Mercedes 2004 Annual Report Download - page 27

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Operating profit
DaimlerChrysler recorded an operating profit of €5,754 million
in 2004, which was slightly higher than the result of the prior
year (€5,686 million). We thus achieved our target of significantly
improving on the prior year’s operating profit, adjusted to ex-
clude the restructuring expenses at the Chrysler Group (€469
million) and the gain realized on the disposal of MTU Aero Engines
(€1,031 million).
Chrysler Group and the Commercial Vehicles Division developed
positively, achieving substantial increases in their operating
profits compared with the prior year. Commercial Vehicles’ earn-
ings improved significantly despite the charge of €475 million
for quality and recall actions at Mitsubishi Fuso Truck and Bus
Corporation (MFTBC). However, the Mercedes Car Group recorded
lower earnings than in 2003. This was due partially to a less
favorable model mix, but above all to currency effects and expen-
ses incurred for the launch of new products and to safeguard the
products’ high quality standards. The Services division further in-
creased its operating profit from the financial services business.
This increase more than compensated for the losses from the
involvement in Toll Collect, which resulted from the reassess-
ment of the system’s total cost and additional expenses to secure
the start of the system. In the Other Activities segment, the
agreement reached with Bombardier in September 2004 to settle
all disputes connected with the sale of DaimlerChrysler Rail
Systems GmbH (Adtranz) led to a gain of €120 million. The prior
year’s result was positively affected by income of €1,031 million
from the sale of the MTU Aero Engines business unit. If these
exceptional items are excluded, Other Activities actually improved
its operating profit compared with 2003, primarily due to the
increased contribution from EADS.
The Mercedes Car Group’s operating profit of €1,666 million in
2004 was significantly lower than in 2003 (€3,126 million).
Charges on earnings resulted at the Mercedes-Benz Passenger
Cars business unit from a slight decrease in unit sales of 2% to a
total of 1,074,600 vehicles, an effect that was amplified by shifts
in the model mix. Operating profit was also reduced by currency
effects due in particular to the appreciation of the euro against
the US dollar and expenses for the ongoing comprehensive quality
offensive. Additional factors were higher marketing expenses,
mainly relating to the launch of the SLK, the CLS-Class and the
A-Class.
The smart brand sold a total of 152,100 vehicles in 2004. The
increase compared with the prior year was a result of the launch
of the smart forfour in the second quarter, which more than
compensated for lower sales of the smart fortwo and the smart
roadster. Despite higher unit sales, smart recorded a significant
operating loss that was larger than its operating loss in 2003.
The reasons for this deterioration were higher marketing
expenses, launching costs for the smart forfour and increased
development expenses.
Profitability
In millions
Operating Profit (Loss) by Segments
2004 2004 2003
2,255
1,932
1,803
1,692
617
(509)
7,790
1,666
1,427
1,332
1,250
456
(377)
5,754
3,126
(506)
811
1,240
1,329
(314)
5,686
Mercedes Car Group
Chrysler Group
Commercial Vehicles
Services
Other Activities 1
Eliminations
DaimlerChrysler Group
1 2003 figures include discontinued operations (MTU Aero Engines).
US $€€