of participants is accessible. You can find the list of participants together with the attendants in the document area of our online service later on. Ladies and gentlemen, with this, we enter into the agenda of today's Annual General Meeting, and we start with agenda Item 1, presentation of the company financial statements and the group financial statements as approved by the Supervisory Board, together with the combined company and group management report for the financial year as of the 31st of December 2019, the explanatory report of the Board of Management on the information required pursuant to Section 289a and Section 315a of German Commercial Code HGB and the report of the Supervisory Board for the financial year 2019. Those documents have been made available on our website and here in the assembly room. You can find the written reports of the Supervisory Board at the beginning of the business report. And I can, therefore, just focus on some of the most important points. I would like to start with changes in the compensation of the Supervisory Board and the Board of Management ever since our last AGM. Already in last year's AGM, I introduced you to Dr. Vishal Sikka. In May 2019, he was elected by the AGM as a representative of the employers to the Supervisory Board. He supports the Supervisory Board with special expertise in the fields of artificial intelligence and digitalization. Due to the current situation, it was impossible for him to travel from the United States to Munich. On the side of the employee representatives, we've renewed members into the Supervisory Board since the last AGM in Verena zu Dohna-Jaeger as the representative of the Trade Union IG Metal and Dr. Thomas Wittig as the representative of the executives, and they have special strengths on the fields of mobility, human resources, accounting and financial services. There were also important changes in the composition of the Board of Management after the AGM of last year. On the 15th of August 2019, the mandate of our Chairman of the Board, Mr. Krüger, concluded in mutual agreement after Mr. Krüger had announced to me that he would not run for a further term of office. We thank Mr. Krüger for his successful work and the important actions that he contributed during his long-standing work for the BMW Group as the Chairman of the Board and member of the Board and in his functions before that. And we thank him for all the passion he's brought to his job. With the effect of the 16th of August 2019, the Supervisory Board appointed Mr. Oliver Zipse as Chairman of the Board. Mr. Zipse before that has been responsible on the Board of Management for the production division ever since 2015. He's worked for the BMW Group since 1991. And in addition to his expertise in production, especially his experience from earlier strategic leadership functions, contribute to his new job. With the effect of the 1st of October 2019, Dr. Milan Nedeljkovic was appointed member of the Board of Management responsible for the production division. Dr. Nedeljkovic is a graduate engineer and has been with the BMW Group since 1993. After heading our plants in Leipzig and Munich, he recently led the company area Corporate Quality. The mandate of Ms. Milagros Caiña Carreiro-Andree ended by mutual agreement on the 31st of October 2019. We would like to thank Ms. Caiña Carreiro-Andree for her successful contribution to the further development of the HR division of the BMW Group. With effect from the 1st of November 2019, Ms. Ilka Horstmeier was appointed board member charged with HR and Labor Director. Ms. Horstmeier is business graduate and has worked since 1995 for the BMW Group. Following different executive positions in HR and production, she recently headed the Dingolfing plant. Mr. Peter Schwarzenbauer left the Board of Management after reaching the standard retirement age on the 31st of October 2019. We thank him for his committed and successful work, especially for all his impasses to the digitalization of the company. In the framework of the new setup of the Board responsibilities, the responsibility for all the brands of the BMW Group was clustered in the division, Customer, Brands and Sales under Pieter Nota. Thus, the Board of Management was reduced in size to 7 members. As already announced in the press release, the Supervisory Board in March of this year in the framework of its succession planning appointed Frank Weber with effect from the 1st of July 2020 as new member of the Board. He will take over the development division. The background to this is that Klaus Fröhlich whom we value a lot will turn 60 years, 60 this year and would not have been available for a further long term in office. Mr. Weber has a graduate mechanical engineer, has long-standing executive experience in the automotive industry. He joined the BMW Group in 2011 as Head of Overall Vehicle and is today responsible for the product line, Rolls-Royce and the BMW luxury class. So our management team is well set up for the future. We wish our Chairman of the Board and the other members of the Board of Management a further successful cooperation and all the best for the upcoming challenges. That brings me to some of the focal points of our work on the Supervisory Board in the past fiscal year. The Supervisory Board closely monitored the business development and the financial situation and has -- and gave advice to the Board of Management in important discussions and plans. A special focus of the Supervisory Board was on the strategic further development of the company. Central strategic fields were and still are digitalization and electrification just as well as autonomous driving. We dealt in detail with the global trade conflicts and the different Brexit scenarios. Focal points from different boards segments were also on our agenda, amongst them, the core elements and the strategy of group financing, the strategy and risk situation in our Financial Services segment, the contribution of the purchase and supply network division to profitability and future viability of the BMW group and the new setup of our sales organization just as well as the status and the strategy regarding our brand BMW. The Board of Management informed us about important current developments, amongst them: the joint venture with Great Wall Motor for the production of many vehicles in China; just as well as the joint venture with Daimler in the field of mobility services; the cooperation for battery cell production with Northvolt; the opening of our BMW plant in Mexico; and the competence center battery cell here in Munich; just as well as the new technology and future trade fair #NEXTGEN here in the BMW Welt. We continuously and intensively dealt with the investigation of the EU commission regarding the Cartel allegations connected to earlier working groups of some German car manufacturers. After the EU commission in April of 2019 conveyed its statement of objections to the company and the company then followed a significant reserve for a possible fine, the Audit Committee had a special session on this meeting. In it, the Audit Committee was informed in detail about the allegations of the EU commission and the point of view of the company, which rejects the allegations. The Supervisory Board receives advice by an independent antitrust law experts in this procedure, and this expert confirmed the legal position of the company. The Supervisory Board will continue to monitor these procedures closely. The Board of management, in addition to this, reported in detail to the Audit Committee about the amicable conclusion of the procedures of the Federal Cartel Office initiated in 2016 regarding the purchase of long steel and the acceptance of a fine notice of EUR 28 million in November 2019 by the BMW Group. And the Board of Management confirmed in this regard that this exchange did not have any effect on the sales prices of vehicles of the BMW Group. We also dealt with the heightened structure of the remunerations of the Board members. And for the business year 2019, we assessed it and came to the conclusion that the compensation of the Board members is appropriate in its height. In Personnel Committee, we also dealt with the question in how far the business impact of the pandemic will affect the remuneration of the Board in the year 2020. And against the backdrop of the current situation, the following remark is important. Around 70% of the annual compensation of the Board is based on variable parts. Only around 30% of the compensation is based on fixed parts. So if the company's result drops or the company return on equity falls below the minimum levels of EUR 3 billion or 3%, then the result component of the compensation of the Board of Management will be completely taken out. A reduction of the return or the profit in 1 fiscal year also has an effect on multiyear components, and therefore on the compensation of the Board of management over several years, I'm talking about the performance cash plan here, which depends on the results in 3 business years in a row and which will only be paid out after these 3 years, which means, for example, that the reduction in profit in the year 2020 will still have an effect on the compensation of the Board members for the years 2018 and 2019. So from today's point of view, the cash compensation of a member of the Board for the business years 2018, '19 and '20 compared to the planned values would drop by around 50% of an annual compensation if in 2020, we don't reach the bandwidth of 3% return or EUR 3 billion group result for this -- for the year 2020. As for the years 2021 and following, we had taken the current figures at the time into account. The reduction will probably be even greater as the Board members also purchase BMW shares and hold them over 4 years. Price fluctuations are immediately reflected in the portfolio. And due to the higher success component, this -- the cash value will be reduced much more amongst the executives than amongst the employees. What I want to underline with this is that our success-oriented compensation system for the Board of Management without a correction of the Supervisory Board or one-sided declarations of the Board members reaches its goal and it creates a compensation that is suitable to the situation of the company. And of course, we also make sure that the individual performance of the Board members has taken into account. Last year, we dealt with the implementation law on the rights of shareholders directive and the changes in the German Corporate Governance Code, and we planned that for the fiscal years from 2021 onwards, in line with the legal recommendations and the new demands of the German Corporate Governance Code, we will rework the remuneration system, which will then present to the Annual General Meeting in the fiscal year 2021 for approval. We also assessed our corporate governance in the past fiscal year. And in December 2019, issued a declaration of compliance to the German Corporate Governance Code. We will follow all the recommendations of the code in the version that was valid at the time of decision. That is the version of the 7th of February 2017. In 2019, in the framework of a preview, we also dealt with the changed proposals of the government commission, German Governance Code and have already implemented some of the recommendations. So for the Supervisory Board, you will find an overview of the participation, the attendance of meetings and the attendance or participation rate in the meetings of the Supervisory Board and the committees in 2019 overall was at over 99%. And we also reworked the rules of procedure of the Supervisory Board and presented this on our website. Furthermore, we dealt with the implementation of the diversity concept of the Board of Management and support the aim to increase the share of women, especially in leadership functions. In a rework declaration on corporate governance, we brought a detailed overview on our appointment objectives for the Supervisory Board of the competence profiles and the individual areas of expertise of the members of the Board of the Supervisory Boards. And I would like to refer you to that to avoid any repetitions here. But we've come to the conviction that the Supervisory Board in its composition of the 31st of December 2019 fulfills our appointment objectives. We've explained our accounting audits as of the 31st of December 2019 in detail in the financial statements. PwC, Wirtschaftsprüfungsgesellschaft, for the first time acted as our statutory auditor. It audited the statements drawn up by the Board of Management on the 10th of March and which was then updated regarding the forecasts on the 31st of -- on the 16th of March and assessed this and answered after a supplementary audit issued an unqualified audit opinion for the group and company financial statements on the 16th of March 2020. The Supervisory Board, as proposed by the Audit Committee, approved of the result of the audit after its own thorough assessment on the 17th of March 2020. No objections needed to be raised, and thus, the financial statements are adopted. Audit committee and Supervisory Board also checked the proposal of the Board of Management for the utilization of unappropriate profits. And with the dividend, shareholders participate in the result of the past business year. The proposed dividend of EUR 2.52 per share of preferred stock and EUR 2.50 per share of common stock is already lower compared to the previous year 2018. We still deem this proposal appropriate. The Board of Management explained to the Audit Committee and the Supervisory Board in the second half of April 2020 in detail on the situation of the company and has confirmed that the liquidity of the company and its financing possibilities are robust enough that we can maintain this dividend proposal. Mr. Zipse will also talk about this dividend proposal in his speech. Finally, I would like to talk about the work of the Supervisory Board since the balance sheet meeting at the mid of March. For the BMW Group, the economic effects of the pandemic and the lockdown measures have become more and more perceivable. Mr. Zipse and Dr. Peter therefore provided the Chairman of the Audit Committee, Dr. Klein, myself in shorter intervals with updates on the situation. Audit committee, executive committee and personnel committee had additional meetings and telephone conferences. The Supervisory Board at the time between the meetings received a detailed written report on the situation. And we will, of course, monitor the ongoing developments just as diligently. Ladies and gentlemen, Mr. Zipse will explain to you how the company responds to the current challenges. In such a situation, the people at BMW are decisive. And I'm convinced that for BMW, thanks to its committed employees, this crisis also offers an opportunity. The willingness of the employees and the Board of Management to bring their best efforts and the passion for the company and its products make us optimistic that the BMW Group will continue to shape the individual mobility of the future as a technological trailblazer in a very successful way. That is why on behalf of the Supervisory Board, I want to thank all the members of the Board of Management and all employees all around the world cordially. And these things on only just referred to the efforts in the business year 2019, but also to the cooperative efforts to bring this company back on its track to success. Following the report of the Supervisory Board, I now would like to talk about some of the additional agenda items and the resolution proposals of the Supervisory Board. Under Item 5 of the agenda on the recommendation of the Audit Committee, the Supervisory Board proposes that PricewaterhouseCoopers GMBH Wirtschaftsprüfungsgesellschaft be appointed as company and group auditor for the financial year 2020 and as auditor to carry out a review of the condensed interim group financial statements and interim group management report for the first 6 months of the financial year 2020. The experiences with PwC in the first year statutory auditor were positive. Under Item 6 today, we have elections to the Supervisory Board, 2 Supervisory Board members to represent shareholders need to be elected. And to fulfill the legal gender quota, at least 1 woman needs to be elected to the Supervisory Board. With the end of today's AGM, Ms. Köcher will leave the Supervisory Board. Dr. Köcher has been a member of our Board since 2008 and has enriched the work of the Supervisory Board with many constructive contributions. We thank her for the trustful cooperation in those -- all those years and wish her all the best and especially health, especially during these times. Based on the recommendations of the Nomination Committee, the Supervisory Board proposes that with effect from the end of today's meeting, AGM, Ms. Anke Schäferkordt be elected as a new representative of the shareholders to the Supervisory Board for a period of office up to the close of the Annual General Meeting, at which the ratification of the acts of the Supervisory Board is resolved for the financial year 2024. I myself run, with the support of the nomination committee and the Supervisory Board, for reelection for the same time frame. We've made our CVs available on the invitation to the Annual General Meeting and on our website. I would like to introduce to Mr. Schäferkordt who's present here as a guest at the BMW Welt in Munich. Ms. Schäferkordt has longstanding experience in executive functions from her work at the Bertelsmann Group, the largest German media company. She has a lot of experience in the fields of company management, communication and media. Her management, competence and her fine sense for social future topics, she impressively showed amongst others as the Managing Director of the Media Group RTL Germany. Moreover, she is an independent financial expert. We're convinced to have Ms. Schäferkordt with her skills and her experience would really complement and strengthen the Supervisory Board of BMW. Now my own person, I've been a member since 2015 and Chairman of the Supervisory Board of BMW AG. I'm a member and Chairman of the Executive Committee of the Personnel and the Nomination Committee of the Supervisory Board and member of the Audit and Mediation Committee of the Supervisory Board. Up to 2015, I was Chairman of the Board of Management of the company. So my time on the management board ended 5 years ago. Due to my longstanding experience in executive functions in the BMW Group and due to my training as a graduate engineer, I am able to both support and monitor the Board of Management in strategic and technological questions. Due to my experience from heading the company during the financial and economic crisis of the years 2008 and 2009, I can also contribute these experiences to my work on the Supervisory Board. The Supervisory Board deems myself and Ms. Schäferkordt as independent. Under Item 7, we propose a change in the compensation of the Supervisory Board. Other than in the past, the proposed compensation will be a pure fixed compensation, which follows the recommendations of the new German Governance Code and the proposal of many investors. Ladies and gentlemen, the remuneration of the Supervisory Board hasn't been adapted ever since the year 2013, while the responsibilities of the Supervisory Board have grown in the meantime. That's why the compensation level of the last years did not seem an inappropriate benchmark for the transfer into fixed compensation model. Compared to the compensation of the past 3 years, the proposed remuneration of a member of the Supervisory Board without additional functions in total will go down around 5%. Also, the new fixed term compensation of additional functions, including that of the Chairman is, at around minus 5% compared to the previous year. We further suggest that the compensation for the members and the Chairman of the Audit Committee will be increased compared to the previous year, which reflects the efforts and the responsibilities of the Audit Committee, which have grown over the past years. You can see a comparison of the proposed new version compared to the current articles of incorporation on our website, and we hope that this proposal will also find your approval. With this, I would like to hand over to Mr. Zipse and ask him for his report on the past business year and for an outlook on the ongoing business year. [Presentation]

The 100th Annual and General Meeting of BMW AG that their shareholders says a lot about your company, it is strong and robust, adaptable and innovative. It takes a stance and acts accordingly in a responsible manner. That is how BMW has shaped mobility over the decades. What else does it take? Values. We live by and respect the solidarity in good times and in bad. A constructive relationship between management and employee representatives, this is what makes BMW the 100th Annual General Meeting. It also says something about you, our shareholders, you take a long-term view just like us, you give us support and stability, you enable us to be bold and look to the future. That is how we, at BMW, are able to purposefully chart our own course. So let me start by saying thank you on behalf of the Board of Management and all our associates worldwide. I would like to combine the thank you with a warm welcome to all our shareholders. The 100th BMW Annual General Meeting is also the first in our history to be held virtually. I see this positively as well. In this way, we can share information with you and answer your questions without putting your health at risk, particularly in the current situation. You want to know what steps are we taking. Postponing this event was not an option for us. Of course, I would prefer to stand before you in person today, looking into your eyes instead of looking into a camera. We all, during the coronavirus pandemic, have realized how much we need personal contact, not just with our families but also our friends, colleagues and social groups. And even though we are using digital options now more than ever, BMW has always been a joint project. When we are successful, it is thanks to many people: you, as shareholders, our employees and their families, our suppliers also, of course, our retailers and also always society. BMW is a partner of cities and communities in all countries where we operate in. We call this a stakeholder approach that is lived, and we have -- and that has always served us well. 2019 as a financial year was not easy. In April, the European Commission provided us with a statement of objections relating to its antitrust allegations. In the first quarter of 2019, we made a provision of almost EUR 1.4 billion for this purpose. Nevertheless, we did meet our adjusted targets for 2019. We sold more vehicles than ever before, over 2.5 million BMW MINI and Rolls-Royce cars and over 175,000 BMW motorcycles. This represents a ninth consecutive all-time sales high, and I would like to express my sincere thanks to all our customers worldwide. You are already familiar with our financial figures from 2019. Group revenues of over EUR 100 billion. Group earnings before tax of more than EUR 7 billion, significantly lower than the previous year. The EBIT margin of 4.9% in the automotive sector was within our adjusted target range. Without the effect of the provision, the margin would have been 6.4%. We invested over EUR 6 billion in research and development. Today, we are proposing a dividend of EUR 2.50 per share of common stock and EUR 2.52 per share of preferred stock. In the current situation, a lot of people are asking is it even appropriate to pay out a dividend? How is this compatible with paying short-time allowance? And we have naturally given this a lot of thought. In March, around 20,000 employees at our German plants were working short-time hours. In April, there were just over 30,000. The short-time allowance is paid from contributions made towards unemployment insurance, which is funded in equal parts by employers and employees. This secures jobs during times of crisis. First, we had to exhaust our many flexibility options, including systematically using up overtime hours and asking employees to take leave. We are topping up the short-time allowance to up to 93%, in line with our agreement with the German Works Council. The dividend is clearly a way of sharing the company's success with you, our shareholders. And this happens retroactively for the prior financial year. Anyone who buys BMW shares is investing for the long term, and we consider it a privilege to be able to make business decisions with a long-term view. And that is because you, our shareholders stand by us, like you are today during the coronavirus pandemic. Your company can be relied on and the same applies to our dividend policy. Let us not forget that our employee profit sharing is also tied to the dividend and debt. Our employees achieved great things in 2019 is something that I'm convinced of. Many of our active and former employees would have normally joined us today in the Olympiahalle in Munich. I would like to take this opportunity to say how much I respect and appreciate what our employees have achieved. Thank you for your hard work and dedication last year. At the same time, this recognition comes with an expectation. Now is the time to mobilize all our forces. 2020 will be extremely challenging, but we remain optimistic. We have learned from experience throughout our history. We have always faced up to challenges and shown that BMW can handle the crisis. And even more so, upheavals have often enabled us to create new beginnings. In every crisis, we have to set the course for the next chapter in our company's history. That is how we also turn a crisis into progress. Several examples prove this. For instance, at the legendary Annual General Meeting on the 9th of December 1959, BMW was on the verge of being taken over by Daimler. Then entrepreneur, Herbert Kunz stepped in and offered us a future. With the revival of the new class, BMW went on to change mobility and become profitable. Another example, in the early 1970s and in the midst of the oil crisis, we opened our plant in Dingolfing. Next year, 2021, there, our highly innovative iNEXT will roll off the production line there. Or during the 2008, 2009 global economic and financial crisis, we launched our e-mobility initiative. Everything required for climate protection today, our BMW i3 has offered since 2013. It is the only car with a sustainable 360-degree approach from supply chain to recycling. At BMW, we've always considered the future perspective. And that is something I would like to talk about today: first, we are relying on flexibility and sound judgment to guide your company through the coronavirus pandemic; and second, we're continuing to invest in our successful future, whilst being a responsible corporate citizen in our actions. Let's turn to the first topic. I took over as Chairman of the Board of Management 9 months ago. And today, hardly anything is the same as it was in August 2019. The coronavirus has shown how vulnerable our globalized world is. In mid-March, we issued an outlook for the full year of 2020, giving a prognosis that is something that the capital markets appreciated. At that point in time, we assume the world's car markets would normalize within a few weeks. In the first quarter of 2020, despite the pandemic, we performed relatively well. Group revenues and earnings before tax were slightly higher than the previous year even. However, this was mainly due to the base effect from the provision I referred to earlier on. As you know, the BMW Group sells vehicles in more than 150 countries. And as COVID-19 spread around the globe from east to west, our retail outlets closed one after the other, producing a domino effect. At the beginning of March, the sale of cars was only restricted in China and parts of Asia, but as early as mid-April, sales had completely ground to a halt in virtually all of Europe, in Central and South America, Russia, South Africa, India and parts of Asia. In countries like the United States and Canada, sales were also restricted. The only retailers opened were in Korea, Japan, Australia and once again in China. Since earlier this month, May, customers in many European countries and most of North America have been able to visit the showrooms again. Even while they were closed, our dealers stayed in close contact with their customers. They've been videoconferencing with customers to advise them and configuring vehicles together online. This is already possible in more than 60 countries. We have digitalized our sales processes and made significant investments in conjunction with our retail outlets, and this is now bearing fruit. We are also increasingly able to offer contactless vehicle sales. Here also, I would like to say a big thank you to all our dealers worldwide for their flexibility and the creativity over the past few weeks. Thank you very much for that. The progression of the lockdown, however, is also reflected in BMW and many sales figures. In the first quarter, we saw a minus of around 21% compared with the first quarter of 2019, most noticeably in China. In the month of April, sales went down by 41%. This time, the impact was felt most in Europe. In many countries, politicians are now easing restrictions. And particularly here in Germany, a lot of people think things have already bottomed out, that the worst is over. But unfortunately, this general perception does not reflect the actual situation. The full economic impact of the coronavirus pandemic on our business will be felt in the second quarter, especially in key markets like Europe and the United States. The forecast for 2020, ladies and gentlemen, looks bleak. There is no other way to describe that. The IMF projects that the global economy will shrink by 3%. There has been nothing like this since the Great Depression. In Europe, the European Commission expects the Eurozone economy to contract by 7.7%. The outlook for 2021 remains extremely uncertain. The biggest problem in the current situation is that supply and demand are collapsing at the same time. That didn't even happen during the economic and financial crisis 2008, 2009. Governments and central banks are offering substantial financial support and stimulus packages that should at least mitigate the economic damage. Having the right exit strategy will be important for all economies because the length of the lockdown will ultimately determine the cumulative loss of output and demand. There is at least a glimmer of hope coming from China. After a record 2019, our sales dropped by 88% in February 2020. But as early as in April, we already delivered nearly 14% more vehicles to customers than in April of 2019. And we know from our Chinese customers that consumption there will quickly bounce back, thanks to pent-up demand. In addition to that, there are also only 170 vehicles for every 1,000 people there. Unfortunately, our biggest single market is only of limited use as a blueprint for development in other markets. In Europe, economies in Europe have been affected to varying degrees by the pandemic, for instance. Demand for cars in countries like Spain, Italy and the U.K. will probably be very slow to recover. The same applies to the United States. Experts agree there will be no rapid recovery and that the coronavirus pandemic will influence the global economy for months or even longer. And we, at BMW, have always steered the group according to demand. And a few days ago, for this reason, we adjusted some aspects of our outlook for the full year of 2020. As expected, group sales and group earnings before tax will be significantly lower than the previous year. The EBIT margin in the Automotive segment will now be within the range of 0% and 3%. What is our priority right now? The best restart possible for your company. This is how my Board of Management team and I are approaching the situation. We're adopting a realistic view, taking actions that are controlled, but highly consistent and switching course quickly when circumstances change. This applies to all 3 phases of dealing with the coronavirus pandemic lockdown, reopening and the gradual return to normal business. In phase 1, we protected our employees worldwide. That had the highest priority, while at all times maintaining our operational capabilities. And therefore, we always kept the BMW Group running. In production, we continued to implement everything that was urgently needed. In nonproduction areas, many people worked from home. In phase 2, we began and will continue with a structured phased ramp-up of our global production network, starting in mid-February with the joint venture plants in China and our component plants, including here in Germany, by the way. These followed in late April by our engine plants. Last week, Goodwood in the U.K., Spartanburg in the U.S. and the motorcycle plant in Berlin. Starting this week, since Monday, our plant in Lower Bavaria and Dingolfing began ramping up. And next Monday, they will be joined by Munich, Regensburg and Leipzig as well as Oxford, Rosslyn and San Luis Potosí in Mexico. Here, I would like to extend a special thanks to our suppliers naturally. Together with them, we are successfully managing the complex ramp-up. The plants will all initially restart, which is 1 shift. 2 shifts only make sense once there is a definite increase in demand. In phase 3, we will gradually resume all production and sales activities under stricter standards as we continue to protect our employees' health with the highest priorities. One example is protective face masks. And I'm sure you can imagine with thousands of employees per plant needing several masks a day, that quickly adds up to a very large number. That is why we are producing masks ourselves. Two fully automatic production systems will go into service at our Wackersdorf location this week. This means with 200 face masks per day, we will largely be able to meet our own needs. And we will also be making these masks available to the public sector. We have aided society in fight against COVID-19 from the beginning. We have produced medical protective equipment, and we have provided relief organizations with vehicles. All activities are coordinated by our corona competence team. In recent weeks, these colleagues from various divisions across the company have been working around the clock. This is what crises are like. And this highlights the strength of our managers and of this company. Our competence team is worthy of our special thanks, and I'm sure that you, as our shareholders, would agree here. As you can see, we are guiding your company through this difficult time by being deliberate, flexible and determined. Even in the current situation, we are still facing up to our business, environmental and social challenges. All 3 dimensions are of equal importance to us. That is part of our position at BMW, and that brings me to the second topic. We're continuing to invest in our successful future, whilst being a responsible corporate citizen in our actions. Our approach is reflected in our behavior. This lends us credible. Some are using the corona pandemic to question the requirements of applicable environmental regulations. Let me say it quite clearly here. This is not our position, we don't agree. The BMW Group keeps its promises to policymakers and to our fellow citizens. We are strongly opposed to the call to set aside applicable environmental laws. This applies to the European Union CO2 targets for 2020 and also in the following year 2021. And this also applies to the introduction of the Euro60 emission standard. We electrified early and systematically. This year alone, we will, therefore, lower the CO2 emissions of our European new vehicles fleet by another 20% compared to the previous year through measures in our conventional vehicles and by ramping up e-mobility. And you see, to achieve our CO2 targets, the BMW Group does not need any additional incentives. We are very well prepared for the new goals now coming into effect. And that is a real competitive advantage in our opinion. In the first quarter of 2020 alone, our customers worldwide bought almost 14% more electrified vehicles than in the same period of last year. So who would benefit from postponing these goals and deadlines? Isn't that those who haven't made adequate preparations and time? So let us make use of the opportunity here in Germany to invest in long-lasting and environmentally friendly projects. What could additionally achieve a broad impact would be an economic package for the entire German economy. It would combine innovation and environmental protection in a meaningful way. I'm thinking, for example, about charging infrastructure at home and at the workplace. This would be future-oriented and help to push e-mobility further. It benefits customers directly as well as the building contractors. In this context, I certainly recognize what the German federal government has already achieved regarding the push towards e-mobility. Germany lives from the global export of its product. That is our business model. The automotive industry in this is systemically relevant. It strengthens and supports the entire economy from the mostly medium-sized suppliers to dealers and repair shops up to service providers. Our industry is not just one of the largest taxpayers in Germany. Let us not forget that. It also provides around 830,000 direct qualified and union-bound jobs in Germany. And all these employees pay tax and social expenditure. All of this together promotes purchasing power and consumption. We should neither underestimate nor jeopardize all of this because this has knock-on effects along the entire value chain. And the faster this key industry can move through the gears and get going again, the sooner the economy and labor market will recover. In addition to that, only a healthy automotive industry will be able to manage the transformation towards sustainable mobility. And I'm convinced as soon as this pandemic levels off, one topic will be back on the political and social agenda with full force. You know what I'm talking about, climate protection. For us, this is a clear call to action. We have never been interested in competing with announcements of far-off goals for 20 or 30 years from now. My Board of Management team and I do not believe in offloading responsibility onto the next generation. That would be too easy. We care about having a real impact. We think in terms of solutions that can have an immediate and sustainable effect, and we are committed to what we and the Board of Management can decide, implement or set in motion today. In the case of electrification, we have clear goals. In 2021, 1/4 of our vehicles we sell in Europe should have an electric drivetrain; in 2025, 1/3; and in 2030, half. We will have 25, I repeat, 25 electrified models on roads worldwide by 2023, around half of them will be fully electric. The environmental footprint of every new plug-in hybrid is certified from procuring raw material through the supply chain, production and use phase, all the way to recycling. In this way, we can show that the overall balance of plug-in hybrids is positive, and we also support our customers to use their vehicles in a way that is good for the environment. That is why we introduced BMW eDrive Zones. So what does that mean? Where our new plug-in hybrids automatically switch to electric mode whenever they drive into a green zone. 80 cities in Europe have already been programmed with more to follow. In parallel with electrification, we are also continuing to make our cars with combustion engines more efficient. The effect on lowering CO2 emissions, and that is very important here, is enormous. However, this gets far too little recognition. Sales figures for our modern diesels have, by the way, stabilized now. Emissions still dominate the climate debate, but they are ultimately only one aspect of the bigger sustainability package. We take responsibility throughout the entire value chain. Here, your company leads the way. Let me offer some examples in the area of production. Electricity, from the end of this year, all our locations worldwide will obtain their externally purchased electricity exclusively from renewable sources. In Europe, this is already the case. Another example, our CO2 emissions per vehicle produced. In 2019, these were reduced by 1/4 from the previous year. Another example, water. Our low water consumption per vehicle produced is the industry benchmark because for many years, we've been investing in this area. We take a holistic approach, as you can see, and that is reflected in our strategic decisions. With immediate effect, the BMW Group will no longer have a separate sustainability strategy. What do I want to say with that? Instead, we're making sustainable development an integral part of the BMW Group strategy. Everything that we do and plan and plan for will be assessed for its environmental impact from the outset. We make decisions in an integrated manner, and as a result, we will also presenting our company results in an integrated reports. We will transparently document all aspects of our business in one single annual report. And with this step, we will be the first among our key competitors. In this way, we are purposely enabling external auditing of our sustainable activities, a very important step. And here, once again, we're thinking ahead. As electromobility increasingly gains traction in the marketplace, the focus will shift more towards the upstream value chain. And here too, your company is already in a strong position in this respect. Starting this year, we will be sourcing the key battery raw materials, cobalt and lithium, ourselves. Long-term supply contracts with various manufacturers in China, Korea and Europe will provide us with battery cells. Our fifth generation electric powertrain no longer requires rare earth for the electric motor. The Gen5, the fifth generation of batteries, will be used for the first time in the BMW iX3. For me, the entire environmental footprint of our products is just as important as the topic of emissions. And that is why we are getting even more actively involved in the upstream supply chains. We're working with our suppliers to identify further potential for reducing the environmental footprint of our supply chain. Together, we can ensure compliance with environmental standards in respect for human rights. Our message to suppliers is the BMW Group is and remains a fair partner. Our message to you, as investors, we will only invest your money where we can achieve a real impact. And we also have another message for the politicians, effective climate protection cannot be achieved through brands, customers want the choice, power of choice. Our customers have choices in all vehicle segments depending on which drivetrain is best for their personal everyday mobility. Once again, we call this the power of choice. The examples are the BMW X3 and the BMW 7 series. Starting this year, the X3 will be available with 4 different drivetrain variants, efficient petrol and diesel, plug-in hybrid and also fully electric as iX3. We will begin producing the iX3 in China this summer, and we will export it from there. Preparations are going according to plan despite the uncertainties caused by the coronavirus pandemic. The next-generation of BMW 7 Series flagship will also be available with 4 different drivetrains, all of them based on one single architecture. As you can see, we're successively rolling out the power of choice in all model series. Here, standing next to the stage is our first fully electric MINI. The very first of its kind. It has only been on the market for a few weeks and is already in high demand. Most buyers have not previously driven a MINI actually. Standing right next to me, there is the BMW i4 concept car. It's a world premier that was held digitally, reaching a total of almost 33 million contacts across our various company channels. This design of the i4 is very close to the production model. We will launch next year. We're putting e-mobility right at the heart of our core BMW brand. With an impressive range of up to 600 kilometers according to WLTP, the i4 will be built at our main plant directly next door or behind me in our main plant in Munich. The fully electric i4 and the conventionally powered BMW 4 Series Gran Coupe will come off the same production line. Both electric cars and cars with conventional engines have a place in our industry. In just under 2 weeks, we will present the new BMW 5 Series, both the Sedan and the Terrain will also be available as electrified versions. We are using our 48-volt mild hybrid technology in nearly all conventional models. That alone saves up to 9 grams of CO2 per kilometer driven. As you can see, we continue to invest consciously in various technologies. This includes hydrogen fuel cell technology, by the way. Ultimately, this is the most intelligent and fastest way to effective climate protection. Preparations for the iNEXT, which will enable highly automated driving for motorways, are currently underway at our plant in Dingolfing. Ladies and gentlemen, the impact of the coronavirus pandemic comes on top of the transformation of drivetrain technologies. It will accelerate the consolidation of our industry because the car is not just a highly sophisticated product, it is the most complex technical overall system you can buy as a customer today. The future hangs on this question, who is capable of further developing this highly complex and digitally connected product in order to benefit customers, meet legal and social requirements and also to meet these social requirements? The ability to integrate systems entails combining hardware and software to create the right overall experience at all -- at the right time. Your company is ideally placed to do this. And I said that at the start, upheavals, we've always created. We've always used to create new beginnings. In the current situation, and especially afterwards, we will be doing a lot of things differently than we used to. All product and structural projects are being reviewed again. Is this the right time? Should we start on them right away? Should we postpone or maybe in individual cases, should we cancel them even? With this in mind, we have intensified and accelerated our performance program. Our goal is to leverage over EUR 12 billion in efficiency potential by the end of 2022. And at the same time, as you can imagine, we continue to systematically digitalize all processes across the company. For me personally, it is important that each individual employee is capable of making data-driven decisions. There are 2 important lessons that the coronavirus pandemic has taught us all for the future. For one thing, the new importance of digital working, and for another thing, it is the return to scientifically grounded facts as the basis for decision-making and for gaining information. And I would also like to see this in future political decisions and the debate surrounding mobility. In return, I can promise, on behalf of the BMW Group, we will continue to present the facts for sustainable mobility. Not least, the current situation has highlighted that mobility remains important to people, both close to home and farther afield. When the world stands still, we all lose. We need to keep the company moving forward, intelligently, sustainably and with a certain amount of humanity. At the BMW Group, we will continue to work and stand together and seize our opportunities that arise. Dear shareholders with you on our side and with your trust, we can accomplish all of this. My Board of Management team, and I, together with our 126,000 associates worldwide are already working towards this. In that respect, our 100th Annual General Meeting is the perfect springboard towards the future, symbolically. Thank you all for your attention. I hope that you all stay safe and healthy. Thank you very much.

Thank you very much, Mr. Zipse for those explanations in clear words. Now I'd ask our CFO, Dr. Peter, to report to you about the utilization of authorized capital since the last AGM. Dr. Peter, the floor is yours.

Ladies and gentlemen, in the Ordinary Annual General Meeting 2019, the Board of Management was authorized to issue new nonvoting preferred shares with the support of the Supervisory Board. This authorization can be exercised until the 15th of May 2024, and it's for an overall volume of up to EUR 5 million of share capital. New shares may only be issued against contributions in cash. The authorized capital may only be used to issue employee shares. Due to this intended purpose, the subscription rights of shareholders are already excluded in the resolution of the AGM. I would now like to report on how and to which degree we have seized this authorization since the last AGM. Since the last Annual General Meeting, we have seized the utilization from authorized capital 2019 once. That was in November 2019. The shares were only used for our employee share program. All in all, 740,400 new nonvoting shares of preferred stock with a par value of EUR 1 each were issued. And this reflects an increase of the share capital by only 0.1%. An additional 4,047 shares of preferred stock were bought back from the stock exchanges. The issuing price of the new shares was set at EUR 46.10 per share. This reflects a discount of EUR 13 per share compared to the average closing price of the BMW preferred shares in Xetra trade during the time frame from the 5th to the 8th of November 2019. Around 31,000 associates contributed or participated in the year 2019 in our employee share program. Every entitled associate could purchase up to 25 shares of preferred stock. The new shares are entitled to dividends starting from the business year 2020. They are subject to a 3-year lockup period until the end of 2022. The exclusion of subscription rights decided by the Annual General Meeting is necessary to transfer the shares to the employees. The dilution effect is extremely low. Authorized capital 2019 now stands at around EUR 4.26 million. You can find further information on the utilization of authorized capital in our management report. The employee share program is addressed -- currently addressed to employees of BMW AG and its domestic 100% subsidiaries as far as these -- insofar as these group subsidiaries have decided to participate in the program. In the framework of the program, associates usually once a year have a time frame of a few weeks in which they can purchase a certain number of nonvoting shares of preferred stock with an appropriate discount compared to the current stock exchange price. And usually, for this multiyear lockup period or a vesting period of several years is agreed with the associates in this process. Ladies and gentlemen, employee shares have been approved in the instrument at the BMW AG ever since 1989 to have our associates participate from the company's success. And we're convinced that the moderate utilization of authorized capital since the last AGM has been in the best interest of both the company and the shareholders. Thank you very much for your attention.

Thank you very much, Dr. Peter. That brings us to the end of the public part of our Annual General Meeting. For registered shareholders, we will broadcast the full AGM via our online service. If you haven't done that so far, you should now register and login in the online service. The necessary login data, you can find on the registration confirmation at the top right. I would like to currently thank all viewers of our public broadcast, and I would like to thank you for your interest. Ladies and gentlemen, before we begin with answering your questions, first of all, I would like to inform you about the attendance in today... [Audio Gap] [Statements in English on this transcript were spoken by an interpreter present on the live call.]