Mercedes 2009 Annual Report Download - page 93

Management Report |Liquidity and Capital Resources |89
ships and general agencies, other corporate customers and retail
customers. In connection with the export business, general
agen
cies that do not have sufficient creditworthiness are gener-
ally required to provide collateral such as first-class bank guar-
antees. The credit risk with end customers in the financial services
business is managed by Daimler Financial Services on the basis
of a standardized risk management process. In this process, min-
imum requirements are defined for the sales financing and leas-
ing business and standards are set for credit processes as well as
for the identification, measurement and management of risks.
Key elements for the management of credit risks are appropriate
creditworthiness assessments, supported by statistical analyses
and evaluation methods, as well as structured portfolio analysis
and monitoring.
Financial country risk management includes various aspects:
the risk from investments in subsidiaries and joint ventures, the
risk from the cross-border financing of Group companies in risk
countries, and the risk from direct sales to customers in those
countries. Daimler has an internal rating system that divides all
countries in which it operates into risk categories. Equity capital
transactions in risk countries are hedged against political risks
with the use of investment-protection insurance such as the
German government’s investment guarantees. Some cross-border
receivables due from customers are protected with the use of
export-credit insurance, first-class bank guarantees and letters of
credit. In addition, a committee sets and restricts the level of
hard-currency credits granted to financial services companies in
risk countries.
Additional information on the management of market price
risks, credit defaults and liquidity risks is provided in Note 30
of the Notes to the Consolidated Financial Statements.
Cash flows
The presentation of cash flows has been changed compared to
the prior year due to an amendment to the International Financial
Reporting Standards (IFRS). All cash flows related to leased
vehicles and receivables from financial services are now allocated
to cash provided by operating activities. The figures for the prior
year have been adjusted accordingly (see also Note 1 of the Notes
to the Consolidated Financial Statements).
Cash provided by operating activities increased significantly
to €11.0 billion (2008: minus €0.8 billion). The negative impact
from the Group’s lower earnings was primarily offset by the
development of inventories. Inventories were reduced as a result
of active and effective inventory management, whereas they
increased in the prior year. The development was additionally
affected by the lower levels of new leasing and sales-financing
business and by the sale of parts of the non-automotive portfolio
in the financial services business. Cash provided by operating
activities increased also as a result of reduced trade receivables
and lower tax payments. On the other hand, cash provided by
operating activities was reduced by lower trade payables and
higher contributions to pension plans.
Cash flows from investing activities resulted in a net cash out-
flow of €9.0 billion in 2009 (2008: €4.8 billion). This development
was almost solely the result of the acquisition and sale of secu-
rities carried out in the context of liquidity management, which
led to a net cash outflow of €5.4 billion (2008: net cash inflow
of €0.2 billion). The cash outflows for investments in intangible
assets and property, plant and equipment were lower than in
the prior year, however, due to the need to concentrate on par-
ticularly important projects due to the economic crisis. Cash
flows from investing activities in the prior year included inflows
from the sale of real estate at Potsdamer Platz and from the
transfer of shares in EADS in a total amount of €1.7 billion, as
well as outflows for a loan extended to Chrysler (€1.0 billion)
and related to the acquisition of shares in Tognum and Kamaz
(€0.9 billion).
in billions of €
Net increase (decrease) in cash and cash equivalents
(maturing within 3 months or less)
Cash
and cash
equivalents
12/31/2008
Cash
provided by
operating
activities
Cash
used for
investing
activities
Cash
used for
financing
activities
Effect of
foreign
exchange
rate changes
Cash
and cash
equivalents
12/31/2009
6.9 9.8
11.0
- 0.2
- 9.0
1.1