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

Ladies and gentlemen, esteemed shareholders, I now open the 102nd Annual General Meeting of Bayerische Motoren Werke Aktiengesellschaft. This year, we again broadcast the Annual General Meeting live over the Internet as a virtual meeting streamed from the BMW Welt in Munich. As Chairman of the Supervisory Board, I assume the chair of the meeting as stipulated in the Articles of Association. On behalf of the Supervisory Board and the Board of Management, I welcome you most cordially. All members of the Board of Management attend this Annual General Meeting here at the BMW Welt in person. Moreover, all members of the Supervisory Board are also following this Annual General Meeting either here in person or via video or an audio stream. Most of them have joined us here at the BMW Welt. Today's shareholder meeting is our third virtual annual general meeting. To protect the health of everyone involved and the additional contact persons. The Board of Management and the Supervisory Board have again opted for this virtual format. We are aware of the fact that some shareholders question this format. While preparing this Annual General Meeting, we, therefore, reflected on how we can expand the possibilities of shareholder participation in the context of this virtual shareholder meeting and at the same time, ensure that the meeting runs in a timely and appropriate manner. I will explain these possibilities to participate in more detail later. You may wonder what kind of format and Annual General Meeting will add in the future. At present, draft legislation is being considered in accordance with the legislative procedure. This legislation is to lay the foundation for holding virtual shareholder meetings under the German Stock Corporation Act, which format BMW's Annual General Meeting will have in this coming year, we cannot yet say today, depending on the general conditions prevailing at the time of the Board of Management and the Supervisory Board will carefully consider which format is the best choice taking into account the interest of the shareholders and the company. To shareholders, I will now address some organizational aspects of today's meeting. Here at the BMW Welt, exclusively, company designated proxies will attend as representatives of the shareholders. They will exercise their voting rights following the instructions of shareholders with granted the power of attorney. The minutes of this Annual General Meeting are being taken by Dr. Vossius. This Annual General Meeting has been duly convened when it was published in the electronic Federal Gazette on the 29th of March 2022. All documents, of which access must be given have been available on BMW AG's Internet page for retrieval. This Annual General Meeting is being transmitted live and in full on the Internet. In this context, the presentations given by our CEO and our CFO as well as my Supervisory Board report will be streamed for the interest of public without any access restrictions. Registered shareholders can follow the Annual General Meeting in full via our online service. You can find the access day to log on to the online service in the registration confirmation. Using the online service, registered shareholders can, even during the Annual General Meeting, cast postal votes or authorize the company designated proxies and give them instructions until voting begins here in the meeting room. Until that time, votes already submitted or instructions given can be revoked or changed. This, however, applies to holders of ordinary shares only. Preference shares of our company do not grant voting rights. Up to and including the 9th of May. This was the day before yesterday, you had the opportunity to submit questions which are going to -- which we are going to answer in the second part of the meeting. In case the answer does not fully answer your question, you can ask a related follow-up question. In contrast to requesting the floor to make a contribution here at this place in the classical manner, you have the opportunity to submit statements in writing or as video messages. They are made available to the other shareholders via our online service. In addition, the video statements received will also be screened during today's shareholder meeting. To enable you to prepare for this Annual General Meeting, we again published a summary of the speeches of the Board of Management members and my report in advance on our Internet page. On the online service, you also have the opportunity until the end of the Annual General Meeting to lodge objections to be recorded by the notary public in case you consider a resolution by the Annual General Meeting as void or against the law. The prerequisite for doing so is that you exercise your voting right. And we ask you to understand that during the Annual General Meeting motions submitted by shareholders regarding the resolutions passed during the Annual General Meeting will not be accepted. However, it was possible before the Annual General Meeting to submit motions to supplement the agenda, but we haven't received any such motions. In addition, it was possible to submit countermotions and election proposals related to resolutions proposed by the management up until 14 days before the Annual General Meeting. With this period, we received such counter motions from 2 shareholders at an election proposal for 1 shareholder. We published them on our Internet page. In the context of today's meeting, these countermotions and the election proposal are deemed as having been submitted. As in the past, video and audio recordings of our Annual General Meeting by third parties are not permitted. Please bear with us for not allowing it. Ladies and gentlemen, before we start going through the agenda, we, as is our tradition, commemorate those among our workforce and our pensioners who passed away. Moreover, in view of the horrifying events in Ukraine, we also wish to commemorate those who've become victims of this atrocious war. At this point, I ask everyone present to stand up for a moment of commiseration. The suffering of people in Ukraine is a cause of great concern to us. We wish to express our sympathies and our connectedness with the victims of the war and their relatives. We remember, with gratitude, all BMW colleagues who passed away. Ladies and gentlemen, you commemorate the dead and their relatives. I thank you for that. Now I would like to give you a brief overview of the course of the Annual General Meeting. First, I will present to you the report on the activities of the Supervisory Board during the last financial year. Afterwards, Mr. Zipse, our CEO, is going -- speaking on behalf of the Board of Management, will report obvious financial year. And in addition, he will present to you an outlook on plans the company has for the future. Afterwards, our CFO, Dr. Peter, will inform you about financial issues. In our speeches, we will also address the proposals, which the Board of Management and the Supervisory Board will present to the Annual General Meeting today for resolution. Afterwards, we will screen video statements related to our Annual General Meeting and submitted by shareholders and proxies. Following that, we will answer questions and follow-up questions of shareholders. Once questions have been answered, I will announce that voting will begin here in this meeting room. And this will be the last possible time to cast postal votes or give instructions to the company designated proxies via the online service. This will be followed by voting on the proposed resolutions and the election proposals in the meeting room. And finally, after the votes submitted were counted, I would announce the results concerning the resolutions. Ladies and gentlemen, we will now go through the agenda of this Annual General Meeting, and we'll begin with Item #1 on the agenda. That's the presentation of the adopted company financial statements and the approved group financial statements, along with the Consolidated Management Report for the company and the group as at the 31st of December 2021 as well as the report of the Supervisory Board for the fiscal year 2021. Now these documents are available from our Internet page. There, you will also find the explanatory report of the Board of Management on the statutory disclosures regarding takeovers and the statement of corporate governance together with the corporate governance report for retrieval. You will find the tax version of the report of the Supervisory Board on [indiscernible] page in the BMW Group report, and therefore, permit made to restrict myself to picking out some important aspects. I'll begin with the changes to the composition of the Supervisory Board and the Board of Management since the last Annual General Meeting. After the close of the Annual Meeting 2021 Dr. Karl-Ludwig Kley, Professor, Dr. Reinhard Hüttl; and Ms. Simone Menne, being shareholder representatives have retired from the Supervisory Board. Mr. Rachel Empey, Dr. Marc Bitzer, Professor, Dr. Christoph Schmidt have been elected to the Supervisory Board, shareholder representatives by the last year's Annual General Meeting. And they introduced themselves already at the last year's Annual General Meeting. Dr. Kurt Bock is a member of the Supervisory Board since 2018 and Chair of the Audit Committee since 2020 has been elected to the presiding committee, a successor for Dr. Kley, who had resigned and has also been elected as a member of the Personnel and Nomination Committee. There have also been several changes among the employee representatives, most of which relate to resignations due to old age and some signify a generational change. No request since last year, Mr. Horst Lischka, Mr. Willibald Löw, Mrs. Brigitte Rödig, Mrs. Verena zu Dohna and Mr. Werner Zierer all prematurely retired from the Supervisory Board at their own request. For the respective remaining terms, the following were appointed as employee representatives on the Supervisory Board by court order. Mr. Johann Horn. He is a Regional Director of IG Metall Bavaria. Mr. Jens Köhler, Chairman of the Works Council at Leipzig plant; Mr. Bernhard Ebner, Chairman of the Works Council at Landshut plant; Ms. Sibylle Wankel, first authorized representative of the IG Metall. [indiscernible] and Mr. André Mandl, Chairman of the Works Council at the Regensburg plant. Another employee representative will, at the end of this month, after a long and successful career at BMW, resigned from the supervisory board and retirement at the end of this month. Dr. Thomas Wittig in his last position, Head of the Financial Services business area and before that of group reporting represents the executive employees on our Supervisory Board. We thank all former and soon to resign members for their, in some cases, many years of invariably, constructive and very trustful cooperation. Now a good cooperation with employee representatives, which is based on mutual trust and attempts to seek balanced solutions has been a long-established part of our BMW corporate culture. This is also demonstrated by the cooperation of the employee and shareholder representatives on the Supervisory Board of BMW AG. In addition, this cooperation is also a manifestation of good corporate governance. I'm looking forward to continuing this tried and tested cooperation with the new members on the Supervisory Board. Now also in the composition of the Board of Management have we seen changes. Dr. Andreas Wendt. He was a Board member, in charge of purchasing and the supply network, entered retirement at the end of last year. We thank Mr. Wendt for successful work for the BMW AG for many, many years towards the end of his career, in particular, whose prudent and dedicated management while guiding the company through the semiconductor shortage crisis. As a successor, the Supervisory Board appointed as of 1st of January 2022, Dr. Joachim Post to the Board of Management, Dr. Post has been working for the BW Group since 2002. And in his last assignment he was heading the business area product line and middle-class segment BMW. Before that, he was responsible for BMW Group's vehicle strategy at management level. At present, preserving supply chains is a particular challenge. As an example, I mentioned the sufficient supply of semiconductors and wire harnesses. The latter being produced in Ukraine to a considerable extent. We wish Dr. Post and his colleagues on the Board of Management and his team, who show very intense commitment in this matter, all the best and continued success. I will now move on to the key activities of the Supervisory Board in the last financial year. The Supervisory Board has fulfilled its tasks to the best of its abilities. It regularly and rigorously supervise business operations, advising the Board of Management on crucial issues of corporate management. We discuss the current situation of the company, including the issue of semiconductor supply with the Board of Management in detail at everything. An important focus of the Supervisory Board work was that the corporate strategy, especially on the all-embracing orientation of the company towards sustainability. At our every meeting, we dealt with the transformation occurring in drive system technology and electrification of the vehicle fleet. In addition, we heard reports on key issues facing the different divisions. These, in particular, include sales markets in Asia. The NEUE KLASSE architecture, which the BMW Group will launch in 2025 to enter the third phase of electromobility and the New Cluster vehicle architecture intended for it. Possible uses of artificial intelligence in processes for production planning. Group finance and the financial services business areas as well as working practices and working environments at the BMW Group. In addition, the Board of Management informed us about important current issues. Like, for instance, the creation of a consortium for the industrial application of quantum computing and the expansion of the Ionity network for premium charging points. The Chief Compliance Officer directly reported to us on the status and further development of compliance in the company. The Audit Committee and the Supervisory Board diligently dealt with issues in the context of antitrust proceedings of the EU Commission regarding former working groups of several German automobile manufacturers. I take this opportunity to emphasize again that in these proceedings, charge of illegal manipulation of diesel emissions devices by the BMW Group have not been an issue. In this respect, the EU Commission also made clear that these proceedings must be distinguished from investigations against some competitors, which relate to the use of illegal defeat devices. After conclusion of the proceedings in July 2021 by settling on a fine of about EUR 373 million, the question whether or not former members of the Board of Management of personnel responsibility was thoroughly considered or debated. The Supervisory Board consulted with an external lawyer who explained his written appraisal in detail during the meeting. In this context, consideration was given to the fact that the EU Commission also in their own assessment entered new legal territory with these proceedings. For an assessment from an antitrust perspective, the Supervisory Board consulted with an additional specialist. On this basis, the Supervisory Board after in-depth debates, and upon recommendation of the Audit Committee decided against asserting any claims against former members of the Board of Management of BMW AG. Owing to my previous position on the Board of Management, I did not take part in this decision. An important range of topics of the work of the Supervisory Board have been strategic cooperations also in 2021. Here, one focus was in the future positioning of the BMW Group in the vital market of China. We dealt with the remuneration of Board of Management members at meetings of the Personal Committee and the full Supervisory Board. After in-depth preparation by the Personnel Committee, the Supervisory Board in December, in particular, adopted the targets for the components of the variable remuneration of the members of the Board of Management for the 2022 financial year. And regarding long-term Board of Management remuneration, 50% are again tied to the ambitious targets of the environmental criterion. In the context of the work of the Supervisory Board concerning the Board of Management remuneration for the last financial year, I will provide further information to my statement about remuneration report under Agenda Item 7. The Supervisory board also exhaustively examined the long-term business plan in which the Board of Management corroborated the central objective of continued growth. After an in-depth review, the Supervisory Board approved the longer-term business plan of the BMW Group. The Supervisory Board also gave its approval to the corporate development plan for the 2022 financial year after detailed discussions with the Board of Management. In addition, the Board of management presented to us diversity concept for the company and describe the current status of target achievement on different levels. In December, the Board of Management and the Supervisory Board issued their declaration of compliance with the German Corporate Governance Code. We will observe the recommendations of the code again without exception. Together, we evaluated the efficiency of our work of the Supervisory Board and in the committees at the end of the year. And in doing so, noted a high level of satisfaction among the Supervisory Board members. You can find a person-by-person overview in the Supervisory Board report listing the attendance of Supervisory Board members. And the attendance rate at Supervisory Board and committee meetings exceeded 99% in the last financial year. Our review of accounts as at the 31st of December 2021 is being explained in detail in the written version of the Supervisory Board report. PwC Wirtschaftsprüfungsgesellschaft was our auditor over the third time. They audited the company and group financial statements prepared by the Board of Management as of the 31st of December 2021 and the management report integrated into the BMW Group report for the 2021 financial year and issued an unqualified auditor certificate. As proposed by the Audit Committee, the Supervisory Board agreed to the result of the audit after its own detailed examination and the tenth -- and on the 10th of March 2022, approved the company and group financial statements of BMW AG for the 2021 financial year as prepared by the Board of Management, there were no objections to be raised. The financial statements have thus been adopted. The combined nonfinancial statement, as at the 31st of December 2021 was also reviewed by the Audit Committee and the Supervisory Board and has been approved after the auditor had explained the audit results. Audit Committee and Supervisory Board also reviewed the proposal of the Board of Management on how to appropriate the net profit. The dividend will give shareholders a share in the success of the respective previous financial year. Today, in accordance with our long-standing dividend policy, Board of Management and Supervisory Board proposed to the Annual General Meeting payment of a dividend of EUR 5.82 per preference share and EUR 5.80 per ordinary share. The Supervisory Board considers the amount of this dividend appropriate. Ladies and gentlemen, the previous financial year was a particularly a challenging one for the BMW Group. Semiconductor supply issues and the ongoing coronavirus pandemic have made the business environment still more volatile. And of course, ever greater flexibility from company and workforce alike. However, thanks to the prudent leadership of the Board management and, in particular, the tremendously hard work of our employees 2021 was all the same, a highly successful financial year for the BMW Group. Therefore, I'd like to use this opportunity to thank the members of Supervisory Board and all employees as well as the members of the Board of Management for the excellent achievements in the 2021 fiscal year. I express gratitude and appreciation. In the current financial year, we're facing new challenges as a result of the war in Ukraine and its global repercussions. If you ask long-serving BMW employees, what is the special strength of our associates. They would, I presume, all be in an agreement by saying it is the task force mode. We are, therefore, optimistic that our management team and our workforce will also meet these challenges. Now I would like to speak about the other items on the agenda and the resolutions proposed by the Supervisory Board. Regarding agenda item #4, ratification of the acts of the Supervisory Board. I, as the Chair of this meeting determine that we will vote on the ratification of acts of the Supervisory Board for the previous financial year for each member separately. We understand that some investment consultants see reasons to do so after the conclusion of the EU antitrust proceedings, and we do not wish to disregard this opinion but wish to address it. Therefore, in our online service, we have issued a short-term possibility for separate postal votes concerning this agenda item. Aggregate instructions that have already been issued and aggregate votes already cast retain, of course, their validity. This will thus apply to the ratification of acts of each Supervisory Board member. If need to be, you may also change your instructions already issued and postal votes already submitted on the online service. This is also possible if you've submitted your instructions on postal votes on paper form. On Item #5 of the agenda, the Supervisory Board based on the recommendations of the Audit Committee proposes that the PricewaterhouseCoopers auditor company, be appointed, company and group auditor for the 2022 financial year and auditor for the review of the interim Group financial statements and Interim Group management reports. The Audit Committee, furthermore, reviewed the quality of the audit. Due to the very good experience to date with PricewaterhouseCoopers, we recommend to continue said cooperation. Then on the Item 6, an election to the Supervisory Board is on the agenda. One representative of the shareholders is to be elected to the Supervisory Board. Now with this Supervisory Board, the first term of Dr. Heinrich Hiesinger will end with the conclusion of today's Annual General Meeting. In the past 5 years, he has shaped the work of the Supervisory Board demonstrating expertise and commitment. And therefore, I'm glad that he expressed his willingness to stand for election today, once more. And based on the recommendation of the Nomination Committee, the Supervisory Board proposes to elect Dr. Hiesinger as shareholder representative of the Supervisory Board for a further term of office that is until the close of the Annual General Meeting that decides on the ratification of the acts of the -- 2025 financial year, what -- means about 4 years. I would now like to Dr. Hiesinger to introduce himself again himself briefly preceding over to you.

Thank you, Mr. Reithofer. Dear shareholders, I'm glad to introduce myself once more. My name is Heinrich Hiesinger. I was born in 1960, and I'm married. We've got 4 adult children. I studied at the Technical University here in Munich, Electrical Engineering, where I also wrote my PhD thesis, thereafter, for 18 years, I was with Siemens AG in a number of different business divisions and functions, amongst others, 8 years abroad and also in Asia. And I was also a member of the Board of Management where I was responsible for the entire industrial sector that is, the entire automation as well as digital factory issues. Then in 2010, I changed to thyssenkrupp, where for 8 years roughly until 2018, I was Chairman of the Board of Management. Now what kind of contributions can I make to the Supervisory Board of BMW AG? Well, both companies, Siemens as well as thyssenkrupp are globally active, which means I've got many years of experience in management functions of a company with the worldwide exposure. Above all, looking at the challenges of worldwide distributed functions like development, production and sales. In my entire professional career, I myself was regularly in key markets such as United States and China. And therefore, I know many of the regional specific requirements. Siemens and thyssenkrupp are suppliers for the automotive industry. And this, together with my Chairmanship at the Supervisory Board of ZF Friedrichshafen give me a deep insight into the current, but above all, in the future challenges of the automotive industry over the entire value creation chain from the supplier all the way through to the producer of vehicles. Thanks to my engineering degree, my professional expertise, but also at the moment, I'm constantly looking at state-of-the-art technologies. With Siemens that was, for example, automation and digitalization of production. At thyssenkrupp, it was with hoists and lifts. We also looked at solution with cloud solutions and machine learning and for maintenance and repair services. Furthermore, to always stay updated. I have invested start-ups in the software area. I don't have a function here, but I ensure that in the methods of software development in cloud-based solutions and in applications of artificial intenders I always stay up to date with the developments. When it comes to sustainability or ESG, I've always addressed these issues in depth. First of all, foremost, due to my professional work but also on my own personal interest on my own conviction. And this experience, likewise, is something that I can contribute to my committee work at BMW. As you will be able to have seen in the invitation, I'm also a member in the Supervisory Board of 3 further companies, including one chairmanship. I can assure you that I have no further comparable assignments that we'll take on and have therefore also signed self-declaration accordingly. Cooperation in the supervisory boards are now conducted by me as a main profession, which means I have no further other functions in the management board or as an executive leader, which means I've got adequate time for the preparation, the participation on the post briefing of the meetings. The fact that in the last 4 years, I have participated in 100% of all the meetings, I think, should be a clear indication of said capacity. The collaboration in the committees of BMW AG Supervisory Board committees, I was very active and very intensive over the last few years. I appreciate this company, the transparent, open a corporation that is also able to listen to criticism of the committees. I'm convinced that in the transformation, in the automotive industry, I can provide valuable insights in these committees. And therefore, I would be delighted if you could cast your vote for me, and I could be reelected. Thank you very much.

Thank you, Mr. Hiesinger. Now the Supervisory Board considers Dr. Hiesinger to be independent within the meaning of the German Corporate Governance Code. As an alternative candidate to be elected to the Supervisory Board, the shareholder in Yova Impact Investing GmbH has proposed Professor Susan Shaheen. You can find the CVs of both candidates on our Internet page. Now on the Item #7 of our agenda today, we present you the approval of the Remuneration Report for fiscal year 2021. Now for the first time, the Board of Management and Supervisory Board have prepared it in accordance with the new regulations of the German Stock Corporation Act, which have been introduced to implement the second EU Shareholder Rights Directive. Among others, you will find that the full remuneration report can be retrieved from our Internet page. There, you will also find a summary presentation. Therefore, I will only address the following essential points here. Regarding the Board of management remuneration, the new remuneration system, which the previous Annual General Meeting approved with a large minority, was used for vesting year 2021 for the first time. Remuneration of Board of Management members comprises fixed components and 2 variable components, the bonus and the long-term share-based remuneration. For vesting year 2021 fixed base remuneration has been increased for the first time since 2018. Already before the approval of the remuneration system by the previous Annual General Meeting, we made this transparent in the 2020 BMW Group report. Now for the 2 variable remuneration components, the Supervisory Board defined challenging financial and nonfinancial targets before the beginning of 2021. These have been derived from KPIs, key financial parameters in the corporate business plan. And here special focus was here on sustainability. A substantial part of the nonfinancial targets have been derived from the criteria environmental, social and corporate governance. So in particular, half of the targets or the long-term share-based remuneration depends on the achievement figures in the context of the environmental criterion. That is in lowering CO2 fleet consumption in the EU and on global sales of electrified vehicles. So both the individual targets as well as the individual target achievement are shown in the remuneration report in a transparent manner. Under the leadership of the Board of Management, the BMW Group achieved a very good corporate result in the previous financial year. This is also reflected in the high level of target achievement regarding the financial targets of the variable remuneration components. The proportion of the actual variable remuneration for vesting year 2021 tied to the sustainability targets is around 27% despite the strong financial result. This shows that the Board of Management remuneration is balanced in terms of its defined targets. We consider the arithmetic result and the composition of the Board of Management remuneration to be appropriate. We didn't consider it necessary to adjust results due to extraordinary circumstances. For financial year 2021, the remuneration of members of the Supervisory Board shown in the remuneration report remained unchanged year-on-year and consists of fixed remuneration only. Individual remuneration also takes into account remuneration relevant additional functions as well as attendance of plenary meetings. The auditor, PwC, also reviewed the remuneration report in terms of content going beyond the required formal minimum boarded and issued an unqualified auditor's certificate. Now I would like to give the floor to Mr. Zipse. He is going to report on the previous financial year. And in addition, will also present us an outlook on the plans of the Board of Management. [Presentation]

Ladies and gentlemen, the BMW Group is your company. Now why should you continue investing in us? What is it that makes us strong and relevant? Why should we and why will we be around also in 100 years. Now we concern ourselves with these questions like you do. You, our shareholders, I extend a warm welcome to you from the BMW Welt in Munich. And today is the third time that I answer to you and field questions from you. For me, this is an honor and has been a concern of mine. A company must know what it stands for. Then it can stay on course, rely on its own capabilities, withstand headwinds, reinvent itself time and time again. The BMW Group exists because we move people, touch hearts and inspire minds. This is our inner compass our North Star. It gives us orientation at any time, even during times of change. It describes which were our strong points in the past? What do we achieve at the present time. What are our strong points for the future? And my message to you is, your company has a future. This is our mission. And you consider this important, ladies and gentlemen, because you are accompanying us in the long term. And this should and must be worthwhile. Today, we propose to view a dividend. EUR 5.80 for each [ common ] share and EUR 5.82 for each preference share for our successful financial year 2021. The distribution rate is 30.7%, which is within the corridor we defined. Our dividend policy remains appropriate and reliable. Our future is important for more than 140,000 members of the BMW family. They all are moving things every day. We make our customers mobile with innovations. More than 2.5 million people bought a BMW, or MINI or a Rolls-Royce last year. They expect far more than just moving from A to B. They experience their mobility, quite individually, with a lot of joy. Our business model is based precisely on this sentiment. Joy makes people happy. It is the core of the BMW brand and for us, the constant during transformation. Our future is important for the suppliers, too. For us, they are partners. For industrial value creation is highly complex nowadays, interconnections are more intensive than ever before. When supply chains get stuck, then a stable trusting relationship with the suppliers will prove itself like now. Future remains the leading currency of the economy. Your company is a success story, and we continue writing it. Every management generation has a task to perform entirely in line with Herbert Quandt. This courageous entrepreneur believed in BMW, that next generation will continue his legacy. It encourages us, grants entrepreneurial freedom. And we turn this trust into future. Three fields of action are crucial. Our strong foundation, our successful transformation; and three, our NEUE KLASSE for a new era. And these are my topics today. You know your company claims announcements, pipe dreams. This is not the BMW way. We are for action. We deliver what we promise. This makes us credible and you can always count on it. Two examples. In 2021, we again exceeded the CO2 targets in the EU and undercut it by about 10 grams per kilometer. And two, our path to net zero has clear milestones until 2030. The approach underlying them is scientifically confirmed and transparent. To make it happen, we joined the business ambition for 1.5 degrees of the science-based targets initiative as the first German carmaker and we include the entire value chain. Ladies and gentlemen, however, massive. However, unexpected the requirements may turn out to be, we will meet them. Afterwards, we are even stronger than before. In the middle of the economic and financial crisis, we developed the BMW i3. No other electric model has been in the market longer. Upheavals, we transformed them into new beginnings. And this brings me to the first point. Our future has a strong foundation. There's a shortage of semiconductor chips across the industry. A genuine, a real stress test for us, too. We cannot make as many cars as we are selling. Have customers wait, that's painful. Thousands of chips are put into a modern car. And we increasingly conclude direct supply contracts. The shortage of semiconductors will challenge us for quite a while, at least until the second half of the year, also in 2023.On the other hand, we realized good prices for new cars and also pre-owned cars. Our sales costs are decreasing in all markets. This is reflected in our business figures 2021. Used opportunities, achieved best results. Group earnings before tax of more than EUR 16 billion. They include about EUR 1 billion from provisions for the antitrust proceedings of the EU Commission. They've been closed. We're able to release the provision on a pro rata basis. The EBIT margin in the Automotive segment, 10.3%. This, by the way, is the upper range of our target corridor. The Motorcycles and Financial Services segments have grown, too. The BMW brand is again leading the global premium segment. Volume is not everything, but without coveted products everything else is nothing. The share in the world market is also considered hard currency in our industry. We increased it despite by the coronavirus pandemic to 3.4%, and we achieved all this together as a global team BMW Group, and I sincerely say and on behalf of the Board of Management, I say, thank you. Ladies and gentlemen, your company has a robust capital structure. Your company is highly profitable. This foundation carries us forward even more so in difficult times. In the first quarter, again, unforeseeable events occurred for the third time, by the way, in 3 years. What happens in Ukraine renders us speechless, but not inactive. Last year, I told you, attitude manifests itself in behavior. And this is true more than ever. We immediately made EUR 1 million available to UNICEF for children affected. We stopped our contract production in Russia, export of cars as well. At present, we help children who fled Ukraine with their mothers or alone. And to do so, we support SOS Children's Villages in Poland among others. People from almost all nations are working in our company at our parent plant in Munich, we count more than 70 nationalities and this diversity makes us strong. We are a living example of peaceful coexistence day in, day out, at all 31 production and assembly plants in 15 countries. We support free world trade. It brings people together, leads the progress to prosperity in all regions. Your global company has demonstrated this for a long time. Now what are we doing against supply bottlenecks of components from Ukraine? On the one hand, we compensate breakdowns using alternative sites. We support suppliers, building up additional manufacturing structures. And in doing so, we secure the supply of critical components. On the other hand, we continue to procure wire harnesses from Ukraine. In this way, we give the supplier on the ground a perspective. Some of our plants in Europe had to interrupt production briefly or even limited. This is also true for our sites in China. The reasons there are administrative requirements to contain COVID-19. Companies like to use the term flexibility. Well, it is a trademark, a hallmark of the BMW production. We rechanneled volumes, at short notice, and we adapted our production flexibly. This distinguishes us from the competition. And we have ambitious plans also for this year that is we want to generate sales at the high level of the previous year. Our order books are full [indiscernible]. Markets, enthusiastically order our all-electric novel models, the BMW i4 and the iX. Also the MINI SE and the iX3. The BMW X family is more popular than ever. To date, we sold nearly 10 billion X vehicles. Almost half of our deliveries in 2021 were X models. In April, Pieter Nota and I visited the U.S.A., in Austin, Texas. We presented more than 1,000 dealers from Northern, Middle and Southern America, our current and future cars, a highly emotional event, setting off the new horizons and nothing but everyone felt it. The United States are our second home. In 2021, too, BMW was the largest exporter of cars from the United States, the eighth year in a row, measured in terms of value. And you see our marketing strategies is aimed at balanced approach in the 3 major regions, world regions, America, Europe and Asia. To understand each region in a decided manner, to treat it in a customer adequate manner and produce locally to research there and to procure there, this is what we understand localization really mean. It is in principle important for our future market success. And in addition, it is a response to current geopolitical developments. Let me use China as an example to describe what I mean. In Shenyang, we are going to open a new plant at our site in Tiexi. We are going to build a new BMW 3 Series Sedan in its extended wheel-based version, all-electric and especially for China. The plant in Dadong has been expanded substantially. And this is where the X5 with an extended wheelbase is going to be produced, and it's been tailor-made exclusively for our Chinese customers. If the market situation in some regions is difficult. Then, of course, we are going to have the other markets supporting us. The situation in the world remains tense. Everyone assumes so, politics, institutes and we too. There are some completely new challenges, and they follow each other in ever short intervals. And we know some of them are already, managing pandemics, military altercations with economic repercussions, fragile supply chains, growing protectionism, short resources, expensive raw materials, insecure energy supply. But what is new is these challenges overlap each other. And they happen at the same time, but at different levels of intensity and constellation. This multiple burden becomes the new normal, the normality for entrepreneur elections. And despite the insecurities, we have given a forecast for the year 2022. To be highly profitable, remains our target and our duty vis-a-vis you as well as all stakeholders who make a contribution to our success. Without the events in the Ukraine, we have planned an EBIT margin in the Automotive segment of 8% to 10%. This remains our strategic target corridor. Now for 2022, we are going to aim at 7% to 9% only. Our earnings before tax is to be clearly above that of the prior year. And this surely has to do with our joint venture, BMW Brilliance Automotive. We extended the contract up until 2040. And since February, the BMW Group hold 75% of the BBA shares, and this means BBA has been fully consolidated in our group financial statements. In strategic terms, a significant step forward. Short of 25,000 employees of BBA are now officially members of the Team BMW Group. Your company is growing into or onto a new level in a new dimension. Our financials for the first quarter show this already. For instance, sales has been rising by 16.3% year-on-year. And in the context of the BBA purchase, shares were revalued at market value, and this means there is an appreciation of about EUR 7.7 billion. And this is an effect which is reflected in the group earnings of the first quarter. And this year, too, we are going to prove BMW can handle crisis. BMW can go through transformations. And above all, we are strong because we transform ourselves. And this brings me to the second point, our successful transformation. We are convinced we have the right strategy. We have the right products and technologies in the marketplace at the right time and our transformation has an effect and carries us forward. And to bring this about, we need operative excellence. We need courage in our own technology-based path. With these features and characteristics, we are going to turn this transformation into a competitive edge for us. And in this process, we can really fully utilize and harness our BMW typical capabilities. Technological diversity. The BMW path is not mainstream, but it is effective. We lower CO2 emissions fast and effectively. Each and every drive system makes a contribution. Europe is just determining the route to the Green Deal. But before we switch off individual technologies, I believe we should make sure that the new ones are really safe. We continue to develop all technologies, and this is a benefit for climate protection as well as customers and substantially so because now and in the next decades. You see the markets are wide differently and will be in the future. The charge infrastructure is developed differently and the customers have different needs and requirements regionally. Our latest example how we implement technology open is, it is the new BMW 7. One model, 4 drive systems, unique in the luxury segment, and we are going to launch with it the latest, newest generation of our highly efficient ICEs. It is designed to comply with the Euro 7 standard, and this means we are well prepared for the regulatory requirement when it comes to our conventional drive systems. And this until 2030. And I add to that, the substantial financial expenditures are far behind us. The 7 is far ahead of its time. So just imagine, you look at painting or a piece of art for the first time, you may love art or may not. But in intuitively, you feel that this is something special like the new 7. And this is why we call it our masterpiece. It invites you to drive, but also be driven. Our most demanding customers are supposed to feel at home in it. Like in a private lounge. And for me, this is a leap into the future. And I really love the grandiose screen in the rear, 31-inch. The BMW theater screen, it will change your 7 in a Cinema auditorium, the strongest, most powerful 7 is the all-electric model. [Presentation]

This is tech magic and this is exactly what our customers expect. In technological terms, no vehicle can offer more. In November, the i7 will be launched in the marketplace. It's the first 7 series variant. The electric sound has been developed together with Hans Zimmer. And not only fans of film using you know that he's just been awarded his second Oscar. Genuine diversity of drive systems will also be possible when looking at the BMW X1. At the end of the year, the all-electric variant will be launched in the marketplace. And the iX1 will bring momentum to this high volume premium compact class. In 2023, we are going to launch the next core product of BMW. That is the 5, and all this is part of our road map e-mobility. It's ambitious, it's consistent, and it runs precisely along the line of rising demand. And this means your company will remain a leading manufacturer in the world of electric cars. We will make sure that this will be like this. And there are 8 all-electric models on the roads this year. Add to that, the pre-service vehicles, then we've produced 15 BEVs already. This is the abbreviation for battery electric vehicles. In 2022, all-electric wheels are to account for at least 10% of our deliveries. In the first quarter, we have doubled the number of our BEV sold and this in comparison with the previous year. And by the end of 2025, we are going to break another sound barrier. 2 million in total of our BEVs are going to be the roads. In 2030, we are going to make sure that half of our sales worldwide is all-electric, and we do everything to reach this target much earlier because we challenge ourselves time and again. Our brands MINI and Rolls-Royce in the early 1930s (sic) [ 2030s ] will be all-electric. And in a few months' time, we are going to give you an outlook of the completely new MINI family. At BMW Motorrad all forthcoming urban models are all electric. Last year, we showed you a concept vehicle here, a concept bike that is today, I brought the volume model. I'm riding bikes myself and I believe the BMW CE 04 is a real eye catcher. Perfect for the city, and we harness the full potential of our flexible BMW architectures. A strong point, which your company has. This means we can grow in all segments across the entire portfolio. Now add to that the new hydrogen electric drive system. It will complement e-mobility in a meaningful way. In the upper market segment and the fastest in countries like Japan and Korea, but also in California. The BMW iX5 Hydrogen has been tested under extreme conditions. And starting in autumn, we are going to produce a small series. The path to net zero does not take place on the road alone. It also requires sustainable supply chains. And I can say that the importance of the upstream chain will rise with each electric car sold, and this is good for the climate balance. And we use hundreds of our partners, and they use renewable energy sources. And this is something which we agreed upon in the respective contracts. And this means until 2030, we are going to save 20 million tonnes of CO2 compared to 2019, and this in the supply chain. And as I said, we are going to measure -- to be measured against the results. But internally, we also have a look at and take into account upstream value creation. Our divisions purchasing, development and production from now on will be working technology clusters, and this means they strengthen the responsibility of the divisions, purchasing and supply network. But at the same time, we make sure that we have early access to the latest technology offerings of our partners. We develop our organization dynamically. And last year at the annual conference, the journalist asked me Mr. Zipse, why do you frequently use terms from tech world? Is that necessary? What I answered. Well, because they describe our everyday workings. BMW is digital through and through. And in addition, the real and the virtual worlds are merging more and more. Metaverse is what the tech world calls this. This, of course, refers to our products because customers expect a digital driving experience. And in all derivatives, the BMW iDrive and our Operating System 8 are being rolled out. Remote software updates over the year is included. We have under control the digital car tech stack across all domains off-boar and on-board and also the entire set in technologies for all development -- for the development of all digital features. More than 10,000 experts are working in our IT and software development, and they work together on a global scale. And this, of course, also affects our production. We map and show our processes in a virtual form. Each plant has got a digital twin. And this means we've revolutionized in this way, plant planning. Now short and snappy, cool digitalized vehicles come from cool digitalized plants. And this is just one aspect of our BMW iFACTORY. It is our master plan for the production of the future. And in each plant, we implement a new dimension of lean, green and digital. And last but not least, this affects our sales. Here, we digitalize the customer interface. By 2025, we are going to handle 1/4 of all sales online. We use digital as well as physical possibilities. And our deal network remains highly relevant in order to have -- to make sure that the customers have a premium experience. And I believe that this is a potential advantage which we should extend or build on. And complex transformation will not run by anyone alone. Therefore, our partnerships are long-term partnerships. And at the same time, we have remained nimble, agile in a moving environment. With Qualcomm Technologies and Arriver Software, well, together with them, we develop the next generation of driver assistance systems and automated driving. Level 2, Level 2+ and Level 3 functions. We are cooperating with the best tech players. Google and Apple are among them. Like highly specialized start-ups, cooperation and competition, this is our philosophy. And in the digital environment, this is completely normal. Now the French carmaker Stellantis has communicated, they want to acquire the carsharing operator SHARE NOW. Now the respective antitrust authorities have to agree to this transaction. And this means we are realigning YOUR NOW. Our joint venture with the Mercedes-Benz Mobility AG focuses in future on 2 fields of business, FREE NOW and CHARGE NOW. This means digital multi-mobility as well as digital services around everything in the connection of charging. And here, we believe there is potential for further growth. Now ladies and gentlemen, the future needs biding targets and dominant milestones. And this today is my third point. Our NEUE KLASSE for a new era, definitely, it is the largest future project of your company, digital, electric, circular. An enormous technology leap, for products, technologies as well as the working models. This year, we are going to award the majority of the contracts for the first vehicles. And in doing so, we take into account the CO2 emissions and the share or the proportion rather of secondary material used. They are criteria when selecting suppliers, integrated in the purchasing process, not as an add-on. The NEUE KLASSE is fully designed for e-mobility. And our latest and newest drive generation GEN6 is also taking this into account, more performance, new cell chemistry, new cell formats. So on the 1st June, we're going to lay the foundation for the Debrecen plant. And 26 months later already, we are going to start producing the pre series of the NEUE KLASSE based on our new vehicle architecture. And this means we combine things into a unique step in the production processes. You see our plant in Hungary is to do away with fossil energy resources. The first car plant worldwide. This means we are going to produce things without much discussed natural gas. And that is a bombshell because it implies we cannot only run or supply energy to this plant in terms of CO2 balances or neutrality. But without any CO2 at all. Now you may say, where do we get the power from? What I can say it is generated directly on the plant premises. And for the rest, we are going to use 100% renewable energy resources and the total requirement comes from regional sources. So as you can see, we make an active contribution to the energy transformation. And this applies to other sites and locations worldwide. What's best for the respective plant. What are the local options. This is what we are thinking. And this is how we lower our climate footprint, and we do so in the best possible way in the respective region. Ecological and economical actions go hand in hand because our concept provides for stable prices as well as secure supplies. It is clear. The NEUE KLASSE will be profitable on a level of most advanced ICEs. On the Board of Management, we had to look at 2 concept vehicles, and you will be fascinated to, I promise you. The NEUE KLASSE is exactly the leap forward, which we plan to do. Ladies and gentlemen, Prices for industrial and precious metals are rapidly rising: nickel, aluminum, palladium, copper. Reusing raw materials, use fewer primary materials, this will take us out of the spiral. Today, approximately 90% of the materials used are reusable. So our target is all the more ambitious. We would like to clearly increase the proportion of secondary material, which we use in our vehicles, from currently 30% to at least 50%. Now this is a big step forward. It means your company will be increasingly independent of raw materials in short supply. And our circularity will be the new max interaction, from an ecological view, as well as economic and geopolitical perspectives. As a company, we are going discuss intensively. We want to reduce the dependence on fossil energy resources. And at the same time, we do not slide into new dependencies. Just think of the raw materials in batteries. This is another argument to be in position with a wide basis in terms of technology because diversity will make your resilience. Circular actions is not music of the future. When looking at the MINI Countryman, we can say that the light-alloy cast wheels consist of secondary materials for 70%. In our BMW iVision Circular, really made an impression at the IAA mobility. It is an extraordinary vision vehicle, 100% made of secondary material and regenerative raw materials, 100% recyclable. This means we move body, heart and mind. We move forward in the German car industry. Your company has presented the second integrated BMW Group report. Integrated reporting requires everyone to take part in every decision. What is its impact across the board, not only in economic but also ecological terms, but also in the short, middle and long run, a complex challenge and requirements. Dear shareholders, we've got a future that is optimistic. And he who is optimistic and grows will employ new members of staff. Up to 5% is the figure we want to do. And this is not a gut feeling because our workforce is standing behind the BMW Group. We are going to see and we do see transformation as a chance. This year is the next consistent step on our BMW way in the future. There are 3 anniversaries which your company is going to celebrate this year, 100 years, BMW plant in Munich, 50 years BMW Four Cylinder building, and 50 years BMW M. And they all show, together, we are going to make a difference. We generate value and we create added value. Please stay on our side, remain on our side. Thank you very much.

Thank you very much, Mr. Zipse for your clear report and the outlook that you've given us. I would now like to ask our CFO, Dr. Peter to take the floor and present to you topics from the finance division and to explain agenda items 8 and 9. Dr. Peter, the floor is yours.

Dear shareholders, at the 2019 Annual General Meeting, the Board of Management was authorized to issue new nonvoting preferred shares with the approval of the Supervisory Board. Now the new shares may only be issued against cash contributions. The authorized capital is exclusively intended for the issue of employee shares. On the basis of this purpose, shareholders' subscription rights have already been excluded in the resolution of the Annual General Meeting. Since the last Annual General Meeting, we have made use of the authorization once, namely for the Employee Share Programme 2021. Around 29,000 employees participated in this program and a total of 1,715,000 new preferred shares were issued. This represents an increase in capital stock of nearly 0.26%. The issue price of the new shares was set at EUR 60.78 per share. That represents a discount of EUR 13.50 per share compared to the average closing price of BMW preferred stock in Xetra trading, during the period from October 28 to the 3rd of November 2021. However, the new shares are not entitled to dividends until the fiscal year 2022, and they are subject to a lock-up period until the end of 2024. The exclusion of subscription rights already resolved by the Annual General Meeting is necessary to enable the shares to be transferred to the employees. The dilutive effect is extremely low. The remaining authorized capital 2019 now amounts to around EUR 1.7 million. For further information on the utilization of the authorized capital you can also refer to the BMW Group report. Now employee shares have been approved an instrument at BMW AG since 1989 to enable our employees to participate in the success of the company. We are convinced that the moderate use of the authorized capital since the last Annual General Meeting is in the best interest of the company and its shareholders. So dear shareholders, this brings me to 2 items on today's agenda. Under item #8, we propose an authorization to acquire treasury shares. Thanks to its successful business development, BMW AG has a strong balance sheet and the potential to generate a sustainably high free cash flow. The Board of Management would therefore like to be granted the option of returning available capital to shareholders via share buybacks in order to improve the capital structure. In accordance with statutory requirements, the authorization is to be valid for 5 years and for a maximum amount of 10% of the capital stock. The authorization stipulates that the shares can only be purchased on the stock exchange. And in each case, the purchase price must be within a range of no more than 10% above or below the share price determined on that day in the opening auction in Xetra trading. The shares thus purchased may, in particular, be canceled and withdrawn. In addition, they may also be used for employee share programs or for the acquisition of companies. In these cases, it is necessary to exclude any subscription rights of shareholders. I would therefore like to refer you to the written report of the Board of Management on this subject. And you will find that report in the notice Convening the Annual General Meeting and on our website. Finally, I'd like to explain to you Item #9 of the agenda in more detail. Under this agenda item, we are asking you to approve amendment agreements to existing profit and loss transfer agreements that BMW AG has concluded with 6 of its subsidiaries. You can see these 6 subsidiaries posted here. Now for tax reasons, it has been required for a number of years now that profit transfer agreements contain so-called dynamic references. These are contractual clauses that declare certain legal norms to be applicable in the currently valid version and incorporate them into the contract. This has the advantage that the contract does not have to be adapted even if the law changes after contract conclusion. Now all profit and loss transfer agreements within the BMW Group contain such dynamic references. In addition, however, the relevant sections from the law were sometimes quoted verbatim for illustration purposes. And this was in line with standard contractual practice. But now a provision in the German Stock Corporation Act has been amended. As a result, the citations of the contracts referring to this provision have become incomplete. And we would like to rectify this by removing all literal citations of the law from the contract as a means of precaution. This will make the contract clearer overall. And in the event of future changes to the relevant regulations, it will then no longer be necessary to adjust set contracts. So we are taking the opportunity to update the contracts and bring them into line with standard group-wide clauses. And we're also talking and taking this opportunity to make clarifications and other editorial adjustments. And in doing so, I'd like to emphasize that the amendments to the contracts do not affect the main rights and obligations of the contracting parties. This will continue to apply unchanged. Any further information on the amendment agreements can also be found on our website. Thank you for your attention.

Well, thank you, Mr. Peter. And that brings us to the end of the public broadcast of our Annual General Meeting. For our registered shareholders, we continue to stream this Annual General Meeting in full on our online services. If you haven't done so yet, you should now register on the online service. And you can find the required access data on the confirmation of your registration. And with that, I say goodbye to all those who have followed our public broadcast, and thank you for your interest. [Statements in English on this transcript were spoken by an interpreter present on the live call.]