BMW - Manufacturing Company Based in Germany - Essay Example

The early years of business were focused on serving the military and designing and manufacturing aircraft engines, built-in engines, and railway vehicle brakes. After the ruins of WWII, the company had a tough time reviving its production plant and it was by 1947 that the company started production of the two-wheeler. After rejecting Daimler’s takeover move the company emerged as a strong entity that specialized in manufacturing the highest quality motor vehicles. The company has three luxurious brands BMW, Rolls Royce, and Mini that remain strong and popular amongst those who wish to experience innovative luxury available across BMW's global network (BMW AG).

The company has a strong financial position as reported in its annual report 2008 the company has generated revenues of €44,143mn and a net income of €384mn in 2008. The company has a healthy dividend payout of 61% which may imply higher shareholders’ confidence in the company’s financial position and its ability to generate cash flow in the future. The company’s total assets are worth €23,316mn in 2008 whereas its current liabilities and long-term obligations were €7,974mn and €9,933mn. The company’s equity is €5,338mn and its EPS of €0.49 (BMW AG). Despite the recession in the global economy, the company has been able to generate healthy earnings and its share prices have been on the rise in the last 9 months period currently trading at €35.94 on Xetra Exchange after closing at a low of close to €18 in Feb 2009 (BMW AG).

Group Management Report identified the current financial crisis and a slowdown in consumer spending as one of the major reasons for the company’s financial deteriorating financial performance. The falling revenues within different business segments lead to lower dividend payout than the previous year. The company had to pull back its capital expenditures on different upcoming automobile models given the economic slowdown. The company’s production had faced volatile raw material prices especially steel which rose sharply during 2008. However, the company has managed to announce better results despite current economic conditions and it anticipates further slowing down in 2009 (BMW Group).

The company’s financial records and procedures for the year ending 2008 were audited by KPMG AG Wirtschaftsprüfungsgesellschaft. An unqualified report was submitted by auditors stating that there is a reasonable assurance regarding their opinion on the correctness and completeness of the financial records, internal control,s and reporting system of the company (BMW AG).

From the above analysis and independent analysts’ reviews (BMW AG) available from the company’s website it could be suggested that the company still has a strong position in the industry and it has carefully placed itself in the luxury car industry. Its strong position in certain European countries and emerging Asian countries such as China and India has surely helped the company ease the pressures of the economic downturn in major economies. The company has launched its new model one of the strongest hybrid cars which would surely be admired by environmentalists. On the whole the company’s outlook for coming years remains positive as the economies reshape their weakened structures and consumers will surely desire for luxury offered by BMW. From the shareholder's point of view, the company’s financials are strong and has a strong dividend payout which could motivate investment in the company’s stock. However, more can be evaluated if a detailed financial statement analysis is carried out of the company’s reported financials. Read More