Mercedes 2013 Annual Report Download - page 142

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Free cash flow and liquidity
The anticipated development of earnings in the automotive
divisions will also have a positive impact on the free cash flow
of the industrial business in 2014. When comparing with 2013,
however, it is necessary to consider that the free cash flow
of that year was positively influenced not only by the successful
EADS transactions but also by year-end effects, which will
be offset again this year. In combination with ongoing high levels
of investment and research and development spending, this
is likely to mean that the free cash flow of the industrial business
will be significantly lower in 2014 than in 2013.
For the year 2014, we aim to have liquidity available in a
volume appropriate to the general risk situation in the financial
markets and to Daimler’s risk profile. When measuring the
level of liquidity, we give due consideration to possible refinanc-
ing risks caused for example by temporary distortions in the
financial markets. We continue to assume, however, that we will
have very good access to the capital markets and bank mar-
kets also in the year 2014. We want to cover our funding needs
in the planning period primarily by means of bonds, commer-
cial paper, bank loans, customer deposits in the direct banking
business and the securitization of receivables in the financial
services business; the focus will be on bonds and loans from
globally and locally active banks. In view of the very good
liquidity situation of the international capital markets and our
strong creditworthiness, we expect a continuation of very
attractive refinancing conditions in 2014. An additional goal
is to continue securing a high degree of financial flexibility.
Dividend
At the Annual Shareholders’ Meeting on April 9, 2014, the
Board of Management and the Supervisory Board will propose
an increase in the dividend to €2.25 per share (prior year:
€2.20). With this proposal, we are letting our shareholders
participate in the Company’s success while expressing our
confidence about the ongoing course of business. We want
our shareholders to participate appropriately in Daimler’s
financial success also in the coming years. In setting the dividend,
we will aim to distribute approximately 40% of the net profit
attributable to Daimler shareholders.
Capital expenditure
In order to achieve our ambitious growth targets, we will expand
our product range in the coming years and develop additional
production and distribution capacities. We also want to make
sure that we can play a leading role in the far-reaching tech-
nological transformation of the automotive industry. For this
purpose, we will once again significantly increase our already
very high investment in property, plant and equipment in the
year 2014. The Mercedes-Benz Cars division and to a lower
extent the Daimler Trucks division will contribute to this increase.
In addition to capital expenditure, we are developing our
position in the emerging markets by means of targeted finan-
cial investment in joint ventures and equity interests.
At the Mercedes-Benz Cars division, the focus of our capital
expenditure will be on renewing and expanding our product
range. The main projects include the preparations for the new
C-Class family, the new smart models and further investment
for our new compact cars. But substantial investment is
planned also for the modernization and expansion of engine
and transmission production at the plant in Untertürkheim,
as well as for the expansion of our production capacities in the
United States. After completing its Euro VI product offensive,
Daimler Trucks will mainly invest in successor generations
of existing products as well as the expansion and modernization
of the plants, and new global component projects in 2014.
At Mercedes-Benz Vans, the focus will be on further developing
the existing model range and expanding the sales and service
organization outside Western Europe, especially in the United
States, Russia, Latin America and China. Key projects at
Daimler Buses are advance expenditures for new models and
product enhancements.
Research and development
With our research and development activities, our goal is to
further strengthen Daimler’s competitive position against the
backdrop of upcoming technological challenges. We want to
create competitive advantages above all by means of innovative
solutions for low emissions and safe mobility. In addition, we
intend to utilize the growth opportunities offered by worldwide
automotive markets with new and attractive products that are
tailored to the needs of our customers. In 2014, we will spend
a very large amount on research and development, which will
probably be in the magnitude of the previous year. Key projects
at Mercedes-Benz Cars include the successor generation of
the C-Class and the new smart models. In addition, we will invest
considerable amounts in new low-emission and fuel-efficient
engines, alternative drive systems and innovative safety technol-
ogies. Like at Mercedes-Benz Cars, research and development
expenditure at Daimler Trucks is also likely to be in the magnitude
of 2013. As before, the main areas here are the successor
generations for existing products as well as developing and
adapting new engine generations, with which we will further
reduce fuel consumption and fulfill increasingly strict emission
regulations. The further development of engines to meet future
emission standards and to increase fuel efficiency is an important
area of research and development also at Mercedes-Benz
Vans and Daimler Buses. Alternative drive systems also play
an important role, in particular at Daimler Buses.