Mercedes 2008 Annual Report Download - page 63

Management Report |Profitability |59
The Daimler Group’s revenue of €95.9 billion in the year 2008
was 3.5% lower than in the prior year (€99.4 billion). Adjusted for
currency translation effects and changes in the consolidated
group, revenue decreased by 1.3%. Further information on the
development of revenue is provided on page 52 of the Mana-
gement Report.
Cost of sales of €74.3 billion in 2008 was 1.4% below the level of
2007 (€75.4 billion), falling at a lower rate than revenue. The
gross margin therefore fell from 24.1% to 22.5%. The decrease in
cost of sales is mainly the result of lower sales of passenger cars,
lower expenses due to efficiency gains and the effects of currency
translation.
Selling expenses increased from €9.0 billion to €9.2 billion in
2008. As a proportion of revenue, selling expenses amounted to
9.6% (2007: 9.0%). The increase is partially a reflection of impair-
ments recognized on trade receivables and expenses relating to
the measures taken for the repositioning of Daimler Trucks North
America (€0.1 billion).
General administrative expenses increased by 2.5% to €4.1
billion in 2008 (2007: €4.0 billion). This increase was primarily
due to expenses relating to the measures taken for the reposition-
ing of Daimler Trucks North America (€0.1 billion). Higher
expenses for consulting and IT services were offset by lower
expenses as a consequence of the efficiency programs. As a
proportion of revenue, general administrative expenses increased
compared with the prior year by 0.3 of a percentage point to
4.3%, mainly due to the lower revenue.
Research and non-capitalized development expenses
amounted to €3.1 billion in 2008 (2007: €3.2 billion), or 3.2% as
a proportion of revenue (2007: 3.2%). The Group’s total research
and development spending, however, which includes the capitalized
portion as well as the expensed portion, increased considerably
last year (2008: €4.4 billion; 2007: €4.1 billion). Information on the
main areas of research and development spending is provided
on page 61 of the Management Report.
Other operating income increased to €0.8 billion (2007: €27
million), of which €0.4 billion is related to gains realized in 2008
on the sale of our real estate properties at Potsdamer Platz. In
addition, the Group incurred lower expenses in connection with
its legal proceedings in 2008.
In 2008, our share of profit (loss) from companies accounted
for using the equity method was a net loss of €1.0 billion
(2007: net profit of €1.1 billion). The sharp decrease is primarily
related to our equity interest in Chrysler (2008: proportionate
loss of €1.4 billion; 2007: proportionate loss of €0.4 billion). In
addition, the prior-year result was affected by higher gains in con-
nection with the transfer of portions of our equity interest in
EADS (2008: €0.1 billion; 2007: €1.5 billion). Daimler’s propor-
tionate share in the net profit of EADS improved to €0.2 billion in
2008 (2007: €13 million).
Other financial expense, net, increased from €0.2 billion in 2007
to €2.2 billion in 2008. €1.7 billion of this substantial increase
reflects the impairment of loans and other Chrysler-related assets.
In addition, the prior-year result included a gain of €0.1 billion
from the mark-to-market valuation of derivate transactions entered
into in connection with the transfer of portions of our equity
interest in EADS.
The Group recorded a positive net interest result of €0.1 billion
for 2008 (2007: €0.5 billion). The deterioration of the net interest
result is the result of higher interest expenses and lower interest
income caused by our lower average liquidity in the year 2008.
Other factors with a negative effect were lower expected returns
on the pension plan assets and higher expenses from imputed
interest on our pension obligations.