Daimler AG (stock-market symbol DAI) achieved EBIT of €2,130 million in the first quarter of 2012, which is slightly higher than the high prior-year level (Q1 2011: €2,031 million). Net profit increased by 20% to €1,416 million (Q1 2011: €1,180 million) and earnings per share rose to €1.25 from €0.99 in the first quarter of 2011. “We have started the year with a strong first quarter. Despite higher investment in future growth and a challenging market environment, we succeeded in surpassing the very good prior-year results in terms of unit sales, revenue, EBIT and net profit,” stated Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. “We are on schedule to meet our targets for this year as well as our medium-term targets.”
The development of earnings is primarily a reflection of the ongoing growth of unit sales at Mercedes-Benz Cars and Daimler Trucks. There were opposing, negative effects on earnings mainly in connection with the expansion of the product portfolio, including the current product offensive at Daimler Trucks. Exchange-rate movements had a positive effect on earnings.
The decision to reposition the European business of Daimler Buses resulted in charges of €36 million.
The special items affecting EBIT in the first quarters of 2012 and 2011 are shown in the table at the botton of this page.
First-quarter unit sales up by 9%
In the first quarter of 2012, the Daimler Group sold a total of 502,100 cars and commercial vehicles worldwide, surpassing the prior-year number by 9%.
Daimler’s first-quarter revenue increased by 9% to €27.0 billion. Adjusted for exchange-rate effects, revenue grew by 7%.
The free cash flow of the industrial business decreased compared with the first quarter of 2011 to minus €2.0 billion, due to the normal seasonal development of working capital and in particular to increased inventories. Higher levels of stocks are related to the start of the peak selling season in spring at Mercedes-Benz Cars and the market launch of new products such as the B-Class, the SL and the SUVs. At Daimler Trucks, inventories increased towards the end of the first quarter in anticipation of stronger demand in the NAFTA region and in Asia. Additional factors reducing the free cash flow were the higher level of investment in property, plant and equipment and intangible assets as well as capital contributions in connection with the transfer of the Bergen business to Engine Holding (a joint venture of Daimler and Rolls-Royce relating to Tognum) and the joint venture between Daimler Trucks and Foton in China.
Compared with December 31, 2011, the net liquidity of the industrial business decreased by €1.9 billion to €10.1 billion. This was primarily due to the negative free cash flow.
At the end of the first quarter of 2012, Daimler employed 274,127 people worldwide (end of Q1 2011: 261,718). Of that total, 168,017 were employed in Germany (end of Q1 2011: 164,131).
Details of the divisions
Mercedes-Benz Cars achieved a new record for unit sales in the first quarter of 2012. Total sales by the car division rose by 9% to 338,300 units (Q1 2011: 310,700). First-quarter revenue increased by 8% to €14.9 billion.
With EBIT of €1,252 million, Mercedes-Benz Cars achieved earnings close to the level of the prior-year period (Q1 2011: €1,288 million). The division’s return on sales was 8.4% (Q1 2011: 9.3%).
The development of earnings was primarily driven by ongoing growth in unit sales, especially in Europe and the United States. Mercedes-Benz Cars achieved particularly high growth rates in the C-Class segment and with SUVs. Positive exchange-rate effects also boosted earnings. One of the reasons for the reduction in earnings was the temporarily weaker pricing in China. In addition, there were expenses in connection with the expansion of production capacities as well as higher advance expenditures for new vehicles and technologies.
Daimler Trucks increased its unit sales by 21% to 107,700 vehicles. Revenue rose by 18% to €7.4 billion (Q1 2011: €6.2 billion).
The division’s EBIT of €383 million was lower than in the prior-year period (Q1 2011: €413 million). Return on sales was 5.2% (Q1 2011: 6.6%).
Earnings were affected on the one hand by the positive development of unit sales and revenue in the NAFTA region and Asia. On the other hand, there were expenses relating to the current product offensive. There was another negative impact on earnings from falling unit sales in a difficult market environment in Latin America.
Unit sales by Mercedes-Benz Vans decreased in the first quarter of this year to 51,200 vehicles, primarily due to the market weakness in Western Europe (Q1 2011: 54,000). Revenue of €2.1 billion was above the prior-year level (Q1 2011: €2.0 billion).
The division achieved an operating profit of €168 million (Q1 2011: €173 million). Return on sales amounted to 8.0%, compared with 8.8% in the first quarter of last year.
Despite the lower unit sales, an unfavorable model mix and higher expenditure for research and development, Mercedes-Benz Vans was able to maintain a high level of earnings. This was due in particular to lower warranty costs.
Worldwide unit sales of 4,900 buses and bus chassis by Daimler Buses were below the prior-year number of 7,700 units. The decrease was primarily due to weaker demand for bus chassis in Latin America. The business with complete buses in Europe and the United States remained at a low level. In line with the development of unit sales, revenue of €730 million was lower than in the prior-year period (Q1 2011: €831 million).
The division’s EBIT was minus €103 million (Q1 2011: minus €33 million), primarily due to the decline in unit sales of 37%. Shipments decreased compared with the high levels of the prior-year quarter especially in Latin America. Furthermore, the repositioning of the European business decided upon in the first quarter of 2012 led to charges of €36 million.
As a major element of its strategy, Daimler Buses has started its “GLOBE 2013” growth-and-efficiency offensive. The program is designed to achieve the targeted 6% return on sales in the coming years, and is being rolled out over the entire value chain and at all of the division’s sites. One goal is the more intensive networking of all the plants in the European production network. Within the context of “GLOBE 2013,” Daimler Buses will also utilize existing growth potential in its traditional markets while further expanding its business in new markets.
Daimler Financial Services’ business continued to develop positively in the first quarter. Worldwide, approximately 234,000 new leasing and financing contracts worth a total of €8.3 billion were concluded, representing growth of 20% compared with the prior-year period. Contract volume amounted to €71.6 billion at the end of the first quarter of 2012, remaining stable compared with the end of 2011. Adjusted for exchange-rate effects, there was an increase of 1%.
The division achieved earnings of €344 million, thus surpassing the prior-year figure of €321 million. The main reason for this positive development was the increased contract volume compared with the first quarter of last year. There was an opposing effect from lower interest margins.
The reconciliation of the divisions’ EBIT to Group EBIT primarily reflects the proportionate share of the results of Daimler’s equity-method investment in EADS, as well as other gains and losses at the corporate level.
Daimler’s proportionate share of the net profit of EADS in the first quarter of 2012 amounted to €133 million (Q1 2011: €74 million). The reconciliation alsoincludes an expense at the corporate level of €35 million (Q1 2011: expense of €189 million).
Outlook
On the basis of the divisions’ planning, Daimler expects its total unit sales in the year 2012 to be higher than the figure of 2.1 million vehicles sold in the year 2011.
Mercedes-Benz Cars assumes that it will further increase its unit sales this year and will grow faster than the market as a whole. The division expects its unit sales in each of the remaining quarters of 2012 to be higher than in the respective prior-year period. Mercedes-Benz Cars will profit from the continuation of strong demand for its cars in the C-Class segment. At the end of March, it launched a new model of the SL, the icon in the sports-car sector. The division anticipates further growth for its SUVs, primarily due to the full availability of the new M-Class and as of September 2012 also of the new GL. In addition, the new generations of the GLK compact SUV and of the G-Class will be launched in June 2012. The new models in the high-volume compact-car segment will also contribute towards growth in unit sales; the new B-Class was launched in November 2011 with the new A-Class to follow this September. And a completely new automobile concept will come onto the market in September: the CLS Shooting Brake.
In regional terms, further growth opportunities are seen for 2012 above all in North America, as well as in China, India and Russia. For the smart brand, an ongoing stable level of unit sales is expected.
Daimler Trucks anticipates another rise in unit sales this year. In Europe, the division intends to develop better than the market as a whole, thus further extending its market leadership. The most important model in this respect is the new Actros. Market effects connected with the introduction of stricter emission regulations in Brazil mean that the sales situation there will be difficult, but Daimler Trucks expects to maintain its good market position. Because the average age of trucks is still very high in the NAFTA region, there is a high demand for replacement vehicles and a renewed increase in unit sales is therefore expected in that market. Growth in unit sales is also anticipated in Japan – driven by the reconstruction work following the natural disaster.
Daimler Trucks is about to take another major step in the development of new sales markets: In India, the division will start production of trucks under the BharatBenz brand in the third quarter. In the world’s biggest truck market, China, Daimler Trucks is pursuing a dual strategy: the sale of high-value Mercedes-Benz trucks for the premium segment in parallel with the sale of trucks in the lower-priced volume market through its cooperation with Foton. The joint venture will begin producing trucks to be sold under the Auman brand in the third quarter. Together with the strategic partner Kamaz, Daimler Trucks is developing the growing Russian market through two joint ventures and is thus further expanding its global presence.
Mercedes-Benz Vans assumes that it will further increase its unit sales in 2012. The launch of the new Citan in the small-van segment will help to revive unit sales in Europe. Overall, the division expects to maintain the level of unit sales in Europe that it achieved in the year 2011. Furthermore, Mercedes-Benz Vans expects to sell more vehicles than in the prior year in the United States. And it should be able to participate in the positive development of the Latin American markets due to the launch there of the current model generation of the Sprinter.
Daimler Buses anticipates a decrease in unit sales in the year 2012, whereby complete buses should account for a larger proportion of total unit sales. Weaker demand is expected this year above all in Latin America due to the introduction of the Euro V emission regulations, which led to purchases being brought forward in 2011. A slight recovery of the business with complete buses in Europe is anticipated.
Daimler Financial Services expects to achieve renewed growth in contract volume and new business in 2012. A normalization of credit risks is to be expected – and thus a moderate increase compared with the unusually low level of the year 2011.
Following the significant growth of the year 2011, the Daimler Group assumes that its revenue will increase again in the year 2012. In regional terms, above-average growth rates are expected in the emerging markets and in North America.
On the basis of current market expectations and the planning of the divisions, Daimler aims to achieve Group EBIT from the ongoing business in 2012 that is in the magnitude of the prior year. This target is based on the assumption of currency exchange rates close to their present levels.
The following EBIT targets from the ongoing business have been set for the individual divisions:
- Mercedes-Benz Cars: at the prior-year level
- Daimler Trucks: at least at the prior-year level
- Mercedes-Benz Vans: at least at the prior-year level
- Daimler Buses: below the prior-year level
- Daimler Financial Services: slightly below the prior-year level
Later this year, Daimler Buses anticipates expenses of up to €50 million from the repositioning of the European bus business and of approximately €60 million from the repositioning of the North American bus business.
Due to strong demand for its products, Daimler assumes that its worldwide workforce will expand compared with the end of 2011.
For the automotive business, Daimler aims to achieve an annual average return on sales of 9% across market and product cycles. This is based on targeted returns on sales for the individual divisions, to be achieved on a sustained basis as of the year 2013, of 10% for Mercedes-Benz Cars, 8% for Daimler Trucks and 9% for Mercedes-Benz Vans. Daimler Buses has the target of 6% to be reached in the coming years. The target for the Daimler Financial Services division is a return on equity of 17%.
The special items shown in the following table affected EBIT in the first quarters of 2012 and 2011:Credits: Daimler AG Copyright © 2012, Mercedes-Benz-Blog. All rights reserved.
Over three different exhibition stands, Daimler AG will be exhibiting a total of 19 commercial vehicles from the Mercedes-Benz and Fuso brands at this year's RAI in Amsterdam from 17 through to 21 April 2012.Mercedes-Benz Vans will be on show at stand 04.110 in the Oosthalle. Mercedes-Benz Trucks will be presented in the Europahalle at stand 01.220. Fuso Canter Trucks will be exhibited near to the Mercedes-Benz Trucks at stand 01.230. The Dutch market for commercial vehicles is an interesting one as Dutch delivery and logistics firms always provide the European transport branch with innovative ways of doing things.
Mercedes-Benz Vans at the RAI 2012
In Amsterdam, four Vitos, two Vianos and three Sprinters will be exhibited. A 3D model of the new Citan urban delivery van will be presented outside hall 1.
The Vito E-Cell is of particular interest for those seeking locally emission-free transport solutions in inner cities. The Vito E-CELL crewbus is the world's first seven-seater vehicle which makes emission-free driving a possibility as standard ex-works. With its 130 km range, it is particulary suited for use in environmentally sensitive areas, such as pedestrianised zones. The electric motor (60 kW; 280 Nm max. torque), the power electronics, as well as the transformer and charger unit are all housed under the bonnet. Power is transferred to the wheels of the front axle. The powerful lithium ion traction batteries find their place under the floor of the passenger compartment. The nominal voltage is 380 V and the capacity 36 kWh. The batteries of the Vito E-CELL are charged from a 380/400 V supply, which takes a maximum of six hours. If necessary, the batteries can also be charged at a later stage from a 230 V supply. Recuperation also helps additionally charge the battery whilst the vehicle is in motion. The batteries are protected by a crash element. If an airbag is deployed, the high-voltage technology is automatically disabled.
The new Mercedes-Benz Limited Edition Viano PEARL demonstrates the possibilities of a luxurious large-capacity vehicle. This range-topping Viano combines both space and exclusivity. The Viano PEARL's luxurious interior with specially selected materials and its dynamic exterior both set new standards. Two-tone 19-inch light-alloy wheels with 245/45 R 19 tyres further highlight the dynamism of the Limited Edition Viano PEARL. Thanks to its V6 diesel engine, the Limited Edition Viano PEARL CDI 3.0 BlueEfficiency develops 165 kW (224 hp) of power; a superior level of power with low fuel consumption. The top-of-the-line Viano model is alternatively available with a 3.5 l V6 petrol engine, which puts out 190 kW (258 hp) of power. In both variants, this power is transferred via an automatic transmission.
The Mercedes-Benz Sprinter starts in spring 2012 with several product improvements which underline its desire to be the leader in the vans segment. It is the first van in the world which can be ordered with a seven-speed automatic torque converter. The new 7G-TRONIC transmission will be available worldwide as an option on the van from the beginning of this year. The seven-speed automatic features fully electronic control and, despite having already proved itself in many Mercedes-Benz Passenger Cars, the system has now been adapted to the demands of the vans segment. The advantage of this new transmission with its seven stages is the combination of a broad gear ratio spread with a close graduation of the gears. In practice, this means that a small ratio in first gear ensures a dynamic start. At high speeds, however, the Sprinter drives fuel-efficiently, with low emissions and low noise levels thanks to its low engine speeds.
FleetBoard telematics for the Mercedes-Benz Sprinter can be fitted ex-works as part of the original equipment. Experience in short-radius distribution has shown that fuel consumption and CO2 emissions can be reduced by up to 30 percent if the vehicle is driven in an economical way.
Mercedes-Benz at the Bedrijfsauto RAI
With five Mercedes-Benz trucks being exhibited in Amsterdam, a small selection from the delivery programme of the world's largest truck manufacturer will be on show. With the Dutch market traditionally being a market for cross-European long-distance delivery firms, three variants of the new Actos will be shown: 1842 LS Super Stream Space, 1842 Stream Space and 1851 Giga Space. For low-emissions short-radius distribution, there will be a small series of the Atego 1222 L BlueTec Hybrid. The vehicles presented will be rounded off by the tried and tested Actros 4144 Tipper construction truck with the WideSpread chassis specific to the Dutch market.
All variants of the new Mercedes-Benz Actros are thoroughbread long-distance transport vehicles. Specially designed for use as a long-distance vehicle, a modular system forms the basis of the new Actros. This system includes seven spacious cabs, of which five with a level floor. Innovative interior design ideas, such as the separation of work and living areas, are characteristic of the new cab. A new cockpit which is as functional as it is attractive, a new, cleaner, more responsive and more efficient straight six-cylinder engine with additional torque reserves, a new frame and a dynamic chassis, as well as a further increased level of safety mean that the new Actros is a true innovator.
The new Actros is the first and, up to now, the only truck which has been developed to consistently meet the Euro VI emissions standard. Last year's record run over 10 000 km between Rotterdam and Stettin proved that: in the optional Euro V variant, the fuel consumption was around 7.6 percent less than that of its predecessor; in the Euro VI variant, fuel consumption was around 4.6 percent less and this was achieved with a reduction in AdBlue consumption of 40 percent. The newly developed heavy-duty engines of the new Actros also set standards. The new BlueEfficiency Power engine generation from Mercedes-Benz will, from the very beginning, meet the Euro VI emissions norms. The first member of the new engine family is the straight six-cylinder Mercedes-Benz OM 471 with power outputs from 310 kW (421 hp) to 375 kW (510 hp) and torque from 2 100 to 2 500 Nm. A high torque even at engine speeds below 1 000 rpm and almost full power at 1 400 rpm make for excellent driveability. As a result of the high demands of the Euro VI norm, Mercedes-Benz employs extensive exhaust gas aftertreatment, which comprises SCR technology with AdBlue injection without compressed air, cooled exhaust gas recirculation (EGR) and a particulate filter. Extraordinary robustness and longevity are part of the reason the engine is so economical, as well as a service interval of up to 150 000 kilometres.
An international jury of experts awarded the new Mercedes-Benz Actros the title of "Truck of the Year 2012". The commercial vehicle journalists from 24 countries elected the flagship Mercedes-Benz best truck of the year for the fourth time. In 1997, the first Actros started off the success story, with its successors in 2004 and 2009 also picking up the most votes.
The Mercedes-Benz Atego 1222 L BlueTec Hybrid is also more efficient in times when the price of fuel keeps on rising.
With its innovative Hybrid drive, the Mercedes-Benz Atego allows Daimler AG to offer this technology, with its particulary low emissions, as standard ex-works in Europe; thereby promoting sustainable goods transport solutions. The basis of the Hybrid version is the Atego 1222 L Euro V: it already fulfils the environmentally friendly EEV standard for particularly reduced particulate emissions and can therefore already be driven on German roads without having to pay tolls. Its compact and light four-cylinder 4.8 l diesel engine puts out 160 kW (218 hp). Water-cooled electric motors with a maximum power of 44 kW round off the offering. The electric power for these is supplied by powerful lithium-ion batteries with a high energy density.
The electric motor is located behind the engine and clutch, but in front of the transmission. This construction allows both drive technologies to drive the vehicle, be it either individually or simultaneously. This parallel-hybrid architecture allows purely electric driving, recuperation, boost mode with the help of the electric motor and optimisation of the diesel engine's characteristic curve. The diesel engine's drive power is actuated via a clutch between the diesel engine and the electric motor. Before actuation, the diesel engine is solely used to drive ancillary equipment. This not only drastically reduces fuel consumption and exhaust gas emissions by up to 15 percent, but also leads to a reduction in noise pollution. Use of the engine's automatic start/stop feature also brings consumption, emissions and noise levels down to zero when stopped at traffic lights.
In 2011, to put this important technology of the future through its paces, the first 50 Atego BlueTec Hybrid vehicles were delivered to customers involved in short-radius distribution. At the IAA in 2010, the Atego BlueTec Hybrid was elected "Truck of the Year 2011" by an international jury of specialists.
The Actros 4144 K WideSpread will be displayed for use in the Dutch construction industry. Special conversions with up to five axles are typical of the Dutch tipper market. Mercedes-Benz now delivers the WideSpread chassis ex-works. The delivery programme comprises models with three, four and five axles, additionally with optional 6x4 through 10x8 drive systems. The chassis is fitted with the Dynamic Truck and Trailer Suspension. The Electronic Truck Steering additionally allows the last axle to be steered up to speeds of 45 km/h.
The new Canter 4x4 all-wheel-drive at the Fuso stand
The third of the Daimler AG exhibition stands will present the vehicles of the Fuso brand. A total of five Fuso Canter vehicles will be shown, of which two models in the new all-wheel-drive 4x4 version. The conventionally rear-wheel-driven light truck with high payload capacity is now complemented by this variant with improved traction which features engageable all-wheel drive.
Its off-road capabilities make the Fuso Canter 4×4 the ideal choice for all applications where operation on unsurfaced roads is required, for example on construction sites, in the energy supply sector and in service with the fire brigade. For municipal authorities, it lends itself to use as a winter service vehicle with snowplough and salt spreader. Its width of a mere two metres means that it can also negotiate narrow openings with ease. The Canter 4×4, model designation 6C18, will be offered with a permissible gross vehicle weight of 6.5 tonnes, a two-metre wide comfort cab and a power output of 129 kW (175 hp). The all-wheel drive can be selected and deselected during a journey, thereby ensuring fuel-efficient operation. A differential lock for the rear axle is fitted as standard.
The new Fuso Canter 4×4 is powered by a four-cylinder turbo diesel engine with Euro V and EEV certification. Only the most powerful version of this 3-litre engine – developing 129 kW (175 hp) at 3 500 rpm – is installed on the all-wheel drive model. It boasts a maximum full-load torque of 430 Nm which is available constantly from 1 600 to 2 900 rpm.
In addition to SCR exhaust aftertreatment technology, a combination of exhaust gas recirculation and fully automatic particulate filter regeneration ensures optimum emissions performance. If the vehicle is being used mainly for very short trips, manual regeneration of the particulate filter may be necessary owing to the low engine temperatures.
The Canter 4×4 features the same traditional strengths as the Canter 4×2, namely excellent manoeuvrability, a space-saving cab-over-engine design, good visibility thanks to low windows and a short front overhang, a robust construction, a compact joystick shift lever on the dashboard, straightforward maintenance thanks to a tilting cab which provides easy access to the main assemblies, enhanced safety and reduced wear thanks to the standard-fitted exhaust brake.Credits: Daimler AGCopyright © 2012, Mercedes-Benz-Blog. All rights reserved.
The antitrust authorities have approved the entry of AKKA Technologies at the MBtech Group, an internationally leading engineering and consulting company based in Sindelfingen. As of today, AKKA Technologies holds a stake of 65 percent in the MBtech Group, which was previously a 100 percent Daimler subsidiary. Daimler and AKKA Technologies will now jointly develop MBtech. The details are specified in an agreement signed by Daimler and AKKA Technologies on December 7, 2011. “With a substantial equity interest of 35 percent, Daimler will continue to be a shareholder with a long-term and strategic involvement, as well as an important client of MBtech,” stated Prof. Dr. Thomas Weber, Member of Daimler’s Board of Management for Group Research and Mercedes-Benz Cars Development upon the closing of the transaction.
The entry of AKKA Technologies at the MBtech Group will create one of the biggest European engineering consultancies. AKKA Technologies is a listed company and is an engineering consultancy for the automotive, aeronautics, space, transport and energy sectors. In the area of aeronautics engineering, the company is already the market leader in Europe. In the future, that position will be held by AKKA Technologies and MBtech also in the automotive sector, where the Sindelfingen based company has its focus.
Together with the new majority shareholder, MBtech will broaden its competence profile outside the automotive industry and will expand its international market position in the coming years. Daimler and AKKA Technologies intend to jointly develop the company and to strengthen its competitiveness on a sustained basis. This will protect jobs at MBtech while offering new opportunities for the workforce in an expanded international environment.
AKKA Technologies employs a workforce of 7,000 people at more than 50 locations and posted a proforma revenue of 548 million euros in 2011.
The MBtech Group was established by Daimler AG in 1995. The company develops, integrates and tests automotive components, systems and modules, and employs 3,000 people at locations in Europe, North America and Asia. In the year 2011, it posted revenue of 375 million euros under currently applied accounting principals.Credits: Daimler AGCopyright © 2012, Mercedes-Benz-Blog. All rights reserved.
As soon as the information on the sale of Ducati came out, speculations of a possible takeover by Daimler emerged. Soon after, we learnt that Audi has reached an agreement with the Italian motorcycle manufacturer to secure the 'first refusal' option. In other words, the Ingolstadt-based carmaker has priority in the acquisition process in case Ducati gets eventually sold.We discussed this theme and the chances Mercedes-AMG and parent company Daimler have in this business. The consistent marketing partnership between the Affalterbach company and the Italian constructor began back in November 2010, when the partnership was officially announced at the Los Angeles Auto Show. Up to the moment, a series of joint products have already been released, together with the involvement in advertising and motorsporting activities, through which both entities benefit.
In a recent interview, a Daimler official denied the Germans are interested in acquiring the biggest stake in Ducati. This news inherently leads us to a logical question: why did Daimler spend an important amount of money on this partnership? The financial situation of Ducati was already known since 2010 and raising visibility for the two brands is a poor argument, we say. There were also intense rumors that Mercedes-AMG plans to unveil its own motorbikes using technical expertise from Ducati as part of a coherent growth plan.
Anyway, this could be a unique chance that might not come in the future and Daimler seems to afford the position of losing it without the blink of an eye. Related Articles:
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- Ducati Diavel AMG Special Edition celebrates world premiere at the IAA Frankfurt 2011: AMG and Ducati create first joint products
- Gabriele del Torchio takes delivery of new company car: Ducati president to drive new CLS 63 AMG
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- ANALYSIS: Ducati is up for sale - Could Mercedes-AMG slip the chance?Copyright © 2012, Mercedes-Benz-Blog. All rights reserved.
In 2012 Daimler Trucks aims to build on the successes it posted last year. After sales and revenues had each increased by 20% in 2011, and the results even increased by twice this amount, the division aims to boost its unit sales further this year and achieve Earnings before Interest and Taxes (EBIT) that are at least as high as 2011.
Although the markets in NAFTA and Asia did very well in the first months of 2012, the market situation is rather difficult in Europe and in particular in Latin America. Daimler Trucks expects conditions to improve in the second half of the year. Daimler Trucks is on track to reach its strategic return on sales target of 8% as measured across the business cycle. The target figure is a sustainable average that the division aims to achieve from 2013 on.
“In 2012 we will once again prove that our Global Excellence Strategy is working well. We operate worldwide, our by now five truck brands offer the right products for every region, and we are now just hitting our stride in the growth markets of India and China”, said Andreas Renschler, the Daimler Board of Management member responsible for Daimler Trucks and Daimler Buses, in Stuttgart. The division aims to increase its market share in all regions.
A few weeks ago Daimler Trucks presented the wide range of products offered by the new truck brand BharatBenz in India. These “Made in India” trucks are manufactured in Chennai in the southern part of the country. A total of €700 million was invested in the facility, where the first series-produced vehicles will begin leaving the plant this fall. In the medium term up to 70,000 units can be produced in India each year, and the brand’s product lineup will cover the entire range of vehicles, from light-duty to heavy-duty trucks. At the same time as the subsidiary Daimler India Commercial Vehicles (DICV) makes its preparations for the launch of series production, it is also setting up a sales network, which will consist of around 70 dealerships this year.
In December 2011 the Chinese government gave its final approval for the Beijing Foton Daimler Automotive Co., Ltd., Daimler’s joint venture with the local truck manufacturer Foton. The two companies will cooperate on producing medium and heavy-duty trucks for the world’s largest commercial vehicle market. These trucks will be sold under the well-established Auman brand. The joint venture will have an annual production capacity of 160,000 units, and the first jointly manufactured truck is scheduled to roll off the assembly line in the third quarter of the year. The Chinese market for medium and heavy-duty trucks is expected to grow to around 1.5 million units by 2020, compared to around 1.2 million units in 2010.
The outlook for the Indian and Chinese truck markets is therefore very promising for the years ahead. This applies especially to the modern domestic segment, in which both BharatBenz and Auman trucks are offered. According to experts, this segment will account for around half of the global truck market in 2020. The quality of modern domestic trucks is much higher than that of the “low cost” vehicles that are still common in many growth markets. Although the new trucks are more robust than these “low cost” vehicles, their technology is not comparable to that of the premium vehicles from the triad markets. “The rise in truck standards in the growth markets is opening up new opportunities for us — not only for our existing vehicles and components, but also for our new, locally manufactured products,” Renschler said.
The product offensive in the modern domestic segment is meant to help Daimler Trucks attain its medium-term sales targets, amounting to about 500,000 trucks worldwide in 2013 and more than 700,000 units per year by the end of the decade.
In another BRIC country, Russia, the cooperation between Daimler Trucks and the local market leader for heavy-duty trucks, Kamaz, is going well. Sales of Mercedes-Benz truck and Fuso Canter models rose sharply in Russia after the Chelny plant in the Russian republic of Tatarstan began assembling these vehicles in 2010. As a result, more than 1,200 Fuso Canter and around 2,800 Mercedes-Benz trucks had been sold in Russia by the end of 2011.
In order to offer customers in Europe’s largest truck market a customized product bearing the familiar Kamaz brand, the partners presented their first joint truck in Moscow last fall. The vehicle is a Kamaz that contains Daimler components which enable it to comply with the Euro V emissions standard. The truck will be launched on the Russian market in 2014.
The expansion of the division’s global presence and the massive increase in local manufacturing operations are rounding out Daimler’s global truck organization, and the advantages of this arrangement are becoming more apparent day by day. An example of this is the division’s new Global Powertrain, Procurement and Manufacturing Engineering Trucks unit, which bundles the worldwide activities in these fields.
Because the powertrain accounts for more than half of the total costs of a truck, the synergy benefits are obvious. An example of this is the new heavy-duty engine family, in which Daimler invested more than €1 billion. This new generation of engines has streamlined the previous portfolio of four engine families from four plants down to just one global engine platform for four displacement variants, which is manufactured at two locations.
After the engines were introduced at Fuso in Japan and Daimler Trucks North America (DTNA), a European adaptation of this engine is now also used to power the new Actros. Mercedes-Benz’ new OM47x engine generation, which is already available in the new Actros, meets the Euro VI emissions standard, which will go into effect in 2014. The engines share more than 80% of their components worldwide. This results in corresponding benefits due to economies of scale.
The division’s platform and module strategy will extend beyond the powertrain, affecting many more components than just the engines, transmissions, axles, and exhaust treatment systems. The Axor cab, for example, will also be installed in the Indian BharatBenz models in the future.
Daimler Trucks’ platform and module strategy allows it to generate extensive synergies, which will help the division to reach its margin goals. “The message is clear: We aim to become the regional champion wherever we enter the market, and thus also become Number 1 worldwide in our industry,” said Renschler. “Ultimately we want to achieve a sustained average return on sales of 8% per year beginning in 2013 and extending across the business cycle.”
In 2011 Daimler Trucks made considerable progress toward achieving this goal. The return on sales rose to 6.5% from 5.5% in 2010. The return on sales would have even risen to 6.9% had it not been for €32 million in write-offs from the involvement in Kamaz and one-time expenses of €70 million caused by the natural disaster in Japan.
However, Daimler Trucks significantly increased sales, revenues, and earnings compared to the prior year. Vehicle sales substantially exceeded the prior year’s figures in the division’s core regions (NAFTA, Europe, Asia, and Latin America). Total sales worldwide rose by 20% to 425,800 units. Revenues also increased by 20%, to €28.8 billion, while earnings before interest and taxes (EBIT) jumped twice as much, or over 40%, to €1.9 billion.
All of the division’s operating units contributed to these good results, with Daimler Trucks North America (DTNA) providing the biggest boost. DTNA’s sales skyrocketed by 50% to 118,800 units last year. Demand was particulary driven by the need to renew the aged truck fleets. For the past three decades, the average age of trucks in North America has not been as high as it is today. Thanks to the outstanding market response to its product lineup, DTNA was able to further strengthen its leading position in the segment of vehicles in Classes 6 to 8, where it now has a market share of 31.9% (2010: 31.6%).
Total sales of Trucks Europe/Latin America rose substantially once again, climbing to 159,300 units (2010: 135,200). Sales were therefore back up to the high pre-crisis level achieved in 2007. Western Europe contributed considerably to sales growth. Daimler Trucks once again led the market for medium and heavy-duty trucks there, boosting sales by 14% to 57,100 units. Although the division’s market share dropped slightly in Europe, the full availability of the new Actros “Truck of the Year 2012” in all of the key markets will once again push up market share this year.
Fuso’s performance is particularly impressive. Contrary to the expectations that still prevailed in mid-2011, Fuso was able to increase sales throughout the year by 5% to 147,700 units, despite the disruptions resulting from the natural disaster in Japan in March 2011. The increase was due to the rapid progress of reconstruction work in Japan after the natural disaster, which led to increased transportation needs and thus to a greater demand for commercial vehicles. In Japan itself, Fuso increased truck sales by 9% to 27,000 units.
At 61,900 vehicles, Daimler Trucks achieved a new sales record in Latin America. Despite intense competition, sales remained at the previous year’s high level of 44,100 vehicles in the region’s biggest market, Brazil. Vehicle production in the region was also at a record level.
Daimler Trucks has no intention to slacken its efforts after achieving these successes. The division’s Shaping Future Transportation initiative brings together a wide range of technologies and services that not only make commercial vehicles safer, more economical, and more environmentally friendly, but will also contribute substantially to Daimler Trucks’ future success. The CleanDrive concepts, for example, help to drastically reduce commercial vehicles’ fuel consumption and exhaust gas emissions.
Daimler Trucks has already put more than 500,000 environmentally friendly BlueTec trucks featuring SCR technology on the road. In addition, it has delivered more than 8,000 vehicles with alternative drive systems, including around 2,700 hybrid trucks. What’s more, the new, fourth generation of the Mercedes-Benz Actros is the world’s first long-haulage truck to rigorously meet the future Euro VI emissions standard. Despite the fact that this standard represents a big technological challenge, the new truck also consumes far less fuel than its predecessor.
Fuel consumption isn’t the only important issue for truck customers, however; the total cost of ownership is also a primary concern. These costs can be reduced by a number of truck-related services, including customized financing offers (Daimler Trucks Financial), the renting of trucks at short notice to cover peaks in transportation demand (Mercedes-Benz CharterWay), electronic assistance systems that make workshop stays as short as possible, and technology for managing entire truck fleets (FleetBoard).
These services become especially important for customers in times of economic uncertainty. Services, after-sales activities, and telematics systems now account for around 20% of Daimler Trucks’ revenues.
Credits: Daimler AG
Copyright © 2012, Mercedes-Benz-Blog. All rights reserved.
Daimler Buses achieved its second-best sales result ever in 2011, selling a total of 39,740 vehicles or 2% more than in the previous year. The division achieved this result despite difficult sales conditions for complete buses. The only time that sales were even higher was in 2008, when almost 40,600 units were delivered. As a result, Daimler Buses continues to be the world’s leading supplier of buses weighing more than 8 tons GVW.
311,000 buses were sold worldwide, an increase of 2% compared to the previous year. Whereas business was booming particularly in Latin America, the bus market in Western Europe remained in a slump because of the financial and debt crisis. Market development was similarly negative in North America, which, like its Western European counterparts, suffered from public sector budget constraints and therefore from substantially fewer calls for bids.
Strong sales increase in growth markets
The main reason for the rise in sales at Daimler Buses was the increased demand in Latin America, where the division boosted sales of Mercedes-Benz brand chassis by 8% to 25,000 units. Sales were also buoyed by purchases made earlier than planned due to the introduction of the Euro V emissions standard in Brazil in 2012. The market share of Daimler Buses in Latin America remained at a high level of around 43% in 2011. Substantial increases were posted in Mexico as well. Business was also good in Turkey, where sales rose by 55% to the record figure of 1,100 buses.
By contrast, Daimler Buses was unable to buck the downward trend in Western Europe and North America. As a result, sales dropped in Western Europe by 17% to 5,900 vehicles and chassis. Sales of city buses once again declined steeply, as the public sector continued to be negatively influenced by budget restraints. The division sold 600 buses in North America, or almost one third less than in 2010. Budgetary constraints were also the defining factor in this market.
“In 2011 we kept pace with the global market as a whole,” says Hartmut Schick, Head of Daimler Buses. “We captured an impressive 12% of the global market, which makes us the world’s Number One bus supplier. More specifically, we clearly maintained our leading position in the core markets.”
Daimler Buses’ revenues and earnings both declined in 2011. At €4.4 billion (2010: €4.6 billion), revenues were slightly lower than in the prior year. These figures are the result of two contrary developments. Whereas the demand for chassis rose substantially, it dropped considerably for complete buses, which generate significantly more revenue per bus. This development therefore had an even bigger impact on earnings than on revenues, and EBIT declined from €215 million to €162 million. “2011 was clearly a chassis year, while the business with complete buses was very sluggish, particularly in Europe,” comments Schick.
"We've got the right strategy"
Even though Daimler Buses’ return on sales dropped to 3.7% in 2011 (2010: 4.7%), the division’s target for 2013 remains at 6%. “We have the right strategy, and we will systematically pursue it,” says Schick. A key element of this strategy is the GLOBE 2013 growth and efficiency offensive. This “fitness program” will be rolled out at all locations and along the entire value chain. “We will leave no stone unturned and make sure that nothing is omitted,” states Schick.
One of the aims of this strategy is to more strongly interlink the European production network, which has locations in Germany, Turkey, and the Czech Republic. The two German bus plants in Mannheim and Neu-Ulm will remain an integral part of this network, which is why the division invested extensively there in recent years as well as in Hosdere, Turkey.
“GLOBE 2013 will further increase the competitiveness of the German locations. We are making Mannheim and Neu-Ulm sustainably fit for the future. Daimler Buses is the only major bus manufacturer to remain faithful to Germany as a production location,” says Schick.
As part of GLOBE 2013, Daimler Buses will exploit existing growth potential in its traditional markets and further expand its business operations into new ones. In response to the introduction of the Euro VI emissions standard, the division is launching a product offensive in the city bus segment as well as in the coach market. Daimler Buses’ Travego Edition 1 is the first Euro VI-compliant coach. “Our products precisely meet our customers’ wishes, and we will systematically exploit growth potential,” says Schick.
City buses in India — chassis in China
Big growth opportunities are also offered by new markets such as India and China. After having introduced two travel coach models in India since 2008, Daimler Buses is now launching the first Mercedes-Benz city bus there. India is the world’s second-largest bus market, with a current volume of about 46,000 buses per year. Experts predict that this volume will grow to around 80,000 units in 2020.
By then, the bus market in China is expected to increase from its current level of more than 100,000 units to around 150,000 units. Daimler Buses is taking a multi-track approach in order to exploit the opportunities in China. The division will begin selling chassis in the country this year. In addition, Daimler Buses will talk with the Chinese company Foton about joint projects. Foton and Daimler are already cooperating in the truck sector. The two companies are partners in the joint venture company Beijing Foton Daimler Automotive Co., Ltd., which produces Auman brand medium-duty and heavy-duty trucks in China.
Daimler Buses expects sales to be negatively affected by the introduction of the Euro V emissions standard in Brazil this year, whereas business will probably improve slightly in Western Europe.
Credits: Daimler AG
Copyright © 2012, Mercedes-Benz-Blog. All rights reserved.
car2go North America, LLC, a subsidiary of Daimler North America Corporation, announced today it will launch in two new cities, from coast to coast in March 2012. The car2go carsharing service will be available in Washington, D.C. beginning March 24 and in Portland, Oregon beginning March 31.
“car2go is an integral part of Daimler's overall mobility service strategy,” said Bodo Uebber, member of the Board of Management at Daimler AG and Chairman of the Supervisory Board of Daimler Financial Services, the division of Daimler that has recently assumed responsibility for car2go. “And the success speaks for itself: Starting with an innovative idea three years ago, car2go today is a benchmark mobility business that expands rapidly.”
“Already more than 70,000 people worldwide are car2go members, using our smart urban transportation each and every day,” Uebber went on to say. “We will continue this success story by bringing car2go to further cities worldwide step by step,” said Klaus Entenmann, Chairman of the Board of Management of Daimler Financial Services.
The car2go program will provide the people who live, work and visit Washington D.C. and Portland with a smart transportation solution that is designed for rapidly growing urban areas. “In each car2go city, we provide a carsharing service that helps ease congestion, reduce emissions and provide a viable automobility solution that complements public transportation,” said Nicholas Cole, President & CEO of car2go North America. “The people who live, work and visit the vibrant cities of Washington D.C. and Portland already embrace a variety of transportation options, and we are excited to bring them the unsurpassed convenience and flexibility of the car2go way of carsharing.”
As the world’s first-free floating carsharing service, car2go provides a new way of carsharing that is unique, particularly in these three areas:
- BY THE MINUTE: Members pay only for the time they use the car, by the minute, with discounted rates for hourly and daily use. There is no minimum amount of time that a car can be used - whether a member needs a car for 10 minutes or an entire day - members simply get in and drive, for as long as they want without a mandatory return time. Parking, fuel, maintenance and insurance are included at no additional cost, and there are no annual or monthly fees.
- ON DEMAND: Members can use the first available car2go they find, via a smart phone app, the car2go vehicle finder at car2go.com, by calling the customer call center, or by simply locating an available car2go on the street. There is no need to make a reservation in advance because members have unrestricted and unlimited access to car2go vehicles 24 hours a day, seven days a week.
- FREE FLOATING: Members can pick up and drop off any car2go anywhere within the car2go Home Area - in any legal on-street parking space, including metered, nonmetered and residential neighborhoods parking spaces. Members do not need to drive the car back to its original location or commit to a predetermined amount of time. They can simply drive the car for as long as they need it, park the car at their individual destination, end the rental by swiping the card on the windshield reader, and instantly the car becomes available for the next member to use.
At the end of March, car2go will begin to phase-in more than 200 smart fortwo cars in each of the two cities, with the official launch dates set for March 24 in Washington D.C. and March 31 in Portland, Oregon.
Registration for both cities opens today, and for a limited time, car2go is offering new members in Washington D.C. and Portland free registration and 30 free minutes of driving time.
For more information about the special promotions, please visit WashingtonDC.car2go.com and Portland.car2go.com . Additional information about car2go can be found at www.car2go.com .
Credits: Daimler AG
Copyright © 2012, Mercedes-Benz-Blog. All rights reserved.
The new Head of Sales at Daimler Buses/EvoBus GmbH is to be Till Oberwörder (41). Subject to agreement by the board of management at EvoBus GmbH, the long-standing Daimler Manager will take over the management of Marketing, Sales & Aftersales on 1 April 2012. “In Till Oberwörder, we’ve gained a real sales professional for the bus market who has many years of experience in the commercial vehicles segment”, states Hartmut Schick, Head of Daimler Buses.
After having studied business administration, Till Oberwörder began his career in 1998 at Daimler in Stuttgart. Since then, he has carried out a variety of leadership functions in the Sales department of the company, both within Germany and abroad. In the Trucks division, he was responsible for Sales Management and Market Management in Central and Eastern Europe, before taking over the management of Mercedes-Benz Ceská in the Czech Republic in 2006. In February 2011, Till Oberwörder returned to Stuttgart and has since been in charge of Mercedes-Benz Vans Sales and Market Management.
As Head of Marketing, Sales & Aftersales, Till Oberwörder succeeds Angela Titzrath-Grimm (45), who left Daimler in January 2012 to join the Board of Management at Deutsche Post/DHL.
Credits: Daimler AG
Copyright © 2012, Mercedes-Benz-Blog. All rights reserved.
In agreement with the General Works Council, the Board of Management of Daimler AG has set a performance participation bonus for the year 2011 of €4,100 (previous year: €3,150) be paid to each entitled employee. The amount of the annual employee bonus at Daimler AG is always related to the company’s performance in the previous financial year.
In the past jubilee year – “125 Years! Inventor of the Automobile” – Daimler set new records for unit sales (2.1 million vehicles), revenue (€106.5 billion), EBIT (€8.8 billion) and net profit (€6.0 Mrd.). On the basis of these excellent results, the company will pay the highest performance participation bonus in its history.
Wilfried Porth, Board of Management Member for Human Resources and Labor Relations Director of Daimler AG: “Daimler looks back on an excellent year. Our employees made the decisive contribution to that with their outstanding performance and maximum commitment. These exceptional efforts will be given special recognition with our performance participation bonus.”
Erich Klemm, Chairman of the General Works Council of Daimler AG: “Record earnings can only be achieved as a result of a record performance. For this reason, the General Works Council was in favor of an employee bonus also at a record level. The employees showed maximum flexibility with high levels of overtime, Saturday shifts and night shifts, and worked hard to achieve those record figures. We regard the performance participation bonus as appropriate recognition by the company of those efforts.”
The performance participation bonus for the year 2011 will be paid out with the salaries for April 2012. Those entitled to receive the bonus are not only the employees of Daimler AG in Germany paid according to collective wage-tariff agreements, but also apprentices and trainees, students from cooperative state universities and doctoral students.
Credits: Daimler AG
Copyright © 2012, Mercedes-Benz-Blog. All rights reserved.
Daimler AG (stock-exchange symbol DAI) today presented its preliminary and unaudited earnings figures for the Group and the divisions in the year 2011. Daimler increased its Group EBIT from the ongoing business by 24% to €8,977 million in 2011 (2010: €7,212 million). Including special factors, Group EBIT rose by 20% to €8,755 million (2010: €7,274 million). Both EBIT figures are new records. Net profit also reached a record figure of €6,029 million (2010: €4,674 million) and earnings per share amounted to €5.32 (2010: €4.28).
Overall, Daimler was able to set several records simultaneously in the anniversary year, “125! years inventor of the automobile.” “The Group achieved its best-ever results in 2011 for unit sales, revenue, EBIT and net profit. All of our divisions contributed to this success,” stated Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. Above all, Mercedes-Benz Cars also set new records for sales, revenue and EBIT. In its long corporate history, the car division has never performed better than in 2011.
“In total, we made the anniversary year also into a year of success for Daimler. This performance shows that with its strong portfolio of cars, trucks, vans, buses and financial services, the Group is strategically very well positioned. We are now putting all of our efforts into continuing this success and achieving our targeted rates of return on a sustained basis as of the year 2013,” emphasized Zetsche.
Financial year 2011
The excellent earnings for the year 2011 primarily reflect the very good situation of unit sales in the divisions. In 2011, Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans significantly increased their unit sales compared with the prior year in the major regions. Daimler Financial Services profited in particular from the lower cost of risk.
Special factors connected with the natural disaster in Japan resulted in total charges for the Group of €80 million. Insurance compensation has been taken into consideration in calculating this figure. Charges were also recognized from the impairment of Daimler’s equity interests in Renault (€110 million) and Kamaz (€32 million).
The special items affecting earnings in the years 2011 and 2010 are listed in the table on page 13 and in the individual divisions.
Daimler sold a total of 2.1 million vehicles in 2011, surpassing the prior-year figure by 11%. All of the automotive divisions contributed to the increase. Group revenue increased by 9% to €106.5 billion; adjusted for exchange-rate effects, there was an increase of 10%.
The net liquidity of the industrial business amounted to €12.0 billion at December 31, 2011 (2010: €11.9 billion).
The generally positive business development led to an increase in the number of persons employed worldwide to 271,370 as of December 31. This was 11,270 more than at the end of 2010. In Germany, the number of employees increased to 167,684 (2010: 164,026).
Due to Daimler’s success in 2011, the Board of Management and the General Works Council have agreed that the workforce’s performance will again be rewarded with a high performance participation bonus: In Germany, each eligible employee of Daimler AG will receive an amount of €4,100 (2011: €3,150) at the end of April 2012.
The shareholders will also participate appropriately once again in the Group’s financial success. In setting the dividend, Daimler aims to distribute approximately 40% of the net profit attributable to Daimler shareholders. In view of the good business development, the Board of Management and the Supervisory Board will therefore propose to the shareholders for their approval at the Annual Meeting to be held on April 4, 2012 that a dividend of €2.20 per share be paid out (2010: €1.85). This represents a total dividend of €2,346 million (2010: €1,971 million).
“In this way, we want our shareholders to participate appropriately once again in our financial success, and we anticipate a continuation of this dividend development in the coming years,” stated Bodo Uebber, Member of the Board of Management of Daimler AG for Finance & Controlling and Financial Services.
Investments for the future
On the basis of the “Road to Emission-free Mobility” initiative, one focus will be on new, extremely fuel-efficient and environmentally friendly drive technologies in all the Group’s automotive divisions. The objectives are to optimize conventional drive technologies, to enhance their efficiency through hybridization, and to develop electric vehicles with fuel-cell drive and battery power. Another focus is on new safety technologies with the goal of avoiding accidents as far as possible and of alleviating the consequences of any accidents that might still occur.
In this context, Daimler therefore increased its research and development expenditure to €5.6 billion in 2011 (2010: €4.8 billion). R&D spending amounted to €3.7 billion at Mercedes-Benz Cars (2010: €3.1 billion) and €1.3 billion at Daimler Trucks (2010: €1.3 billion).
Investment in property, plant and equipment amounted to €4.2 billion (2010: €3.7 billion), of which €2.7 billion was invested in Germany (2010: €2.1 billion). The focus was on substantial capital expenditure on local production facilities, new products and new technologies. One of the main areas at Mercedes-Benz Cars was the expansion of production capacities for the successor to the A-/B-Class at the Rastatt plant in Germany and at the new plant in Kecskemét, Hungary. Daimler Trucks made substantial investments in 2011 in the launch of the new Actros heavy truck.
The divisions in detail
Mercedes-Benz Cars, comprising the brands Mercedes-Benz, Maybach and smart, set a new record in 2011 with sales of 1,381,400 vehicles (2010: 1,276,800). The division’s revenue rose by 7% to a record of €57.4 billion (2010: €53.4 billion).
The division posted EBIT of €5,192 million, a significant improvement compared with the prior-year result (2010: €4,656 million). Its return on sales was 9.0% (2010: 8.7%).
The increase in earnings resulted primarily from the worldwide growth in unit sales, especially in the mid-sized and SUV segments. Above all in China and the United States, the division was able to boost its unit sales due to its attractive product range. Improved pricing for new vehicles and lower warranty expenses also made positive contributions to earnings. There were negative effects on earnings from increases in prices of materials and higher expenses related to the launch of new models, increased research and development costs and negative exchange-rate effects.
Daimler Trucks increased its worldwide unit sales by 20% to 425,800 vehicles and revenue also rose by 20% to €28.8 billion (2010: €24.0 billion).
The division’s EBIT of €1,876 million was also significantly higher than in the prior year (2010: €1,332 million). Return on sales amounted to 6.5% (2010: 5.5%). The positive earnings development is mainly based on strong growth in unit sales with contributions from all the major regions (the NAFTA region, Europe, Asia and
Latin America). The successfully implemented optimization and repositioning of the business operations of the subsidiaries Mitsubishi Fuso Truck and Bus Corporation and Daimler Trucks North America had sustained positive effects also in 2011, contributing to significant efficiency improvements and thus also to higher earnings. Negative effects on earnings resulted from higher material costs and the advance expenditure for the new Actros. In connection with the natural disaster in Japan, charges of €70 million were recognized. Without these charges and the impairment of the investment in Kamaz, Daimler Trucks would have achieved a return on sales of 6.9%.
Mercedes-Benz Vansincreased its unit sales by 18% to 264,200 vans of the Sprinter, Vario, Vito and Viano model series. Revenue of €9.2 billion was also significantly higher than in the prior year (2010: €7.8 billion).
The division posted a significant improvement in earnings. EBIT increased to €835 million (2010: €451 million) and return on sales improved from 5.8% in 2010 to 9.1% last year. The positive development of earnings resulted from significantly higher unit sales, above all in Germany, the NAFTA region and Eastern Europe. One of the main factors was the excellent market response to the new-generation Vito and Viano models. Higher material costs were more than offset by sustained efficiency improvements and better pricing.
Daimler Buses once again increased its sales of buses and bus chassis, despite difficult conditions for complete buses, to a total of 39,700 units (2010: 39,100). Revenue of €4.4 billion was slightly lower than in the prior year (2010: €4.6 billion).
With EBIT of €162 million, the division did not match the high level of earnings it achieved in the prior year (2010: €215 million). Its return on sales was 3.7% (2010: 4.7%). This earnings development is due to lower unit sales of complete buses in Western Europe and North America, especially in the city-bus segment, in which demand decreased. Higher prices due to the influence of inflation in Latin America also had a negative impact on EBIT. The division’s earnings were positively affected by higher shipments of bus chassis in Latin America (including Mexico) and by exchange-rate effects.
Daimler Financial Services developed very positively in all regions. Worldwide contract volume grew by 13% to the record level of €71.7 billion (2010: €63.7 billion). Adjusted for exchange-rate effects, contract volume grew by 12%. New business increased by 15% to €33.5 billion due to the higher volumes of unit sales by the automotive divisions.
The division significantly surpassed its earnings of the prior year with EBIT of €1,312 million in 2011 (2010: €831 million). Its return on equity was 25.5% (2010: 16.1%). The improvement in earnings was mainly caused by lower provisions for risks, improved refinancing conditions and an increased contract volume. On the other hand, earnings were negatively affected by expenditure related to the realignment of business activities in Germany. Another factor was that additional allowances for bad debts had to be recognized in connection with the natural disaster in Japan.
The reconciliation of the divisions’ EBIT to Group EBIT comprises Daimler’s proportionate share of the results of its 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 income of €143 million (2010: expense of €261 million). In addition, an expense at corporate level of €588 million has been taken into consideration (2010: income of €21 million). In 2011, this was primarily related to litigation and the impairment of Daimler’s equity holding in Renault (€110 million). Due to the sharp drop in the stock-exchange price of Renault shares at the end of the third quarter, the shareholding had to be impaired to its fair value.
Outlook
According to current estimates, worldwide markets for motor vehicles should continue to grow this year, with the exception of the Western European markets, which are increasingly affected by the debt crisis. Global registrations of new cars are likely to increase by approximately 4%, whereby the growth will primarily be driven by the Asian emerging markets, the US market and the Japanese market, which will benefit from catch-up effects.
Worldwide demand for medium and heavy trucks in 2012 is expected to be at least at the level of last year. Despite a perceptible growth slowdown, the North American market should prove to be the world’s most important driver of demand, expanding by 15 to 20%. Demand for trucks in Europe will be impacted by the ongoing sovereign-debt crisis and the resulting economic weakness. So at best, demand in that market can only be expected to be about as strong as last year. The Japanese market for heavy and medium-duty trucks should expand once again by 5 to 10% compared with the prior year, thanks to the country’s economic growth, which is benefiting from the reconstruction efforts. Overall demand for trucks in the emerging markets should grow only moderately this year.
Mercedes-Benz Cars assumes that it will be able to further increase its unit sales this year and will grow faster than the total market. Its competitive model range will facilitate growth in traditional markets also under less favorable conditions. The division will also profit from the continuation of very strong demand for its models in the C-Class segment. In the luxury segment, the new generation of the SL will boost unit sales as of late March. With sport-utility vehicles, further growth is anticipated primarily due to the full availability of the new M-Class and as of September 2012 from the new GL. Furthermore, both the new GLK (a compact SUV) and the new-generation G-Class will be launched in June. The new models in the high-volume compact-car segment will also boost growth in unit sales. The new B-Class was already launched in November 2011 and the new A-Class will follow in September 2012.
On the engine side, the new and particularly efficient four-, six- and eight-cylinder engines and the ECO start-stop technology will be introduced in additional models. This will boost unit sales above all with commercial customers. With the help of the new engines and the particularly economical BlueEFFICIENCY models, Daimler was able to reduce the average CO2 emissions of the cars sold in the European Union to 150 grams per kilometer in 2011 (2010: 158 g/km).
Within the framework of the “Mercedes-Benz 2020” growth strategy, the product range will be significantly expanded across all segments in the coming years. In the compact-car segment alone, there will be five models with the three-pointed star in the future, which will increasingly appeal to younger customers as well. At the same time, Mercedes-Benz Cars will expand the top end of its model range – for example with three additional versions of the next S-Class and another SUV version, as well as with models such as the CLS Shooting Break, which will be launched in September 2012 as a completely new vehicle concept. Positive impetus is expected for smart this year from two highlights: The new smart fortwo electric drive will gradually be launched in more than 30 markets around the world, and the smart ebike will also be introduced.
In regional terms, Mercedes-Benz Cars sees further growth opportunities in 2012 above all in North America, as well as in China, India and Russia. Prospects in Western Europe are rather limited, however. But the division assumes that it will be able to further strengthen its position also in this extremely competitive market, due in particular to the expansion of the model portfolio. Fairly stable unit sales are anticipated for the smart brand.
Daimler Trucks also assumes that its unit sales will increase this year. Following the significant growth in 2011, the division intends to continue to grow faster than the total market in Europe. For the Brazilian market, demand is expected to fall at first following the record year 2011, due to the introduction of stricter emission standards.
The recovery of the truck market in the NAFTA region will probably continue. Because of the high average age of vehicle fleets there, the need to invest in replacements is still very high. On the basis of well-filled order books, the division assumes that it will be able to profit from that development to an above-average extent. Rising unit sales are anticipated also in Japan. Reconstruction after the natural disaster is leading to a stronger demand for trucks in that market.
With its activities in Russia, India and China, the division has created the right conditions for further growth in those markets. The final approval of the authorities for the joint venture in China was granted last year, the joint venture in Russia with Kamaz presented the first truck with components from Daimler, and the first plant in India will be opened in April 2012.
In general, the division assumes that it will be able to further improve its worldwide market position in the coming years. Daimler Trucks will be supported by a large number of new models and the flexibility of its global production network.
At Mercedes-Benz Vans, the positive trend of unit sales should continue, aided on the product side by the new city van Citan, which will enable the division to utilize additional growth potential in a new market segment as of this year. Van production in Argentina was changed over to the current generation of the Sprinter at the beginning of the year 2012. As a result, the range of products in Latin American markets is being significantly upgraded. Unit sales in China should be substantially increased by means of local production. As part of this development, in addition to the Vito and Viano models, the joint venture Fujian Daimler Automotive has also been producing the Sprinter since the end of 2011.
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. However, a slight decrease in unit sales is anticipated in 2012 because of the introduction of Euro V emission regulations in Brazil. Slight growth in unit sales is expected in Western Europe, the stable core market, due to the launch of the new Mercedes-Benz Citaro, a product of outstanding quality.
Daimler Financial Services anticipates further growth for both contract volume and new business in its core business of vehicle financing and leasing. This should be supported in particular by growth in the BRIC markets and by the provision of financial services for the new cars in the compact-car segment. In the area of insurance, the division aims to achieve further growth in the number of policies brokered and in its market share. Strong growth is also expected in the new Mobility Services business unit, into which the car2go mobility concept was integrated in the year 2011.
On the basis of assumptions on the development of major sales markets and the planning of the divisions, the Daimler Group expects that its unit sales will increase again significantly this year, and that its revenue will also continue to grow. Daimler aims to post EBIT from the ongoing business in the magnitude of the prior year. This is based on the assumption of currency exchange rates at close to the present levels.
The following EBIT targets have been set for the divisions:
- Mercedes-Benz Cars: at the prior-year level
- Daimler Trucks: at least at the prior-year level
- Mercedes-Benz Vans: at least at the prior-year level
- Daimler Buses: at least at the prior-year level
- Daimler Financial Services: slightly below the prior-year level
Daimler aims for an annual average return on sales for the automotive business of 9% across market and product cycles. This is based on target returns on sales for the individual divisions, which are to be achieved on a sustained basis as of 2013, 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%.
In the period of 2012 through 2013, Daimler will invest a total of €21.5 billion in research and development activities (€10.9 billion) and property, plant and equipment (€10.6 billion). That is €3.2 billion more than in the years 2010 and 2011.
In order to achieve its ambitious growth targets, Daimler will require additional employees in all its divisions. In connection with expanding the production capacities, new jobs will be created above all in North America, Asia and Hungary. By developing production capacities abroad, the jobs in Germany are being secured for the long term.
Table: Earnings in both years were affected by special factors, which are listed in the following table:
Credits: Daimler AG
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