Daimler achieves EBIT of €917 million in first quarter of 2013

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Daimler AG (stock-exchange symbol DAI) achieved earnings below the prior-year level in the first three months of 2013. The Daimler Group posted first-quarter EBIT of €917 million (Q1 2012: €2,098 million). Net profit amounted to €564 million (Q1 2012: €1,425 million). Earnings per share amounted to €0.50 (Q1 2012: €1.26).

“In the first three months of this year, many markets developed worse than expected for economic reasons, especially in Western Europe. Nonetheless, we maintained our unit sales and revenue almost at the levels of the prior-year quarter and gained market share in many segments,” explained Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, with regard to business developments in the first quarter.

“The response to our new products such as the CLA and the E-Class is excellent, and at Daimler Trucks, our successful product offensive is largely completed with the new Arocs and the new Atego. On the basis of the new products, the ongoing efficiency programs and our assumptions for future market developments, we expect earnings in the second half of this year to be higher than in the first half, due in particular to the launch of the new S-Class,” continued Dr. Zetsche.

“Daimler is now in the middle of the most comprehensive growth offensive in its history. To these ends, we are investing large amounts in products, technologies and markets, which, in combination with the generally weak markets, led to a moderate start to the year 2013 in terms of earnings. But due to the stimulus from new products and the effects of the ongoing efficiency programs, we naturally intend to improve significantly in the coming quarters,” explained Bodo Uebber, Member of the Board of Management of Daimler AG for Finance & Controlling and Financial Services.

The decline in earnings in the first three months of this year is a reflection of both a shift in the regional structure of unit sales and a changed model mix at Mercedes-Benz Cars and Mercedes-Benz Vans, as well as a decrease in unit sales by Daimler Trucks. At Daimler Buses, increased unit sales led to an improved operating profit, while the earnings posted by Daimler Financial Services remained almost constant.

The compounding of non-current provisions and effects from the reduction in discount rates led to charges of €47 million in the first quarter of this year (Q1 2012: €170 million). There was an opposing impact from slightly positive exchange-rate effects.

Group revenue at the prior-year level

In the first quarter of 2013, Daimler sold 501,600 cars and commercial vehicles worldwide, and was thus close to the prior-year level (Q1 2012: 502,100).

Daimler’s first-quarter revenue of €26.1 billion was 3% lower than in the first quarter of last year. Adjusted for changes in currency exchange rates, there was a decrease of 1.5%.

The free cash flow of the industrial business amounted to minus €1.2 billion, primarily due to ongoing high expenditure of €1.6 billion for investment in property, plant and equipment and intangible assets. The net liquidity of the industrial business amounted to €10.0 billion at March 31, 2013.

At the end of the first quarter of 2013, Daimler employed 274,555 people worldwide (end of Q1 2012: 274,127). Of that total, 166,265 were employed in Germany (Q1 2012: 168,017), 21,702 in the United States (Q1 2012: 21,520), 14,622 in Brazil (Q1 2012: 14,737) and 11,242 in Japan (Q1 2012: 11,344). The consolidated subsidiaries in China employed 1,743 persons at the end of the first quarter (Q1 2012: 2,269). The headcount changes in China result from the transition of the sales organizations for cars into a non-consolidated joint venture. In addition, employees in sales functions in South Africa, who were previously allocated to the Mercedes-Benz Cars division, are now allocated to the sales organization.

The divisions in detail

Mercedes-Benz Cars posted yet another high level of unit sales in the first quarter of 2013. Total sales by the car division increased to 341,500 units (Q1 2012: 338,300). First-quarter revenue fell by 6% to €14.1 billion. The division’s EBIT of €460 million was significantly lower than in the first quarter of last year (Q1 2012: €1,230 million). Return on sales was 3.3% (Q1 2012: 8.2%).

Earnings reflect a shift in the regional sale structure and a changed model mix. Furthermore, EBIT was reduced by expenses for the enhancement of our products’ attractiveness and capacity expansion, as well as advance expenditure for new technologies and vehicles. Exchange-rate effects were slightly positive.

Unit sales by Daimler Trucks decreased by 6% in the first quarter to 101,400 vehicles and revenue amounted to €7.0 billion (minus 5%). The division’s EBIT of €116 million was lower than in the prior-year period (Q1 2012: €376 million). Return on sales was 1.7% (Q1 2012: 5.1%).

Earnings were affected by the overall negative development of unit sales and revenue, resulting from weak demand in some core markets. Earnings were reduced also by expenses for the development of business in India and China, product adjustments especially in the NAFTA region and Europe, and higher warranty costs.

Unit sales by Mercedes-Benz Vans increased slightly in the first quarter of 2013 to 52,600 vehicles (Q1 2012: 51,200), despite the difficult market environment in Western Europe. Revenue decreased slightly to €2.0 billion (Q1 2012: € 2.1 billion). The division achieved EBIT of €81 million (Q1 2012: €167 million) and its return on sales fell accordingly to 4.1%, from 8.0% in the first quarter of last year.

In a market environment featuring restrained demand and intense competition in the European markets, Mercedes-Benz Vans’ unit sales in the first quarter of 2013 were slightly higher than in the prior-year period. Earnings decreased significantly, however, mainly due to changes in the product mix and the regional sales structure. Advance expenditure for new products, including the launch of the Sprinter Classic in Russia, additionally reduced earnings.

In the first quarter of 2013, Daimler Buses increased its worldwide unit sales by 23% to 6,000 buses and chassis as a result of rising demand for bus chassis in Latin America. The business with complete buses in Western Europe was below the prior-year level. Revenue rose by 3% to €751 million; however, the changed model mix following the repositioning of the North American business system had a dampening effect on revenue growth. The division’s EBIT amounted to minus €31 million (Q1 2012: minus €105 million) and its return on sales was minus 4.1% (Q1 2012: minus 14.4%).

Compared with the previous year, EBIT rose as a result of increased unit sales. Daimler Buses achieved significantly higher shipments of bus chassis, especially in Latin America. Business in Europe developed disparately, however: While demand for city buses recovered somewhat, Daimler Buses recorded lower unit sales of coaches. Exchange-rate effects and the initiated efficiency measures had a positive impact on earnings. Expenditure for the repositioning of the European business system decreased substantially to €4 million (Q1 2012: €36 million).

The business of Daimler Financial Services continued to develop positively in the first quarter. Worldwide, some 253,000 new leasing and financing contracts with a total value of €8.6 billion were concluded, representing growth of 4% compared with the first quarter of 2012. Total contract volume of €81.7 billion at the end of the first quarter was 2% higher than at the end of 2012. Adjusted for the effects of currency translation, contract volume increased by 1%. The division’s EBIT of €314 million was lower than in the first quarter of last year (Q1 2012: €344 million).

This earnings development was primarily due to lower interest margins and normalizing credit risk costs. As an opposing effect, the increased contract volume impacted positively on earnings.

The reconciliation of the divisions’ EBIT to Group EBIT comprises our proportionate share of the results of our equity-method investment in EADS, other gains and losses at the corporate level, and the effects on earnings of eliminating intra-Group transactions between the divisions.

Daimler’s share of the net profit of EADS in the first quarter of 2013 amounted to €34 million (Q1 2012: €133 million). The decrease in investment income was also due to the reduction of our equity interest in EADS following the sale of a block of shares in December 2012. The reconciliation also includes expenses at the corporate level of €91 million (Q1 2012: €35 million). The elimination of intercompany transactions in the first quarter of 2013 resulted in income of €34 million (Q1 2012: expense of €12 million).

Outlook

According to current estimates, worldwide demand for cars should grow in the range of 2% to 4% this year, driven primarily by the ongoing strong growth in demand in the United States and the further expanding Chinese market. However, as a result of the continuing economic weakness, a decline is again expected in the Western European market. Demand will thus continue to move around a 20-year low. The German market cannot detach itself from this development and is expected to fall significantly short of the previous year’s level. A decline is expected also for the Japanese market compared with the previous year’s level, which was unusually high as a result of government incentives for car buyers.

According to the current status, global demand for medium-duty and heavy-duty trucks is expected to grow perceptibly in 2013. However, this depends very decisively on the development of the world's biggest market, China, which should experience a perceptible recovery in demand, although the start of the year proved to be below expectations. Demand in North America should stabilize in the coming months, but from today’s perspective, Daimler anticipates market contraction of up to 5%. In view of the continued weak economic environment, the Group expects a drop of approximately 5% for the European truck market. Market volume in Japan could be up to 5% below the prior-year level, whereby the possible effects of the Japanese government’s new economic stimulus package are still difficult to assess. A moderate recovery and market growth of as much as 10% are expected in Brazil, thanks to the improved economic outlook and favorable financing conditions. The Russian market has already returned to near-pre-crisis levels and is expected to grow again moderately in the year 2013. On the other hand, a drop in demand for trucks is expected in India due to the continued below-average economic momentum.

On the basis of the divisions’ planning, Daimler anticipates another increase in its total unit sales in the year 2013.

Mercedes-Benz Carsis consistently moving ahead with its “Mercedes-Benz 2020” offensive. Numerous model changes and new products should ensure that the division achieves yet another record for unit sales in the year 2013. The new models in the high-volume compact car segment are likely to make a major contribution to sales growth. After the successful start of the A-Class and B-Class, the four-door CLA coupe came on the market as the third model based on the new compact car architecture in mid-April 2013. The extensively revised new E-Class sedan and station wagon have also been available at Mercedes-Benz sales and service centers and dealerships since April. As of June 2013, the new E-Class coupes and convertibles will also provide added sales momentum. The electrically driven, locally emission-free super sports car SLS AMG Coupe Electric Drive will come on the market in June 2013. Mercedes-Benz Cars expects significant growth in the luxury segment for the second half of 2013, due mainly to the launch of the all-new S-Class. As the most important new model of the year 2013, the new S-Class equipped with trailblazing innovations will set new standards of comfortable and safe driving under the umbrella term “Mercedes-Benz Intelligent Drive.” In addition, the Mercedes-Benz brand will continue to profit from the market success of the models in the SUV segment in 2013.

The smart brand sees a good chance that the unique two-seater can continue to defy its advancing lifecycle in the highly competitive micro-car segment in 2013 and can achieve unit sales in the previous year’s range once again.

Daimler Trucks expects a slight increase in unit sales in the full year. In the first half of the year, however, the continued weak state of the economy will probably lead to a rather modest or even negative development of unit sales in a number of core markets. The extensive product offensive, which is now largely complete in all relevant regions, should provide a counterbalance to the difficult economic conditions. As a result of this offensive, the division is in a very good starting position: In Europe, unit sales will gain added impetus from a full product range already in line with the stricter Euro VI standards significantly ahead of the date of introduction, with the Actros, the Antos, the new Arocs for the construction sector, and the new Atego. In the NAFTA region, Daimler Trucks will maintain its competitive position with its excellent vehicle offering in combination with strong Detroit components. A convincing sales argument in favor of the Freightliner Cascadia Evolution for example is the optimization of vehicle aerodynamics and powertrain, which yields additional fuel savings of 5% compared to its predecessor, the previous market benchmark.

The Fuso and BharatBenz brands will continue to make an important contribution to sales growth in 2013. In the future, trucks of the Fuso brand will also be produced in Chennai and exported to the Asian markets outside India and to Africa. The Fuso Canter and its hybrid versions, which have also been produced in Europe since 2012, should provide additional demand stimulus. Furthermore, additional models of the BharatBenz truck will be launched in India and the sales and service network will be further expanded. In Russia and China, the division is progressively expanding its collaboration with local partners Kamaz and Foton, and is thus creating the conditions for the further development of those growth markets.

Mercedes-Benz Vans expects to achieve growth in unit sales in full-year 2013. On the product side, this should be assisted by the new Mercedes-Benz Citan and as of mid-2013 by the new generation of the Sprinter. Moreover, the start of local production of the Sprinter Classic in Russia in the second quarter of 2013 should enable the division to continue increasing its unit sales in that growth market.

Daimler Buses anticipates a significant increase in unit sales for the year 2013, with bus chassis likely to account for a higher percentage of total unit sales. The division expects to see a distinct revival of demand in 2013 especially in Latin America. Daimler Buses assumes that its business with complete buses in Europe will follow a stable development at an ongoing low level.

Daimler Financial Services expects further growth in new business and contract volume for full-year 2013.

After the significant increase in the year 2012, Daimler assumes that Group revenue will continue to grow in 2013. In regional terms, above-average growth rates are anticipated in the emerging markets and North America.

On the basis of the planned new models, the increasing effects of the efficiency programs that have been initiated and the assumptions made for the development of important markets, Daimler expects its earnings to improve in the second half of 2013 compared with the first half. Due to the fact that there will be no further equity-method results from EADS in the course of the year, as well as lowered market expectations and the weaker than expected EBIT in the first quarter, Group EBIT from the ongoing business in full-year 2013 is expected to be below the previous year’s level.

Mercedes-Benz Cars anticipates full-year EBIT below the level of 2012. Daimler Trucks and Mercedes-Benz Vans expect to post EBIT from the ongoing business in the magnitude of the prior year, while Daimler Buses should improve on its negative earnings of 2012. In 2014 and the following years, Daimler expects an EBIT improvement for all its automotive divisions and for the Group as a whole. Daimler Financial Services anticipates a stable development of earnings.

From today's perspective, Daimler assumes that the size of its worldwide workforce will remain largely stable compared with the end of 2012.

The items shown in the following table affected EBIT in the first quarters of 2013 and 2012:

Credits: Daimler AG

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Daimler plans expansion of Mercedes-Benz Cars production network

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The Daimler AG Board of Management has decided to expand the Mercedes-Benz Cars powertrain production network. Following approval by the Supervisory Board, additional capacities for transmission assembly are now planned to be established at the Romanian Daimler subsidiary, Star Transmission. For the production of a new generation of automatic transmissions more than 280 million euros shall be invested in Romania. Overall, the company plans investments of more than 300 million euros there.

Andreas Renschler, Member of the Daimler Board of Management for Manufacturing and Procurement Mercedes-Benz Cars and Mercedes-Benz Vans, explains: "The expansion of our production network to include an additional location for transmission assembly is designed to perfectly complement our existing capacities. Our goal here is to serve the high customer demand with even greater flexibility in the future."

Additional capacities will be built up in view of the high capacity utilization as well as the lack of space for further expansion of transmission production in Stuttgart. "Star Transmission has been a reliable partner of our German powertrain locations for over 10 years. According to the current planning status and based on our excellent experience with Star Transmission, the preferred option for providing the additionally required assembly capacities in a flexible manner is to expand the activities there," explains Peter Schabert, Head of Powertrain Production and Head of the Mercedes-Benz Untertürkheim plant, referring to the plans for the future production network for transmissions. "Our Stuttgart transmission plant will remain the heart of transmission production for Mercedes-Benz Cars and will act as the center of competence in this production network."

Wolfgang Nieke, Chairman of the Works Council for the Mercedes-Benz Untertürkheim plant and Passenger Car Development: "The plant management and works council agreed two years ago, to set up the production of the new automatic transmission and an assembly module at the Stuttgart-Hedelfingen location. The Board of Management thus reaffirmed its commitment to the in-house production of our transmissions. The second assembly module in Sebes will be supplied from our production location. The increased demand for transmissions ensures the long-term capacity utilization of our transmission production at the Stuttgart-Hedelfingen location."

In order to transfer the Swabian expertise appropriately the Romanian employees will undergo a special qualification program. They spend several months at the Untertürkheim parent plant in quality, maintenance and logistics teams in addition to the production areas.

Daimler subsidiary Star Transmission was founded in 2001. At the moment, the company and the roughly 800 employees at the Cugir location produce components for current Mercedes-Benz car engines and transmissions as well as older generations of transmissions for the spare parts business. The decision has already been made to start production of the 5-speed automatic transmission from the middle of this year at the new location in Sebes until its discontinuation. Starting in 2014, the current generation of front dual clutch transmissions will also be assembled there. This will thus provide additional assembly capacities to complement Stuttgart, where the assembly has been concentrated to date. Subject to the support of the Romanian government for the expansion of the production capacities, it is planned that a new generation of automatic transmissions for cars will also be produced in the new production network involving the locations in Stuttgart (full production including assembly) and Sebes (assembly only) starting in 2016.

The reason for these plans is the expected, continually increasing demand for transmissions in line with the Mercedes-Benz 2020 growth strategy. The Stuttgart-Hedelfingen transmission plant, which is part of the Untertürkheim parent plant from an organizational perspective, is today already at full capacity. All available space has gradually been developed in recent years so that the site – due to its special geographical location in the upper Stuttgart Neckar Valley – has reached its maximum possible expansion level and no meaningful options for further expansion of the facilities exist there.

At the same time, any type of capacity expansion at Mercedes-Benz Cars should also contribute decisively to increased profitability in light of the fierce global competition in the premium segment. This premise naturally also applies for transmissions, which are produced in-house in contrast to the approach preferred by the competition. Overall, the future production network for transmissions is designed to ensure that the required unit figures can – even in the future – be provided in a reliable and extremely flexible manner in line with customer expectations while fulfilling the set cost targets.

About the Mercedes-Benz Cars powertrain production network

The Mercedes-Benz Cars powertrain production network consists of several locations in Germany and is being complemented by international production plants in close connection with the increasing production of Mercedes-Benz vehicles in close proximity to markets and customers. The central location here is the Mercedes-Benz Untertürkheim plant, which produces engines, transmissions and axles in a total of six plant sections. In the past fiscal year, Daimler has invested over 900 million euros here alone in the expansion and conversion of the powertrain plant sections as well as in the startup of new products and production technologies and, as a result of high customer demand, has been able to create 350 new jobs. The company is investing more than 800 million euros at the location in 2013.

The Mercedes-Benz Berlin plant produces engines and powertrain components, while the Mercedes-Benz Hamburg plant is responsible for the production of axles and various additional components. Our subsidiary MDC Power in Kölleda/Thuringia is another important engine production location; it recently received the prestigious "Factory of the Year" award. When it comes to the international locations, the Romanian subsidiary Star Transmission is responsible for the production of engine and transmission components as well as replacement transmissions. Starting this year, the Beijing production location (BBAC – a joint venture between Daimler and the Chinese partner BAIC) in China will start engine production in order to supply local production of Mercedes-Benz cars and vans. Starting in 2014 in the USA, Daimler and Nissan will – as part of the strategic cooperation between Daimler and the Renault-Nissan Alliance – start the joint production of 4-cylinder gasoline engines based on Mercedes-Benz technology at the Nissan plant in Decherd/Tennessee. One of the main customers for these engines will be the future C-Class production at the Mercedes-Benz plant in Tuscaloosa/Alabama.

Credits: Daimler AG

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Daimler Annual Shareholders’ Meeting 2013 in Berlin: Dr. Dieter Zetsche reaffirms focus on growth and efficiency

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“Growth and efficiency: Daimler is staying the course” is not only the motto of today’s Annual Shareholders’ Meeting of Daimler AG, but also describes the Group’s strategic focus. Daimler is pursuing the goal of reaching the top of the respective sectors. “We are Daimler. We don’t only want to get better. We want to beat the competition – on a permanent basis,” stated Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, with regard to the Group’s goals, according to the text of his speech.

“In 2012, Daimler continued to grow,” Zetsche said about the past financial year before an expected number of approximately 5,000 shareholders at the Berlin Trade Fair Center (Berliner Messe). The Group achieved record unit sales and revenue in 2012. Worldwide, 2.2 million vehicles were sold and Group revenue increased by 7% to €114.3 billion (2011: €106.5 billion). Group EBIT amounted to €8.6 billion (2011: €8.8 billion), and Group EBIT from the ongoing business amounted to €8.1 billion (2011: €9.0 billion). Net profit increased to €6.5 billion (2011: €6.0 billion), and value added rose to €4.2 billion (2011: €3.7 billion).

In view of the earnings achieved and the course of business in the year 2012, the Board of Management and the Supervisory Board recommended the distribution of a stable dividend of €2.20 per share (2011: €2.20). This represents a total dividend of approximately €2.35 billion or a distribution ratio of about 40%.

Affirmation of long-term strategy and goals

Zetsche formulated clear objectives for the Daimler Group: “We strive to be a sustainably competitive company that not only produces the S-Class, but which is the S-Class.”

Daimler is pursuing the following specific targets of

- selling at least 1.6 million Mercedes-Benz passenger cars each year as of 2015 and leading the way in the premium segment also in terms of unit sales by 2020,

- consolidating its leading role in the truck sector by selling more than 500,000 units in 2015 and over 700,000 units in 2020, and

- growing also in its other divisions.

In addition to the growth targets, the Group has corresponding profitability goals. In the medium term, it strives to achieve an average return on sales of 9 percent from its vehicle operations across all market and product cycles, with return targets for the individual divisions of 10% for Mercedes-Benz Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for Daimler Buses. The target for Daimler Financial Services is a return on equity of 17%.

Growth strategies supplemented by efficiency programs

“In order to achieve those goals, we have started the biggest growth program in the company’s history: Daimler is growing — at a faster pace, on a broader scale, and in more markets than ever before,” explained Zetsche at the Annual Shareholders’ Meeting.

The goals are to be achieved on the basis of far-reaching product offensives in all divisions, through expansion of the model ranges, the creation of new segments and close adaptation of products and services to regional customer requirements. Across all of its divisions, Daimler has focused on four strategic growth areas in recent years: strengthening the core business, penetrating new markets, expanding its leadership on green technologies and safety, and implementing new types of mobility concept supported by innovations at the interface between mobility and digital networking.

Zetsche emphasized, however: “We don’t want to grow at any price. Our growth has to be sustainably profitable.” To those ends, the growth strategies of the individual divisions have been supplemented with effective efficiency programs.

In the area of passenger cars, the Fit for Leadership efficiency program is an integral part of the Mercedes-Benz 2020 growth strategy. In the area of trucks, the Global Excellence Strategy that started in 2005 has been reinforced with the initiative Daimler Trucks Number One. Similar programs are in place at the other divisions: Performance Vans 2013 at Mercedes-Benz Vans, Globe 2013 at Daimler Buses and DFS 2020 at Daimler Financial Services. In total, this is expected to improve the Group’s cost position by €4 billion by the end of next year.

For 2013 and the following years, the focus is on the consistent implementation of the defined measures and programs. “The objective for this year is to stay the course, continue our growth and enhance our efficiency,” stated Zetsche.

Unit sales in 2013 – status quo and expectations

Many markets were weaker than expected at the beginning of 2013. That applies in particular to the markets for cars and commercial vehicles in Europe. Nonetheless, in the first three months of this year, the Group sold more cars, vans and buses than in the prior-year period.

First-quarter wholesale shipments by Mercedes-Benz Cars increased compared with last year by 1% (retail 3%). The division expects sales impetus from the very good demand for the compact-class models, as well as from the CLA, the third model in the compact class, the new E-Class and the new S-Class, which will have its world premiere in May. Despite the difficult first quarter, Mercedes-Benz Cars assumes that with expansion of the total car market of 2 to 4 percent, its wholesale shipments will increase in full-year 2013.

Daimler Trucks increased its market shares in the first three months of the year, although wholesale shipments decreased by 6%. Thanks to Daimler Trucks’ global spread and its strong, continuously growing product portfolio, the division anticipates slight growth in wholesale shipments as the year progresses. This development will be supported by the new truck for the construction sector, the Mercedes-Benz Arocs, and the new medium-duty truck, the Mercedes-Benz Atego.

First-quarter wholesale shipments by Mercedes-Benz Vans were slightly higher than in the prior-year period (+3%). The division expects growth impetus from the new generation of the Mercedes-Benz Sprinter, which will be available as of mid-2013. In regional terms, growth prospects are varied: While demand for vans in Western Europe could continue to fall, the division anticipates a slight recovery in China as well as sales stimulus in North and Latin America.

Wholesale shipments by Daimler Buses were better than in the first quarter of last year (+23%). The division also expects an increase in wholesale shipments for the full year compared with 2012. In Europe, there will be contributions to this growth from the new Mercedes-Benz Tourismo and the new Setra TopClass 500. In Mexico, the launch of an all-new product family of five coach variants and city buses is being prepared.

The growth of the vehicle divisions is also reflected by the development of Daimler Financial Services: Its new business once again increased in the first quarter of 2013 compared with the same period of last year. In 2013, the division intends to pass the mark of three million leasing and financing contracts for the first time. Daimler Financial Services sees considerable potential in the expansion of its business with innovative mobility services.

Not much tailwind is anticipated from the markets in the coming months. For Europe in particular, there are no signs of a trend reversal. Daimler will therefore reassess whether its previous market-related assumptions for 2013 are still valid and will provide further information regarding market and earnings expectations for the Group and its divisions for the full year in the first-quarter reporting.

Thanks to new products and the efficiency programs now running, Daimler assumes that earnings in the second half of the year will be higher than in the first half.

Zetsche is confident that these goals will be achieved: “The course we have set is the right one – but we have to follow it. And we will follow it – undeterred by the ups and downs of the markets. Consistently and persistently.”

The full speech document (English version) of Dr. Dieter Zetsche at the Daimler Annual Shareholder's Meeting 2013 --> HERE

Credits: Daimler AG

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The Annual Shareholders’ Meeting of Daimler AG approves dividend of €2.20 per share for 2012

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At the Annual Shareholders’ Meeting of Daimler AG in Berlin on Wednesday, the shareholders approved the distribution of a dividend for the year 2012 of €2.20 per share (prior year: €2.20). The total dividend payout amounts to €2,349 million.

The Annual Shareholders’ Meeting also reelected Ms. Sari Baldauf and Dr. Jürgen Hambrecht as members of the Supervisory Board representing the shareholders for a further five years. Furthermore, the Annual Shareholders’ Meeting elected Ms. Andrea Jung for the first time as a member of the Supervisory Board for five years.

The members of the Supervisory Board representing the employees were elected in March and their period of office begins with the end of the 2013 Annual Shareholders’ Meeting. The members reelected are Erich Klemm, Michael Brecht, Jürgen Langer and Jörg Spies. Elke Tönjes-Werner and Wolfgang Nieke were elected for the first time as members representing the employees. The members of the Supervisory Board representing the trade unions are Jörg Hofmann (as before) and Sabine Maaßen (a new member). Valter Sanches continues to be a member of the Supervisory Board of Daimler AG on the employee side as a trade union member from outside Germany. Dr. Frank Weber was elected to the Supervisory Board for the first time and represents the senior management for the next five-year period. The newly elected members Elke Tönjes-Werner and Sabine Maaßen are the first female members of the Supervisory Board representing the employees. Elections for the Supervisory Board members of the employee side are held every five years.

The actions of the members of the Board of Management were ratified by 98.62% of the votes cast and the actions of the members of the Supervisory Board were ratified by 98.60% of the votes cast.

The Annual Shareholders’ Meeting was held at the Berlin Trade Fair Center (Berliner Messe) and was attended by approximately 5,000 shareholders and shareholder representatives (prior year: 5,700). 29.32% of the share capital was represented.

The dividend will be paid out on April 11, 2013 to all shareholders who held Daimler shares on April 10, 2013.

Credits: Daimler AG

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Sustainable growth initiative by Daimler

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Daimler will continue to rely on sustainable actions and in its “Mercedes-Benz 2020" growth strategy takes ecological as well as social aspects into account with the goal of long-term, sustainable growth. As part of the annual "Daimler Sustainability Dialogues” the company also draws upon the know-how of external experts.

Integrity as part of the corporate culture

Daimler is committed to the actions in and on behalf of the company being guided by values. However, conduct based on business ethics cannot be filled with life by decree, but rather solely on the basis of generally supported principles – both in dealing with one another and with customers and business partners. To achieve a common understanding of "proper business dealings", Daimler conducted a Group-wide integrity dialog across divisions and hierarchies in 2011 and 2012. The results of these dialogs have been integrated in the Daimler Integrity Code, which specifies a binding code of conduct and guidelines that govern everyday actions. Respect, openness, fairness, responsibility, compliance with laws and the respect for rights are key principles in this regard.

Dr. Christine Hohmann-Dennhardt, member of the Daimler Board of Management, Integrity and Legal Affairs: “Conduct based on business ethics is an essential success factor for companies striving for a sustained top position. We share this conviction and have sustainably anchored integrity as in inherent part of our corporate culture.”

Advisory Board for Integrity and Corporate Responsibility

Daimler also places great importance on the critical and constructive outside perspective: for this reason Daimler has established the Advisory Board for Integrity and Corporate Responsibility, which advises the company on questions regarding integrity. Its members are:

- Stefan Aust, journalist, publicist and author
- Professor Kai Bussmann, Head of Economy & Crime Research Center, Martin Luther University, Halle-Wittenberg
- Professor Helmut Holzapfel, Head of the Department for Integrated Traffic Planning and Mobility Development, University of Kassel
- Renate Hornung-Draus, Managing Director of the Confederation of German Employers’ Associations (BDA), Director European and International Affairs
- Professor Michael Kittner, former Professor of Business, Labor and Social Law, University of Kassel and legal advisor for IG Metall
- Professor Julian Nida-Rümelin, Professor for Philosophy, Ludwig Maximilian University, Munich
- Pierre Sané, Board Member, UN Global Compact
- Sylvia Schenk, attorney in Frankfurt, Board Member of Transparency International Germany and German Olympic Academy
- Prof. Ernst Ulrich von Weizsäcker, environmental scientist, climate expert and former Member of the Bundestag

The newest member is Louis Freeh, former director of the Federal Bureau of Investigation (FBI) and federal judge, who advised the company as compliance monitor until March 31, 2013 and will henceforth be part of this independent advisory committee.

“We are delighted that we were able to attract personalities with outstanding know-how in the area of conduct based on business ethics for our Advisory Board for Integrity and Corporate Responsibility. The exchange benefits both sides equally,” said Dr. Christine Hohmann-Dennhardt, member of the Daimler Board of Management, Integrity and Legal Affairs.

Market success by means of sustainable innovative strength

Daimler also demonstrates a strong commitment to sustainability with the ever-growing environmental compatibility of its products. From electric bicycles, passenger cars and vans to light-duty trucks and buses the company meets almost all mobility needs.

“We invest more than five billion euros each year in research and the development of our passenger car portfolio – about half of that in green technologies. That pays dividends. We were able to achieve sizeable CO2 savings in all vehicle segments,” said Prof. Dr. Thomas Weber, Member of the Daimler Board of Management, responsible for Group Research and Development Mercedes-Benz Cars as well as Chairman of the Daimler Sustainability Board.

The company’s portfolio today has more than 47 passenger car models with CO2 emissions of less than 120 grams per kilometer; among them 14 models that emit less than 100 grams of CO2 per kilometer. Thanks to the efficiency initiative, Mercedes-Benz Cars was thereby able to reduce the average CO2 emissions of its entire fleet of new passenger cars in Europe to 140g/km in 2012 – the equivalent of a mere 5.6 liters per 100 kilometers. The Stuttgart-based automaker repeatedly achieves a significant reduction in the CO2 emissions of its vehicle fleet and at the same time remains below the target values specified by the EU for 2012.

Furthermore, the gasoline-powered models of the new Mercedes-Benz A- and B-Class today already meet Euro 6 emission standards that will only go into effect in September 2014. “As an automaker we want to safeguard mobility in individual and sustainable fashion. That’s why we put the bar much higher with regard to sustainability and continuously set ourselves new and most importantly ambitious goals. By 2016 we want to lower the emissions of our Mercedes-Benz Cars fleet to 125 g/km. To achieve this, we use all relevant control levers – from high-efficiency drive systems and intelligent energy management to perfect aerodynamics and consistent lightweight construction.”

Most extensive portfolio of electric vehicles in the industry

In order to meet strict future statutory CO2 emission limits, electric mobility will increasingly gain in significance. That is the reason why the company already has the most extensive portfolio of electric vehicles in the industry, now numbering nine models. This includes the smart ebike, the smart fortwo electric drive and its BRABUS version, the Mercedes-Benz A-Class E-CELL, B-Class F-CELL, the SLS AMG Coupe Electric Drive, the Vito E-CELL and the Citaro FuelCELL Hybrid bus. More electric vehicles are already in the starting blocks: the B-Class Electric Drive recently celebrated its world debut at the New York International Auto Show and the electric version of the next-generation smart car is planned both as a two- and four-seater model.

With the example of the smart fortwo electric drive Daimler also shows that emission-free electric mobility is not just feasible on a local scale, but also comprehensively: the energy required for operating all electric smart vehicles in Germany is supplied by a wind power station next to the A9 autobahn, with which Daimler supplies the grid additionally with electricity produced entirely from renewable resources. More than 1000 units of the smart fortwo electric drive have already been produced and delivered to customers; production output will be increased continuously in 2013 to meet the strong demand. With a market share of 20 percent of the entire German market for electric passenger cars, the smart fortwo electric drive is already today’s market leader among passenger cars with a purely battery-electric drive system.

Sustainability Report with A+ rating

The focus of the Daimler Sustainability Report this year was once again on the principles of “materiality” and the inclusion of stakeholders. The company bases its reporting about sustainability on the standards and requirements of the Global Reporting Initiative (GRI). The goal of the GRI is to create comparability between companies within the same industry. The current Daimler Sustainability Report again earned an “A+” rating.

Credits: Daimler AG

Copyright © 2013, mercedesgla. All rights reserved.

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Daimler IT honored with the first ever „European Data Innovator Award“

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Daimler AG has been awarded with the first ever “European Data Innovator Award“. At a festive ceremony hosted by the European Data Forum in Dublin, Ireland, Dr. Michael Gorriz, CIO Daimler, received the Award on behalf of the Information Technology Management (ITM) of Daimler.

For more than one year Daimler ITM colleagues from various departments have worked on concepts and processes on how to apply the new and open World Wide Web Consortium (W3C)-standards of the semantic webs in different disciplines of the company.

In his acceptance speech, Dr. Gorriz explained that Semantic Web Technologies are the base for a more effective usage of data and are the pre-requisite to get access to so-called „data silos”. This established transparency of data inventory accelerates decision making processes and business flows.

Thus employees can concentrate on their core responsibilities, as their work gets more efficient when these supportive IT-systems are interconnected free from media breakage.

Dr. Michael Gorriz summarizes: „Through the establishment of forced data transparency and data openness, profound structural changes are taking affect, which need to be supervised. The core business of manufacturing enterprises, such as Daimler, is more and more influenced by IT - “Modern Economy“ und “Old Economy“ are merging together. Cultural and technological changes towards a digital organization need to go hand-in-hand.”

Credits: Daimler AG

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Daimler Awards Best Suppliers in Recognition of Outstanding Performance

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Daimler AG has granted 2012 Daimler Supplier Awards to 16 suppliers in recognition of their outstanding performance over the past business year. The awards ceremony was the highlight of this year's event, which took place last night with the theme "Night of Masterpieces" in the Mercedes-Benz Center Stuttgart, and was hosted by the TV presenter and news anchorwoman Judith Rakers.

Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, delivered a speech to more than 450 top-ranking representatives of the most important Daimler suppliers and around 200 representatives of Daimler Management in which he emphasized the importance of the suppliers for Daimler's success: “Our goal is profitable growth. In order to achieve this, we need you as our partners.” Zetsche expressed his sincere gratitude to the suppliers gathered there in recognition of their teamwork and their contribution to the records achieved in the 2012 business year: “You are not just our key suppliers, you are also our key supporters.”

With the Daimler Supplier Awards, each year, the company rewards above-average performance in terms of technology, quality, cost, and delivery reliability.

The awards from the three Daimler procurement divisions were given to the suppliers by the relevant Management Board Members and Heads of Procurement: Dr. Wolfgang Bernhard, Board Member Manufacturing and Procurement Mercedes-Benz Cars & Mercedes-Benz Vans, and Dr. Klaus Zehender for Production Material Procurement Mercedes-Benz Passenger Cars and Vans; Andreas Renschler, Board Member Daimler Trucks, and Dr. Holger Steindorf for Production Material Procurement Commercial Vehicles; Wilfried Porth, Board Member HR and Labor Director, and Wendelin Wolbert for Non-Production Material Procurement.

With this year's "Special Award for Innovation," three suppliers (Burmester Audiosysteme GmbH, ASK INDUSTRIES S.P.A., and Foster Electric (Europe) GmbH) were jointly rewarded for their contributions to the high-end sound system of the new Mercedes-Benz S-Class, which will soon celebrate its world premiere. Prof. Thomas Weber, Board Member Group Research and Mercedes-Benz Cars Development said: “The high-end sound system satisfies even the most demanding customers – from now on, they can experience the natural sound of a concert hall in our new S-Class. This innovation really does deserve special acknowledgment on our part!”

The high-end sound system of the new S-Class was developed in close cooperation between the three renowned suppliers and Daimler engineers. The stated goal was to create the world's best sound system in the automotive sector. On the suppliers' side, the overall system lead was the responsibility of the Berlin, Germany-based high-end audio specialist Burmester Audiosysteme GmbH. Founded in 1977 by musician and engineer Dieter Burmester, it has devoted itself to achieving the absolute sound experience under his leadership, seeking "art for the ear." The amplifier hardware is provided by ASK INDUSTRIES S.P.A., an Italian company that is one of the leading suppliers of high-quality automotive audio solutions. The loudspeakers are the contribution of Foster Electric (Europe) GmbH, also an acknowledged expert for acoustic masterpieces.

The winners of the 2012 Daimler Supplier Awards are:

Procurement Mercedes-Benz Cars and Vans

Exterior - Brose Fahrzeugteile GmbH & Co. KG
Rewarded for global investments in production facilities to ensure just-in-sequence delivery at nearly every Daimler site.

Interior - Lear Corporation
Rewarded for the next generation of the E-Class seats.

Electrics/Electronics - Kathrein-Werke KG
Rewarded for the fact that cars from Mercedes-Benz would be unthinkable without Kathrein products.

Chassis - Hirschvogel Holding GmbH
Rewarded for outstanding performance in the MRA and MFA projects.

Powertrain - BorgWarner Turbo Systems
Rewarded for outstanding performance in the following projects: OM651 (2nd phase), OM660 (1st phase), M27 (1st phase) biTurbo, AMG M177/178, M133.

Procurement Daimler Trucks and Buses

Exterior - MEKRA Lang GmbH & Co. KG
Rewarded for the main and front mirror in the new Mercedes-Benz Trucks (Actros, Antos, and Arocs).

Interior - Consolidated Metco Inc.
Rewarded for the joint development of an innovative oil pan for the Detroit brand as part of the New Engine Generation project.

Electrics/Electronics - WABCO Fahrzeugsysteme GmbH
Rewarded for outstanding performance on the brake components for the new Mercedes-Benz trucks (Actros, Antos, and Arocs).

Chassis - mefro wheels GmbH
Rewarded for leading technological development of new tires (weight reduction).

Powertrain - Johnson Matthey PLC
Rewarded for outstanding willingness to perform in the Daimler Trucks #1 project.

International Procurement Services

R&D Services - APL Automobil-Prüftechnik Landau GmbH
Rewarded for outstanding performance in powertrain testing of passenger car transmissions as well as functional and endurance run testing of commercial vehicle engines.

Production Machines and Equipment - EBZ SysTec GmbH
Rewarded for high quality and consistent customer support in the following projects (among others): Body shell for the C-Class 204 and C-Class 205 in Bremen, Tuscaloosa, and East London.

Contract Logistics - DB Schenker Deutschland AG
Rewarded in recognition of many years of a successful and reliable partnership for logistics services at the Mercedes-Benz locations in Bremen, Dusseldorf, Wörth, and Stuttgart (e.g. space-saving storage concept for SKD bodies and I-Park management for the Bremen plant).

Special Award Innovation
- Burmester Audiosysteme GmbH
- ASK INDUSTRIES S.P.A.
- Foster Electric (Europe) GmbH
Jointly rewarded for the high-end sound system of the new Mercedes-Benz S-Class.

Credits: Daimler AG

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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

Copyright © 2013, mercedesgla. All rights reserved.

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Daimler strengthens international research and development network with new site in India

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Mercedes-Benz Research and Development India (MBRDI) formally opened its new site in Bangalore today. With 1,200 employees, MBRDI is the largest Daimler research and development centre outside Germany, and it also is the largest and ultramodern centre run by any German car manufacturer in India.

The company's Group Research and Mercedes-Benz Cars Development unit is strengthening its international knowledge network as part of the Mercedes-Benz 2020 growth strategy. Already today, research and development staff is working at 22 sites in eight countries in order to meet the challenges of the future. Around 21,000 people work in research and development within the Daimler AG, including 4,300 outside Germany, creating a vast pool of knowledge covering a wide range of disciplines.

"Our new centre of competence in Bangalore gives us direct access to a highly qualified workforce and excellent networking with the locally based international and national supply industry," states Prof. Dr. Thomas Weber, member of the Board of Management of Daimler AG, responsible for Group Research and Mercedes-Benz Cars Development. "With enormous growth potential, India is one of the core markets within our global strategy Mercedes-Benz 2020. With our new research site MBRDI we are further expanding our presence on the market, in order to be closer to the customer also in terms of research and development."

MBRDI started off with just ten employees in 1996 and has since transformed itself from a purely research-based site for IT and vehicle electrics/electronics into a centre of competence with know-how in the fields of design (Computer Aided Design), simulation (Computer Aided Engineering), electrics/electronics (EE) and information technology (IT) for all divisions across the Daimler AG. The Indian site MBRDI filed 50 patent applications in 2012 alone.

"Our international research and development sites are the perfect complement to the R&D activities in Germany, helping to ensure the long-term success and the competitiveness of our traditional research and development sites," adds Professor Weber.

One project that exemplifies the cooperation between the world-wide sites is the "Human Body Modelling" (HBM) simulation tool, which was developed in close collaboration with the German research and development sites. In accident simulations, HBM enables a wide range of parameters to be taken into account, such as biomechanics, physical properties of the human body and many different crash situations. This globally unique system therefore allows evaluation of very complex accident situations and thus helps to make vehicle designs even safer by considering numerous different factors.

Wilfried Porth, Management Board Member for Human Resources, Labor Relations Director and responsible for IT at Daimler AG: “The close cooperation between our global R&D sites is of major strategic importance. It is only possible with a strong and integrated IT structure. Bangalore is a crucial part of our global IT landscape, both in engineering and non-engineering. We will use this IT know-how of the Indian “Silicon Valley” for the whole Daimler Group in order to support our profitability and growth.“

Global knowledge network

The company has representation wherever the centres of competence for relevant fields of knowledge are based – with highly qualified researchers and the appropriate "scientific community". Other local focal points of development are situated near the key production plants. These international activities focus on creating direct benefit for the customer through greater innovative pace and strength as well as shorter development times. This enables tailored solutions for particular growth markets.

The global knowledge network and the high level of investment in research and technology are essential investments in the future of the automobile and, therefore, in the competitiveness of the entire Daimler AG. In 2012, as in the prior year, Daimler invested €5.6 billion in research and development, with further investment totalling €10.8 billion planned for the period 2013 to 2014.

Credits: Daimler AG

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Daimler Annual Press Conference 2013: Best figures for unit sales and revenue in 2012; Group EBIT of €8.6 billion last year

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Daimler AG (stock-exchange symbol DAI) today presented its preliminary and unaudited figures for the Group and its divisions for the year 2012.

Daimler achieved EBIT of €8.6 billion in 2012 (2011: €8.8 billion). EBIT from the ongoing business amounted to €8.1 billion (2011: €9.0 billion).

“The past financial year was overall a strong year for Daimler with some great achievements, but also with clear potential for improvement. We achieved new records for unit sales and revenue at both the Group and Mercedes-Benz Cars, and launched new products in all divisions to the market, which received excellent response,” stated Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars.

“Notwithstanding our success and the numerous pioneering investments in 2012, it is a fact that we did not reach our own targets for earnings and profitability,” Zetsche pointed out. “To ensure that our future growth is even more profitable, we have implemented detailed measures in all divisions that will further increase our efficiency.”

The Group’s net profit amounted to €6.5 billion (2011: €6.0 billion), including the gain on the sale of 7.5% of the shares of EADS. Earnings per share amounted to €5.71 (2011: €5.32).

Daimler wants its shareholders to participate appropriately in the company’s success once again in 2012. In view of the earnings achieved and the business development in 2012, the Board of Management and the Supervisory Board will propose the distribution of a dividend of €2.20 per share at the Annual Shareholders’ Meeting to be held on April 10, 2013 (prior year: €2.20). This represents a total dividend payout of €2,349 million (prior year: €2,346 million).

“With this dividend continuity, we are emphasizing the attractiveness of our shares and expressing our gratitude to the shareholders for their trust in our company,” stated Bodo Uebber, Member of the Board of Management of Daimler AG for Finance, Controlling and Daimler Financial Services.

Financial year 2012

Despite partially difficult market conditions, the development of earnings reflects ongoing growth in unit sales at Mercedes-Benz Cars and Daimler Trucks. Daimler Buses and Mercedes-Benz Vans posted lower unit sales, however. A shift in the regional structure of unit sales, a less favorable model mix and higher expenses in connection with the expansion of Mercedes-Benz Cars’ product portfolio and the current product offensive at Daimler Trucks also had a negative impact on Group EBIT. In addition, Mercedes-Benz Vans incurred expenses in connection with the impairment of the Chinese joint venture Fujian Benz Automotive Corporation. Daimler Financial Services posted earnings at the prior-year level. The development of exchange rates had an overall positive impact on Group EBIT.

EBIT also includes significantly higher expenses in connection with the compounding of non-current provisions (2012: €543 million; 2011: €225 million).

The repositioning of the European and North American business systems of Daimler Buses, which was decided upon in the first quarter of 2012, resulted in expenses of €155 million. The sale of 7.5% of the shares in EADS resulted in a gain of €709 million in the reporting period.

As previously announced, Daimler further increased its unit sales. Sales of 2.2 million vehicles were 4% higher than in 2011. Mercedes-Benz Cars and Daimler Trucks were responsible for the growth, while the Mercedes-Benz Vans and Daimler Buses divisions did not match their unit sales of the prior year. The Group’s total revenue improved by 7% to €114.3 billion; adjusted for exchange-rate effects, there was an increase of 4%.

The net liquidity of the industrial business amounted to €11.5 billion at December 31, 2012 (2011: €12.0 billion).

The free cash flow of the industrial business amounted to €1.5 billion in 2012. The positive profit contributions of the industrial business were offset by the increase in working capital, defined as the net change in inventories, trade receivables and trade payables, in a total amount of €0.8 billion. High investments in property, plant and equipment and intangible assets as well as capital contributions to Engine Holding and the joint venture of Daimler Trucks in China led to cash outflows. There was an additional effect from first-time pension contributions at EvoBus. Other positive effects resulted from the sale of shares in EADS and MBtech Group.

As of December 31, 2012, the Daimler Group employed a total workforce of 275,087 people. Due to the significant increase in business volumes, the workforce grew by 3,717 persons. While the number of employees in Germany decreased slightly to 166,363 (2011: 167,684), there was growth in the United States to 21,720 (2011: 20,702). At year-end, 14,610 people were employed in Brazil (2011: 14,533) and 11,286 in Japan (2011: 11,479). The number of persons employed by the consolidated subsidiaries in China increased to 2,730 (2011: 2,121). In addition, there were 16,383 (2011: n. a.) persons employed by Daimler’s non-consolidated associated companies in China, of which 9,048 (2011: 7,204) work at Beijing Benz Automotive Corporation (BBAC), 1,543 (2011: 2,003) at Fujian Benz Automotive Corporation (FBAC) and 5,530 (2011: n. a.) at the joint venture Beijing Foton Daimler Automotive (BFDA).

Investments in the future

Based on Daimler’s “Road to Emission-free Mobility” strategy, the main focus of work was in the area of new, extremely fuel-efficient and environmentally friendly drive technologies in all automotive divisions. Work was carried out on optimizing conventional drive technologies as well as on achieving further efficiency improvements through hybridization and with electric vehicles using fuel cells or batteries. In order to further enhance the efficiency of its vehicles, Daimler is also improving other key automotive aspects - from energy management to aerodynamics and lightweight construction. Another focus of activities is on new safety technologies and accident-free driving.

As in the prior year, Daimler therefore invested the very large amount of €5.6 billion in research and development in 2012 (2011: €5.6 billion). Total research and development expenditures at Mercedes-Benz Cars of €3.9 billion once again exceeded the high level of the prior year (2011: €3.7 billion). Daimler Trucks invested €1.2 billion in research and development projects (2011: €1.3 billion).

In 2012, Daimler once again significantly increased its investment in property, plant and equipment to €4.8 billion (2011: €4.2 billion). Of that total, €3.3 billion was invested in Germany (2011: €2.7 billion).

The focus was on extensive capital expenditure on local production facilities, new products and new technologies. One main area within Mercedes-Benz Cars was the expansion of production capacities for the new compact-class models at the Rastatt plant in Germany and at the new plant in Kecskemét, Hungary. In Sindelfingen, Daimler invested in preparations for production of the new S-Class. In Tuscaloosa, USA, and Bremen, Germany, preparations are already under way for production of the new C-Class as of 2014. At Daimler Trucks, the main areas of investment were the new Mercedes-Benz Antos, the new heavy-duty construction-site truck Arocs, and various projects for global harmonization and standardization of engines and main components and for the fulfillment of stricter emission regulations. Daimler also invested in expanding its production capacities in Brazil and at the new plant in India, where trucks of the new BharatBenz brand have been rolling off the production line since mid-2012. At the Mercedes-Benz Vans division, the focus of investment was on the new Citan small van and the successor generation of the Vito goods van and the Viano passenger van. Daimler also invested in the production and marketing of the Sprinter in Argentina and in the expansion and modernization of the sales organization. The main investments at Daimler Buses in 2012 were in new products and the modernization of production facilities.

Details of the divisions

Mercedes-Benz Cars, comprising the brands Mercedes-Benz, Maybach and smart, sold 1,451,600 vehicles in the year under review (2011: 1,381,400), and thus continued to grow. Revenue increased by 7% to a new record of €61.7 billion, although major markets weakened in the second half of 2012.

The division’s EBIT of €4,389 million was below the prior-year figure of €5,192 million. The return on sales was 7.1% (2011: 9.0%).

In an economic environment that became increasingly difficult during the year, unit sales developed well. Mercedes-Benz Cars achieved high growth rates in particular in the segments of compact cars and SUVs. In regional terms, the business in the United States developed very positively. Growth in earnings was also realized by positive exchange-rate effects. There were negative effects on earnings from a shift in the regional structure of unit sales and the changed model mix. Furthermore, EBIT was reduced by expenses for the enhancement of the products’ attractiveness, capacity expansion and advance expenditure for new technologies and vehicles. This negative effect on earnings was only partially offset by ongoing efficiency improvements. In addition, higher expenses arose in connection with the compounding of non-current provisions.

In a difficult market environment, Daimler Trucks was able to further increase its unit sales and revenue, with particularly strong growth in the NAFTA region and Asia. Daimler Trucks sold 462,000 vehicles during in 2012, which is 9% more than in the prior year. Revenue amounted to €31.4 billion (+9%).

The division’s EBIT of €1,714 million was below the prior-year figure (2011: €1,876 million). The return on sales was 5.5% (2011: 6.5%).

Earnings were boosted on the one hand by the positive development of unit sales and revenue in the NAFTA region and Asia. Lower warranty expenses and exchange-rate effects also made a positive contribution. On the other hand, earnings were reduced by the current product offensive and by lower demand in Brazil and Western Europe. The decline in demand was related to weaker economic developments and in Brazil additionally to the introduction of new emission limits as of the beginning of 2012. Furthermore, expenses arose from the compounding of non-current provisions. Earnings for the year include expenses of €70 million due to the natural disaster in Japan and an impairment charge on the investment in Kamaz (€32 million).

Worldwide unit sales by Mercedes-Benz Vans decreased to 252,400 vehicles, due in particular to the difficult market situation in Western Europe (2011: 264,200). Revenue of €9.1 billion was also slightly below the prior-year level (2011: €9.2 billion).

The division achieved EBIT of €541 million in 2012 (2011: €835 million). Its return on sales was 6.0%, compared with 9.1% in the prior year.

The decrease in earnings was partially related to lower levels of unit sales, especially caused by the significantly weaker market in Western Europe. Good product quality was reflected by lower warranty costs. Exchange-rate effects also had a positive impact on earnings. There was an opposing effect from expenses of €64 million in connection with the impairment of the Chinese joint venture Fujian Benz Automotive Corporation. Earnings were additionally reduced by expenses connected with the market launch of the Citan city van and the launch of the new Sprinter in Argentina.

Daimler Buses sold 32,100 buses and bus chassis worldwide in 2012 (2011: 39,700). Revenue decreased accordingly by €0.5 billion to €3.9 billion.

Daimler Buses posted EBIT of -€232 million (2011: €162 million) and a return on sales of -5.9% (2011: 3.7%).

The decrease in earnings was primarily the result of lower sales of bus chassis due to the difficult business situation in Latin America, as well as an unfavorable model mix in the declining European market. There were additional negative effects on earnings from expenses of €155 million for the repositioning of the European and North American business systems and from exchange-rate changes.

Daimler Financial Services’ business developed positively once again in 2012. New business increased by 14% to the new record of €38.1 billion. The division’s contract volume rose by 12% to €80.0 billion. Adjusted for exchange-rate effects, the increase was 13%.

Daimler Financial Services achieved EBIT of €1,292 million in 2012, which is close to its earnings of the prior year (€1,312 million). The division’s return on equity was 21.9% (2011: 25.5%).

A larger contract volume and exchange-rate effects contributed positively to the earnings development. There were opposing effects on earnings from lower interest margins and a normalization of risk costs, which had been unusually low in the prior year. Additional expenses arose in connection with the portfolio expansion.

The reconciliation of the divisions’ EBIT to Group EBIT comprises the proportionate share of the results of Daimler’s equity-method investment in EADS, other gains and/or losses at the corporate level, and the effects on earnings of eliminating intra-group transactions between the divisions.
Daimler’s proportionate share of the net profit of EADS amounted to €307 million (2011: €143 million). In addition, the Group realized a gain of €709 million on the sale of 7.5% of the shares of EADS during the reporting period. At the corporate level, an expense of €113 million was recognized (2011: expense of €588 million). Corporate items in the prior year included in particular litigation expenses and a charge on the impairment of Daimler’s investment in Renault (€110 million).

Outlook

According to current estimates, worldwide demand for automobiles is likely to grow this year by approximately 2 to 4%. This growth should be primarily driven by the ongoing expansion of the Chinese market and a moderate increase in demand in the United States. No impetus is to be expected from the Western European market, however. Demand in Japan will probably decrease significantly, with a perceptible negative impact on the growth of the world market.

Worldwide demand for medium and heavy trucks can be expected to increase perceptibly in 2013. However, this will mainly be driven by the significant recovery in China, which was responsible for a large proportion of the global drop in demand last year. In North America, a decline of 5 to 10% is anticipated as a result of uncertainty about the country’s fiscal problems. For the European truck market, demand is expected to fall by up to 5% due to the ongoing weak economic environment. The Japanese market should be at about the prior-year level, following the expiry of certain special effects in connection with the reconstruction there. A significant recovery of up to 10% is expected for the Brazilian market thanks to better economic prospects and the continuation of favorable financing conditions.

Mercedes-Benz Cars is consistently implementing its “Mercedes-Benz 2020” offensive. Numerous model changes and new products should ensure that the division achieves new records for unit sales in the years 2013 and 2014. A major contribution to this growth is likely to come from the new models in the high-volume compact-car segment. The third model based on the new compact-car architecture will be launched in April 2013: the CLA four-door coupe. Also starting in April, the new E-Class sedan and wagon will be available from Mercedes-Benz dealerships after a thorough upgrade. And as of mid-May 2013, the new E-Class coupes and convertibles will create additional sales impetus. In June 2013, the locally emission-free super sports car SLS AMG Coupe Electric Drive will be launched on the market. In the second half of 2013, Mercedes-Benz expects significant growth in the luxury segment, above all due to the launch of the all-new S-Class. As the most important new model of the year 2013, the new S-Class will set new standards with pioneering innovations for comfortable and safe driving, summarized under the heading of “Mercedes-Benz Intelligent Drive.” In addition, the Mercedes-Benz brand will also continue to profit in 2013 from the great market success of its models in the compact-car and SUV segments.

Within the framework of the long-term “Mercedes-Benz 2020” growth strategy, the product portfolio will be further expanded across all segments in the coming years. In the compact-car segment, a total of five new models will be added to the Mercedes-Benz product portfolio. In parallel, the model offensive will also be continued at the upper end of the automobile spectrum, for example with new models of the coming S-Class and with another SUV model version.

The smart brand expects good chances that the unique two-seater in the highly competitive micro-car segment will defy its advanced model lifecycle also in 2013, and will achieve unit sales in the magnitude of the prior year. The successor model of the two-seater, the new smart four-seater and the electric smart scooter will be presented in 2014.

Daimler Trucks anticipates a slight increase in unit sales in the year 2013 and further growth in 2014, although the development in 2013 will at first be rather moderate or even negative in some key markets due to the ongoing difficult economic situation. The introduction of stricter emission limits in 2014 is expected to cause some purchases to be brought forward to 2013. As a result of its extensive product offensive, Daimler Trucks not only has a complete model range of Euro VI trucks, but is also in a very good starting position in all relevant regions: A highly attractive, innovative product portfolio should allow Daimler to further strengthen its market position worldwide and to increase its share of important markets.

Unit sales should benefit from the complete availability of the Actros and Antos models and from other new models such as the Arocs for the construction sector and the new Atego. The strong North American products like the new Freightliner Cascadia Evolution in combination with the strong Detroit components should also make an important contribution to further growth. With a clear focus on profitable customer segments such as the construction and municipal segments within the framework of its “Vocational Strategy,” the truck division wants to utilize further market potential and extend its market leadership in North America.

The brands Fuso and BharatBenz will also make an important contribution to growth in unit sales in the coming years. The Fuso Canter and its hybrid version, which has been produced also in Europe since 2012, should stimulate additional demand. Fuso will extend its leading position in the field of “green innovation” with the new Canter Eco Hybrid and other technologies. Furthermore, Fuso is developing profitable export markets in the context of its growth offensive. In India, the range of BharatBenz trucks will be expanded to a total of 17 models in the weight classes from 6 to 49 metric tons by the year 2014, and the sales and service network will also be expanded. In Russia and China, Daimler Trucks is gradually intensifying its cooperation with local partners Kamaz and Foton, and is thus creating the right conditions for the further development of those growth markets.

Mercedes-Benz Vans plans to increase its unit sales in the years 2013 and 2014. On the product side, the new Mercedes-Benz Citan should contribute to this growth. Entering the market segment of small vans makes the division a full-range supplier and thus gives it additional growth potential in Europe. As of mid 2013, there will be demand stimulus from the upgraded Sprinter. As part of the “Vans goes global” strategy, Mercedes-Benz Vans is increasingly developing the markets outside Europe. It is therefore intensifying its sales activities especially in North America, Latin America, Russia and China. Furthermore, Mercedes-Benz vans are increasingly produced also locally: in Argentina and China, and production will begin also in Russia with the partner GAZ in the first half of 2013.

Daimler Buses assumes that it will be able to maintain its globally leading position in its core markets for buses above 8 tons with innovative and high-quality new products. Not least due to various major orders in advance of the soccer World Cup in 2014 and the Olympic Games in 2016, a rise in unit sales is anticipated in Brazil for the years 2013 and 2014. In Western Europe the division has launched excellent high-quality products in this stable key market: the new Mercedes-Benz Citaro and the new coach generation, the Setra 500. In order to realize further growth potential and to enhance competitiveness, Daimler Buses started the “GLOBE 2013” growth and efficiency offensive in 2012.

With its “DFS 2020” strategy, Daimler Financial Services aims to achieve further profitable growth in the coming years. Key growth drivers are the expansion of business in Asia, the product offensives of the Daimler Group, and the further development of innovative mobility service packages. Worldwide, Daimler wants to gain larger numbers of young customers, who will be increasingly attracted with new models in the compact class and who are particularly open-minded with regard to financing and leasing offers. Daimler Financial Services sees additional growth opportunities in the field of innovative mobility services, where the service offering will be systematically expanded in the coming years – with and beyond car2go.

On the basis of assumptions concerning the development of automotive markets and the divisions’ planning, the Daimler Group expects to achieve further growth in total unit sales in the years 2013 and 2014.

Daimler assumes that Group revenue will continue growing in the years 2013 and 2014. Although uncertainty regarding the future development of the Group’s markets tended to increase during the year 2012, numerous new products will be launched in the context of the growth strategy in the coming years. Furthermore, the Group will increasingly develop the growth markets of Asia, Eastern Europe and Latin America for its products – partially also through local production. The anticipated growth will probably be driven by all divisions, with the biggest contributions in absolute terms coming from Daimler Trucks and Mercedes-Benz Cars. In regional terms, Daimler assumes that growth rates will be above average in the emerging markets and in North America.

Daimler assumes that the development of major markets will at first remain weak in the first half of 2013, and therefore anticipates a weaker development of earnings in the first half of the year compared with 2012. But due to the planned new models, the assumptions made for the development of markets important to Daimler and the increasing effects of the efficiency measures that have been initiated, earnings are expected to improve in the second half of 2013 compared with the level of the first half. On the basis of the anticipated recovery in the second half of the year, Daimler currently assumes that Group EBIT from the ongoing business in 2013 will reach the magnitude of the prior year. For Mercedes-Benz Cars, full-year EBIT is expected to be slightly lower than in 2012, while the other automotive divisions should post higher earnings than in the prior year. In 2014 and the following years, an improvement in operating profit is expected for all automotive divisions and for the Group. For Daimler Financial Services, a stable development of earnings is anticipated in the next two years.

In the medium term, Daimler aims to achieve an annual average return on sales in its automotive business of 9% across market and product cycles. This is based on target returns on sales for the individual divisions: 10% for Mercedes-Benz Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for Daimler Buses. For the Daimler Financial Services division, the target for return on equity is 17%. Due to significantly worsened market conditions, the achievement of these profitability targets has become much more challenging for the Group and the individual divisions. Daimler therefore assumes that the targets will not be achieved as originally planned in the year 2013, but at a later date. In order to make sure it meets its profitability targets in the long term, Daimler is carrying out far-reaching programs to improve its efficiency and competitiveness in all divisions.

In the years 2013 and 2014, Daimler plans to spend a total of €10.8 billion on research and development activities and approximately €10.2 billion on property, plant and equipment. This means that research and development investment will remain at the high level of the years 2011 and 2012; capital expenditure on property, plant and equipment will once again exceed the already very high levels of the two previous years.

Due to the anticipated business development, production volumes will continue to grow in the years 2012 and 2013. At the same time, efficiency and thus also productivity will be significantly increased as a result of the programs being carried out in all divisions. Against this backdrop, Daimler assumes that it will be able to achieve its ambitious growth targets with a largely stable workforce. New jobs will tend to be created in the international growth markets.

The special items affecting earnings in the years 2012 and 2011 are listed in the following table:

Credits: Daimler AG

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