Daimler on a successful path in 2013: record levels of unit sales, revenue, EBIT and net profit

STUTTGART, Germany, Feb. 6, 2014 /PRNewswire/ -- 

• Group EBIT reaches €10.8 billion (2012: €8.8 billion)
• EBIT from ongoing business of €7.9 (2012: €8.2 billion)
• Net profit of €8.7 billion (2012: €6.8 billion)
• Unit sales rise to 2.35 million vehicles (2012: 2.2 million)
• Group revenue increases to €118.0 billion (2012: €114.3 billion)
• Dividend increase to €2.25 per share proposed
• Outlook for 2014: significant growth in unit sales and revenue; Group EBIT from the ongoing business will increase significantly

Daimler AG (ticker symbol DAI) concluded the year 2013 with record levels of unit sales, revenue, EBIT and net profit. The company anticipates renewed growth in 2014 due to its strong product portfolio and ongoing investment in production and new technologies as well as the expected market developments.

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"2013 was a year that we didn't begin particularly well, but which we ended very successfully. Our efforts paid off," stated Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. "Daimler is in very good condition. Our prospects for the future also make us confident that we will achieve our ambitious goals in all our divisions."

EBIT increased in 2013 by 23% to €10.8 billion, which is the highest level in the history of Daimler AG. EBIT from ongoing business amounted to €7.9 billion (2012: €8.2 billion), clearly achieving the expected target of around €7.5 billion. Net profit of €8.7 billion was higher than ever before in the company's history (2012: €6.8 billion).

Daimler further increased its unit sales in 2013. With a total of 2.35 million vehicles, the record level of the previous year was surpassed by 7%. All of the automotive divisions contributed to this growth: Mercedes-Benz Cars (+8%), Daimler Trucks (+5%), Mercedes-Benz Vans (+7%) and Daimler Buses (+5%). Driven by this growth in unit sales, Group revenue increased by 3% to the record level of €118.0 billion; adjusted for exchange-rate effects, revenue grew by 7%.

At the Annual Shareholders' Meeting to be held on April 9, 2014, the Board of Management and the Supervisory Board will propose the distribution of a dividend of €2.25 (2012: €2.20) per share. "With the increase in the dividend, we are letting our shareholders participate in the company's success and at the same time expressing our confidence about the ongoing business development," stated Bodo Uebber, Member of the Board of Management of Daimler AG for Finance & Controlling and Daimler Financial Services. "The proposed distribution represents the highest dividend we ever paid so far at Daimler AG." The dividend distribution amounts to €2,407 million (2012: €2,349 million) and is equivalent to 35% of the net profit attributable to the Daimler shareholders. For the following years, Daimler aims to distribute in the region of 40% of net profit attributable to the Daimler shareholders.

The net liquidity of the industrial business developed positively and increased compared with December 31, 2012 by €2.3 billion to €13.8 billion. The increase is primarily due to the positive free cash flow of the industrial business, which amounted to €4.8 billion in 2013 (2012: €1.45 billion). In addition to the positive contributions to earnings from the automotive divisions, the free cash flow of the industrial business also profited from the successful EADS transaction. The free cash flow was also positively affected in an amount of up to €1.5 billion by reporting-date factors, which will be offset in the following year. There were negative effects from high investment in property, plant and equipment and intangible assets as well as from the acquisition for €0.6 billion of a 12% equity interest in BAIC Motor Corporation Ltd. (BAIC).

"We are soundly financed and have very good access to the capital market. We have at our disposal the required resources to finance our product offensives, the planned capacity expansions and our new developments," said Bodo Uebber. "It also means that we are well prepared for market volatilities."

The workforce of the Daimler Group was fairly stable in 2013 with a total of 274,616 employees at the end of the year (end of 2012: 275,087). Daimler employed 167,447 people in Germany at the end of 2013 (end of 2012: 166,363).

Daimler supports the systematic promotion of women among other things with flexible working-time models and childcare facilities. Daimler has committed to increasing the proportion of women in executive positions to 20% throughout the Group by 2020. This ratio has continually increased in recent years and was 13% at the end of 2013. A year earlier, it was 12%. Daimler therefore met its ambition of increasing the ratio by one percentage point each year.

Details of the divisions

Mercedes-Benz Cars, comprising the brands Mercedes-Benz and smart, once again accelerated its growth with sales of 1,565,600 vehicles in the year under review (2012: 1,451,600). Revenue also increased to a new record level, rising by 4% to €64.3 billion. At €4,006 million, EBIT was lower than the figure for the previous year of €4,391 million. The division's return on sales was 6.2% (2012: 7.1%), and 7.5% (2012: 5.3%) in fourth quarter 2013.

There were positive effects on earnings from the further growth in unit sales, especially in China, the United States and Western Europe; this was due in particular to the Group's expanded range of compact cars. Better pricing and the efficiency actions from the "Fit for Leadership" program also had positive effects on earnings. Earnings were adversely affected by the changed model mix, unfavorable exchange-rate effects and higher levels of vehicle equipment, as well as by capacity expansions and advance expenditure for new technologies and new products. Special expenses of €174 million were recognized in the area of alternative drive systems (2012: €51 million).

Sales by Daimler Trucks increased to 484,200 units in 2013 (2012: 462,000). Changes in currency exchange rates caused revenue to increase only slightly to €31.5 billion (2012: €31.4 billion). The division achieved EBIT of €1,637 million (2012: €1,695 million) and a return on sales of 5.2% (2012: 5.4%).

The revival of unit sales that was apparent especially in the last quarter made a positive contribution to the development of earnings. On the one hand, there was a recovery of the Brazilian market; on the other hand, there was positive impetus from the business in Western Europe, partially due to purchases being brought forward because of the introduction of the stricter Euro VI emission standards in 2014. Earnings were negatively impacted by increased warranty costs and exchange-rate effects. An additional factor was a total expense of €116 million for workforce adjustments in the context of the optimization programs in Germany and Brazil. The efficiency measures within the framework of the "Daimler Trucks #1" program had a positive influence on earnings.

Worldwide unit sales by Mercedes-Benz Vans increased by 7% to 270,100 Sprinter, Vito, Viano, Vario and Citan vans in 2013 despite a difficult market environment in Europe. Revenue of €9.4 billion was also higher than in the previous year (2012: €9.1 billion). The division achieved EBIT of €631 million (2012: €543 million). Its return on sales improved to 6.7% from 6.0% in 2012.

The increase in earnings is partially related to higher levels of unit sales and better pricing. Ongoing efficiency increases in the context of the "Performance Vans 2013" program also contributed to the earnings improvement. EBIT was negatively influenced by advance expenditure for new products. In the previous year, an expense of €64 million had been recognized in connection with the impairment of the Chinese joint venture Fujian Benz Automotive Corporation.

Daimler Buses sold 33,700 buses and bus chassis worldwide in 2013 (2012: 32,100). With this growth of 5%, the division confirmed its market leadership in its core markets in the segment for buses with a gross vehicle weight of more than 8 metric tons. Revenue improved by 4% to €4.1 billion. The division returned to profitability in 2013 and posted EBIT of plus €124 million (2012: minus €221 million). Its return on sales increased to 3.0% (2012: minus 5.6%).

This positive development was driven by growth in unit sales in Western Europe and Latin America as well. Additional factors that led to significant earnings improvements were further efficiency progress and lower expenses for the repositioning of the European and American businesses.

Daimler Financial Services' business developed very positively once again in 2013. Worldwide, the company concluded nearly 1.2 million new financing and leasing agreements; the total number of all vehicles financed or leased passed the three-million mark for the first time. New business increased by 6% to €40.5 billion and thus reached a new record. Contract volume increased by 4% to the record level of €83.5 billion; adjusted for exchange-rate effects, the increase was 11%. The division achieved EBIT of €1,268 million in 2012, which is close to its earnings of the previous year (€1,293 million). The division's return on equity was 19.2% (2012: 22.0%).

A larger contract volume contributed towards the earnings improvement. There were opposing effects on earnings from negative exchange-rate developments and lower interest margins. Higher expenses were incurred in connection with the expansion of business operations.

The reconciliation of the divisions' EBIT to Group EBIT comprises gains and/or losses at the corporate level and the effects on earnings of eliminating intra-group transactions between the divisions. Until the sale of the remaining EADS shares, gains and/or losses at the corporate level also included the proportionate share of the results of Daimler's equity-method investment in EADS. The proportionate share of the results of EADS includes a capital gain of €3.2 billion on the remeasurement and the sale of the remaining shares. Daimler left the former EADS shareholder pact in early April 2013. In the context of the sale, the Group had also reached an agreement with cash settlement allowing participation to a limited extent in a rise in the EADS share price until the end of 2013. This agreement resulted in a gain for the Daimler Group of €44 million.

A loss of €191 million was recognized (2012: loss of €113 million) for the other items at the corporate level.  The elimination of intra-group transactions resulted in a gain of €82 million in 2013 (2012: gain of €8 million).

The special items affecting EBIT in the years 2013 and 2012 are listed in the table at the end of this release.

Investment in the future

"We intend to participate in shaping the upcoming technological transformation of the automotive industry with further pioneering innovations in the future," stated Dieter Zetsche. "We therefore once again invested a very high amount of €5.4 billion in research and development." The corresponding amount for 2012 was €5.6 billion. The ratio of research and development expenditure to revenue remained at a high level of 4.6% (2012: 4.9%). The main areas of investment were new vehicle models, highly fuel-efficient and environmentally friendly drive system and new safety technologies. Daimler is working in all areas to further improve vehicle efficiency: from energy management to aerodynamics to lightweight construction.

In the context of the global growth strategy, Daimler wants to make good use of the opportunities presented by the international automotive markets. This requires substantial investment in new products and new technologies as well as in the expansion of the worldwide production network. In 2013, Daimler therefore once again significantly increased its investment in property, plant and equipment to €5.0 billion (2012: €4.8 billion). Of that capital expenditure, €3.2 billion was invested in Germany (2012: €3.3 billion).

At Mercedes-Benz Cars, investment in property, plant and equipment increased by 6% to €3.7 billion in 2013. The most important projects included the production of the new S-Class and preparations for the new C-Class, which will be produced in Bremen as well as Tuscaloosa (United States), Beijing (China) and East London (South Africa) as of 2014. Substantial amounts were also made available for the modernization and expansion of transmission production in Untertuerkheim and for the expansion of production capacities in the United States.

The main areas of investment at Daimler Trucks were for the Arocs (the new heavy-duty construction-site truck) as well as various projects for the global standardization of engines and other main components. The Group also invested in the expansion of its production capacities in Brazil and in the new BharatBenz plant in India. Total investment in property, plant and equipment at Daimler Trucks amounted to €0.8 billion (2012: €1.0 billion).

Outlook for the markets

The more favorable economic outlook should result in further growth in global demand for cars in 2014: From today's perspective, demand is expected to rise by a rate of 4 to 5%.

The Chinese market should once again make the biggest contribution to global market growth. The US market is also likely to grow. After significant contraction of the overall Western European car market lasting several years, Daimler expects a hesitant market recovery in 2014. Demand for cars in Japan is expected to fall, however. After a weak market development in the prior year, a once again weaker demand situation is anticipated in the major emerging markets (except China). The Russian market should be slightly larger than in the previous year and a moderate recovery of the car market in India is expected.

After the world market for medium- and heavy-duty trucks expanded perceptibly in 2013 despite difficult market conditions, further moderate growth in global demand is expected this year. But market developments will continue to differ significantly from one region to another.

In the NAFTA region, Daimler anticipates significant market growth of up to 10% due to the increasingly dynamic economy. The development of the European market was primarily affected by the introduction of the Euro VI emission standards in recent months. Developments during the rest of 2014 will depend in particular on the extent to which the economic revival in Europe can offset the negative impact of the purchases brought forward. From today's perspective, Daimler expects the market volume for the full year to be slightly below the level of 2013.

Ongoing economic stimuli and an expansive monetary policy should continue to have a positive effect on the Japanese truck market in 2014; slight growth is anticipated for light-, medium- and heavy-duty trucks overall. The Brazilian market for medium- and heavy-duty trucks is likely to be just below the prior-year level, primarily due to the below-average development of investment activity and somewhat less favorable, subsidized financing conditions. In Russia, demand for trucks is likely to recover slightly. The Indian market should stabilize after the significant losses of the previous years. China, the world's biggest market for trucks, should post moderate growth.

Outlook for the divisions

Mercedes-Benz Cars will consistently follow its path of growth in the context of the "Mercedes-Benz 2020" offensive in 2014. A rejuvenated model portfolio and important new product launches should help the division to significantly increase its unit sales and thus reach a new record. The new S-Class is likely to make a large contribution to the growth in unit sales. As of the third quarter, the new S-Class coupe will also be available and will set new standards in the luxury segment. The all-new C-Class sedan will be delivered to its first customers in Europe as early as March 2014, and the GLA sports utility vehicle will be launched in the high-volume compact-car segment also in March 2014 as the fourth model of the new compact cars. In addition, the brand is likely to profit also in 2014 from the great market success of its other models in the SUV segment. For the second half of 2014, Mercedes-Benz anticipates further sales impetus above all from the market launch of the new C-Class wagon and the new generation of the CLS and the CLS Shooting Brake.

Within the framework of the "Mercedes-Benz 2020" long-term growth strategy, the division will consistently expand its product portfolio in all segments also in the coming years. The number of models offered by Mercedes-Benz in the compact-car segment will be increased to five. In parallel, Mercedes-Benz will continue the model offensive also at the top end of the portfolio, for example with additional models of the new S-Class and with an additional SUV variant.

From a regional perspective, Mercedes-Benz Cars expects the markets in North America and Asia to make major contributions to its growth in unit sales. In Asia, the Chinese market is especially important. The division has significantly enhanced the effectiveness of its sales organization there. Furthermore, the range of models offered there will be expanded, partially also with locally produced vehicles such as the compact SUV - the GLA, and the dealer network will be further expanded also outside the mega-cities.

The smart brand will present the successor to its smart two-seater as well as the new smart four-seater in 2014. Due to the model change and the associated production adjustments, Daimler assumes that the brand's unit sales will be significantly lower in 2014 than in the previous year. The new models should then facilitate strong sales growth in the following years.

Daimler Trucks anticipates a significant increase in total unit sales in 2014. In Western Europe, purchases brought forward to the second half of 2013 due to the upcoming introduction of Euro VI emission standards could at first lead to lower demand in 2014. However, in view of the anticipated upward development of the general economic situation, this weakness should soon be offset. Daimler Trucks intend to further strengthen its very good position with the full availability of the new model range and the high acceptance of its products in the market.

In Brazil, after the market slump in 2012 and a recovery phase in 2013, Daimler now anticipates a slightly decrease of demand. Extensive measures taken to optimize production, products and sales should further strengthen Daimler's market position. These measures include the investment of approximately one billion Brazilian Real (approximately €300 million) in the next two years. Those funds will flow primarily into the development of new products and innovative technologies and into process optimization and modernization at the plants in Sao Bernardo do Campo and Juiz de Fora.

Unit sales in the NAFTA region should develop positively and be significantly higher than in 2013. Following last year's gain in market share, the division's products will optimally satisfy customers' needs also in 2014, and will thus continue to secure its strong market position.

In Asia, the availability of additional BharatBenz models in the Indian market should make a major contribution to growth in unit sales. In addition, Daimler Trucks is generating synergy potential and further growth possibilities in the context of its new Asia Business Model. In Japan, the division will participate in the expected slight market growth.

Mercedes-Benz Vans anticipates a significant increase in unit sales in 2014. With the Citan, the division is now a full-range supplier and can thus utilize additional growth potential. With regard to medium-sized and large vans, unit sales in Europe are expected to rise significantly, whereby the new Sprinter, the new Vito and the new V-Class will stimulate additional demand. Mercedes-Benz Vans anticipates a further significant increase in unit sales also for the Citan. In the context of the "Vans goes global" business strategy, the division intends to continue its expansion also in North and South America and in China.

Daimler Buses is pursuing the goal in 2014 of significantly increasing its unit sales and maintaining its leading position in its core markets for buses above 8 tons with innovative and high-quality new products. Not least due to the soccer World Cup in 2014 and new products for the high-volume school-bus segment, the bus division expects unit sales to increase in Brazil. In Europe, Daimler Buses anticipates a stable development of unit sales. The "GLOBE 2013" growth and efficiency offensive was launched in 2012 to utilize further growth potential and to strengthen competitiveness; it is expected to have a positive impact also in 2014.

With its "DFS 2020" strategy, Daimler Financial Services aims to achieve further profitable growth in the coming years. For the year 2014, significant growth is anticipated in new business and contract volume. Important growth drivers are the offensives of the automotive divisions, the addressing of younger customers as a new target group, the expansion of business especially in Asia, the further development of online sales channels and the development of innovative mobility offers. In addition to car2go, the range of mobility services will be systematically expanded. Two examples of this are the "moovel" mobility platform and the "Park2gether" online service for finding parking spaces.

Group outlook

"On the basis of what we initiated in 2013, we can look to 2014 and the following years with confidence," stated Dieter Zetsche. "Our plan is working out step by step. The first results of our growth and efficiency strategy are making us hungry for more: That's why we are continuing our work in a disciplined manner."

Based on the assumptions concerning the development of automotive markets and the divisions' planning, Daimler assumes it will be able to achieve further significant growth in total unit sales in 2014. Daimler therefore also assumes that Group revenue will grow significantly in 2014. Although there is still great uncertainty regarding the future development of the markets, demand is generally expected to rise. Another positive factor is that Daimler should profit from the numerous new models that it launched in all automotive divisions in 2013. The new models of the year 2014 will additionally stimulate demand. Furthermore, the Group is increasingly developing the growth markets of Asia, Eastern Europe and Latin America for its products – partially also through local production. The expected revenue growth is likely to be driven by all divisions, whereby Daimler Trucks and Mercedes-Benz Cars will probably deliver the biggest contributions in absolute terms. Daimler anticipates above-average growth rates in the emerging markets and North America.

On the basis of the anticipated market development and the planning of the divisions, Daimler assumes that Group EBIT from the ongoing business will increase significantly in 2014.

For the individual divisions, Daimler aims to achieve the following EBIT targets in full-year 2014:
– Mercedes-Benz Cars: significantly above the prior-year level,
– Daimler Trucks: significantly above the prior-year level,
– Mercedes-Benz Vans: at the prior-year level,
– Daimler Buses: slightly above the prior-year level and
– Daimler Financial Services: at the prior-year level.

In the medium term, Daimler aims to achieve an annual average return on sales of 9% in the automotive business across market and product cycles. This is based on the target returns for the divisions: 10% for Mercedes-Benz Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for Daimler Buses.

In 2014, Daimler will once again invest a large amount in research and development activities, which should be about the level of last year. In addition, the company will once again increase its already high investment in property, plant and equipment significantly in 2014. "Our product offensives are firing, our efficiency programs are taking effect, and our investments are paying off," stated Dieter Zetsche.

In light of the anticipated business development, production volumes will grow again in 2014. At the same time, efficiency and thus also productivity will be significantly increased as a result of the programs being carried out in all the divisions. Against this backdrop, Daimler assumes that its growth targets can be achieved with a largely stable workforce. In the context of expanding the production network, new jobs will tend to be created primarily in North America and Asia. Workforce growth is likely to take place also at the joint ventures in China and Russia, whose employees are not included in the Daimler Group.

The development of EBIT in both years was affected by special items, which are listed in the following table:

The figures provided in this document are preliminary and have not yet been approved by the Supervisory Board or audited by external auditors.

Link to Dr. Dieter Zetsche's online statement:
http://www.youtube.com/daimler

Further information from Daimler is available at:
www.media.daimler.com and www.daimler.com

This document contains forward-looking statements that reflect our current views about future events. The words "anticipate," "assume," "believe," "estimate," "expect," "intend," "may," "plan," "project," "should" and similar expressions are used to identify forward-looking statements. These statements are subject to many risks and uncertainties, including an adverse development of global economic conditions, in particular a decline of demand in our most important markets; a worsening of the sovereign-debt crisis in the euro zone; a deterioration of our funding possibilities on the credit and financial markets; events of force majeure including natural disasters, acts of terrorism, political unrest, industrial accidents and their effects on our sales, purchasing, production or financial services activities; changes in currency exchange rates; a shift in consumer preference towards smaller, lower margin vehicles; or a possible lack of acceptance of our products or services which limits our ability to achieve prices as well as to adequately utilize our production capacities; price increases in fuel or raw materials; disruption of production due to shortages of materials, labor strikes, or supplier insolvencies; a decline in resale prices of used vehicles; the effective implementation of cost-reduction and efficiency-optimization measures; the business outlook of companies in which we hold a significant equity interest; the successful implementation of strategic cooperations and joint ventures; changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety; the resolution of pending governmental investigations and the conclusion of pending or threatened future legal proceedings; and other risks and uncertainties, some of which we describe under the heading "Risk Report" in Daimler's most recent Annual Report. If any of these risks and uncertainties materialize, or if the assumptions underlying any of our forward-looking statements prove incorrect, then our actual results may be materially different from those we express or imply by such statements. We do not intend or assume any obligation to update these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made.

About Daimler

Daimler AG is one of the world's most successful automotive companies. With its divisions Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and Daimler Financial Services, the Daimler Group is one of the biggest producers of premium cars and the world's biggest manufacturer of commercial vehicles with a global reach. Daimler Financial Services provides financing, leasing, fleet management, insurance and innovative mobility services. The company's founders, Gottlieb Daimler and Carl Benz, made history with the invention of the automobile in the year 1886. As a pioneer of automotive engineering, Daimler continues to shape the future of mobility today: The Group's focus is on innovative and green technologies as well as on safe and superior automobiles that appeal to and fascinate its customers. For many years now, Daimler has been investing continually in the development of alternative drive systems with the goal of making emission-free driving possible in the long term. So in addition to vehicles with hybrid drive, Daimler now has the broadest range of locally emission-free electric vehicles powered by batteries and fuel cells. This is just one example of how Daimler willingly accepts the challenge of meeting its responsibility towards society and the environment. Daimler sells its vehicles and services in nearly all the countries of the world and has production facilities on five continents. Its current brand portfolio includes, in addition to the world's most valuable premium automotive brand, Mercedes-Benz, the brands smart, Freightliner, Western Star, BharatBenz, Fuso, Setra and Thomas Built Buses. The company is listed on the stock exchanges of Frankfurt and Stuttgart (stock exchange symbol DAI). In 2013, the Group sold 2.35 million vehicles and employed a workforce of 274,616 people; revenue totaled €118.0 billion and EBIT amounted to €10.8 billion.

SOURCE Daimler Corporate Communications

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