Daimler Trucks posts record revenues in 2012

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Daimler Trucks substantially increased its sales and revenues in 2012 while also generating good earnings. One of the factors that will help strengthen Daimler Trucks this year is the Daimler Trucks #1 initiative, which is expected to generate positive effects amounting to €1.6 billion until the end of 2014. Due to the expected course of market development, this growth will probably occur mainly in the second half of the year.

In 2012 the truck markets were affected by positive as well as negative developments. After many truck markets had posted strong sales increases in the first half of the year, all core markets saw demand increase more slowly or even decline in the third and fourth quarters. In Europe, the sovereign debt crisis and the associated economic downturn led to a marked decline in purchases. Economic constraints also limited demand in the NAFTA region to the procurement of essential replacement vehicles. Although reconstruction activities caused an upswing in Japan following the earthquake, this development slowed considerably in the course of the year. In Brazil, meanwhile, weak economic growth and the introduction of a tougher emissions standard led to a significant drop in unit sales since the beginning of 2012.

Strong growth in North America and Asia

In spite of these difficulties, Daimler Trucks succeeded in further increasing revenues and unit sales, with growth occurring in particular in Asia and the NAFTA region. Revenues rose by 9% worldwide, to €31.4 billion (2011: €28.8 billion). The division sold 462,000 vehicles, or 9% more than in 2011. Sales in the NAFTA region rose by 18% to around 135,000 units (114,000), and in Asia by 21% to 164,000 vehicles (135,000). In Western Europe, Daimler Trucks’ sales declined by 6% to 58,000 units (61,400). The result in Latin America was particularly impacted by the steep contraction of the Brazilian truck market. As a consequence, sales in the region as a whole dropped by around 25% to 46,200 vehicles (61,900).

“We’ve done relatively well in a difficult situation,” says Andreas Renschler, the Daimler Board of Management member responsible for Daimler Trucks and Buses. “We substantially increased sales and revenues despite volatile markets, thus demonstrating once again that we are properly positioned. That’s because our global presence enables us to offset the effects of weak markets more effectively.” The division’s EBIT amounted to €1.7 billion, which was around 9% lower than in the prior year, due to lower sales in Brazil and Western Europe as well as scheduled expenses for the current product offensive.

Although some of the markets presented difficult conditions, Daimler Trucks’ innovative range of cutting-edge products met with a good customer response and enabled it, as the global market leader, to increase its share of core markets. In spite of the sovereign debt crisis, the division continued to boost its leading position in Europe (EU 29) to 22.6% (2011: 21.7%) and increased its share of the German market by an even greater percentage to 39.2% (37.5%). In North America, the division strengthened its domination of the market for medium and heavy duty trucks (Class 6-8), which it has held for many years. “In 2012 we countered the headwinds with a fantastic product range that enabled us to remain among the top three manufacturers in all of the core markets and, in some cases, to even improve our position,” says Renschler.

In the development and expansion of its product range, Daimler Trucks proceeds as globally as possible and as locally as necessary. Through the rollout of global platforms and modules, Daimler Trucks can exploit the advantages of its worldwide presence extremely well and offer an optimal product lineup for each customer and market. One example of this is the heavy-duty truck platform on which the Mercedes-Benz Actros, Antos, and Arocs trucks are based. Daimler Trucks is rigorously implementing its shared parts and module strategy, for example in the new models it has launched over the past two years. As a result of the recently presented new Atego, Daimler Trucks also became the first manufacturer in the sector to complete the launch of a full range of Euro VI-compliant trucks. What’s more, this was achieved eight months before the new emissions standard goes into effect on January 1, 2014.

Daimler Trucks #1 excellence initiative launched

To safeguard its leading position as a global truck manufacturer and also achieve top profitability values, the division launched the Daimler Trucks #1 (DT#1) initiative in mid-2012. The initiative is part of the Global Excellence Strategy, which has guided the division’s actions since 2005. DT#1 consists of a range of programs that are tailored to the needs of the various business units (Trucks EU/LA, Trucks NAFTA, Trucks Asia, and Global Powertrain), as well as cross-business approaches. All of these measures aim to generate total improvements of €1.6 billion for Daimler Trucks by the end of 2014. Although some of these improvements will be achieved through higher sales and earnings, the reduction of fixed, material, production, and quality-related costs will also play an important role.

One element of the DT#1 initiative is the development of an integrated business model for Asia. “The aim is to exploit as much growth and synergy potential as possible in procurement, production, sales, and the product range,” says Renschler. Among other things, the division plans to produce robust Fuso brand trucks in Chennai, India, and export them – for example to markets in Asia and Africa.

Outlook: World market for medium and heavy-duty trucks expected to grow slightly

Daimler Trucks once again expects its business to get only limited support from economic developments this year. The prospects are particularly dim in the industrialized countries, which suffer from risks ranging from the euro crisis to the federal debt dispute in the U.S. This year the global economy will once again be primarily driven by the emerging markets, which are expected to contribute around three fourths of the world’s economic growth of 2.5 or, at best, 3 percent. The demand for medium and heavy-duty trucks is therefore expected to increase in 2013. It currently seems that the worst is probably over for the truck sector in the emerging markets, and in Brazil and India in particular, and demand is expected to stabilize in the triad later this year.

Daimler Trucks expects the market for medium and heavy-duty trucks (Class 6 to 8) to contract by 5 to 10% in the NAFTA region. In Europe, the demand for medium and heavy-duty trucks is forecast to decline by up to 5%, while the Japanese market is expected to remain at roughly last year’s level.

The market will probably improve considerably in Brazil. Following difficult developments in 2012, the country’s overall economic prospects have now improved substantially and the government will continue to offer favorable financing terms for commercial vehicles. As a result, Brazil’s truck market might increase by up to 10%.

“The year 2013 will be challenging on the whole and business has been rather sluggish in the first few months. However, in the second half of the year the markets should gather momentum”, says Renschler. In view of these market developments and the full availability of Euro VI-compliant Mercedes-Benz medium and heavy-duty trucks in Europe, Renschler expects Daimler Trucks to increase its sales, market share, and profits in 2013.

Credits: Daimler AG

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