Strong First Quarter: Daimler Increases Group EBIT To 鈧?.1 Billion

Strong First Quarter: Daimler Increases Group EBIT To 鈧?.1 Billion

Daimler AG (stock-market symbol DAI) achieved EBIT of 鈧?,130 million in the first quarter of 2012, which is slightly higher than the high prior-year level (Q1 2011: 鈧?,031 million). 鈥淲e have started the year with a strong first quarter. 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 鈧?6 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. Daimler鈥檚 first-quarter revenue increased by 9% to 鈧?7.0 billion. The free cash flow of the industrial business decreased compared with the first quarter of 2011 to minus 鈧?.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. Compared with December 31, 2011, the net liquidity of the industrial business decreased by 鈧?.9 billion to 鈧?0.1 billion. This was primarily due to the negative free cash flow. 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 鈧?4.9 billion. With EBIT of 鈧?,252 million, Mercedes-Benz Cars achieved earnings close to the level of the prior-year period (Q1 2011: 鈧?,288 million). 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 鈧?.4 billion (Q1 2011: 鈧?.2 billion). The division鈥檚 EBIT of 鈧?83 million was lower than in the prior-year period (Q1 2011: 鈧?13 million). 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.

The division achieved an operating profit of 鈧?68 million (Q1 2011: 鈧?73 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 鈧?30 million was lower than in the prior-year period (Q1 2011: 鈧?31 million). The division鈥檚 EBIT was minus 鈧?03 million (Q1 2011: minus 鈧?3 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 鈧?6 million. As a major element of its strategy, Daimler Buses has started its 鈥淕LOBE 2013鈥?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鈥檚 sites. One goal is the more intensive networking of all the plants in the European production network. Within the context of 鈥淕LOBE 2013,鈥?Daimler Buses will also utilize existing growth potential in its traditional markets while further expanding its business in new markets. Daimler Financial Services鈥?business continued to develop positively in the first quarter. Worldwide, approximately 234,000 new leasing and financing contracts worth a total of 鈧?.3 billion were concluded, representing growth of 20% compared with the prior-year period. The division achieved earnings of 鈧?44 million, thus surpassing the prior-year figure of 鈧?21 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.