Mercedes 2008 Annual Report Download - page 72

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(€0.2 billion) and for a loan granted to Chrysler (€1.0 billion).
Investments by the continuing operations in property, plant and
equipment (€3.6 billion) and intangible assets (€1.5 billion)
were significantly higher than in the prior year. The main areas of
investment at Mercedes-Benz Cars were advance expenditures
for the new E-Class and CLK, which are to be launched in 2009.
Important investment projects at the Daimler Trucks division
were in the areas of truck platforms and globally used engines.
The purchase and sale of securities related to liquidity manage-
ment resulted in a cash inflow of €0.2 billion (2007: €4.6 billion).
The smaller expansion of the leasing and sales financing busi-
ness than in the prior year led to a smaller cash outflow from
investing activities in the financial services business.
The cash flows from financing activities resulted in a net
cash outflow of €2.9 billion in 2008 (2007: €25.2 billion). As well
as the payment of the dividend for the year 2007 (€1.9 billion),
this also reflects the ongoing share buyback (€4.2 billion). Increas-
es and decreases in financial liabilities resulted in a net cash
inflow of €3.2 billion. As part of our corporate financing, we issued
bonds in a total amount of €7.6 billion and raised promissory
note loans totaling €1.1 billion, primarily utilizing the capital mar-
kets in the euro zone and in Japan.
Cash and cash equivalents with an original maturity of three
months or less decreased by €8.7 billion compared with December
31, 2007, after taking currency translation effects into consi-
deration. Total liquidity, which also includes deposits and mar-
ketable securities with an original maturity of more than three
months, decreased by €9.1 billion to €8.0 billion. The unusually
high level of liquidity at December 31, 2007 was related to the
disposal of a majority interest in Chrysler. The reduction in liquidity
resulted in an appropriate level for the Daimler Group, taking
into consideration the current situation in the capital market.
The free cash flow of the industrial business, the parameter
used by Daimler to measure the Group’s financing capability, fell
sharply by €11.6 billion to minus €3.9 billion.
The main reason for the decrease in the free cash flow was,
besides lower earnings at Mercedes-Benz Cars, that the inflows
in the prior year from the sale of EADS shares (€3.6 billion)
and the sale of real estate by Mitsubishi Fuso Truck and Bus
Corporation (€1.0 billion) were significantly larger than the
inflows in 2008 from the sale of additional EADS shares (€0.4
billion) and real estate at Potsdamer Platz (€1.3 billion). The
free cash flow in 2008 was also reduced by acquisitions of equity
interests in Tognum (€0.7 billion) and Kamaz (€0.2 billion) as
well as by the loan granted to Chrysler (€1.0 billion). In addition,
more cash was tied up by the development of inventories and
trade receivables and payables. Opposing effects improving the
free cash flow resulted primarily from the discontinued oper-
ations, which had negatively affected the free cash flow in 2007.
The development of business at Mercedes-Benz Vans and
Daimler Buses also had a positive effect.
Amounts in millions of € Change
Free cash flow of the industrial business
(7,453)
(30,774)
3,531
23,144
(11,552)
5,588
29,272
(4,079)
(23,144)
7,637
(1,865)
(1,502)
(548)
-
(3,915)
2008 08/07
Cash provided by operating
activities
Cash provided by (used for)
investing activities
Changes in cash (> 3 month) and
marketable securities included
in liquidity
Settlement of intercompany
receivables due from Chrysler
net of cash disposed
Free cash flow of the
industrial business
2007