Mercedes 2015 Annual Report Download - page 113

120 B | COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION
In the opinion of the Board of Management, the Daimler Group’s
economic situation is thoroughly satisfactory at the time of
publication of this Annual Report. In recent years, we have imple-
mented our strategy effectively and with great determination.
This already led us onto a stable and profitable growth path in
the year 2014, along which we progressed further in 2015.
We significantly increased our revenue, unit sales and earnings
– although we were confronted by difficult conditions in some
markets. With new products and tailored services, we performed
better than our competitors in many areas, allowing us to
increase our market share. At the same time, we strengthened
our leading position in key technologies with pioneering inno-
vations, and systematically pushed forward with the digitization
of the Group at all levels and in all divisions.
Awards for our innovative strength, for our attractiveness as an
employer and for our new products and services are indicators
of the positive momentum we now have. The appeal of our core
brand Mercedes-Benz was significantly enhanced worldwide as
a result not only of new and especially attractive products
but also of outstanding quality. This allows us to address new
markets as well as new and younger customer groups. For
this purpose, we make use also of digital forms of customer
contact and new sales formats, for example with the new
Mercedes me sub-brand.
We significantly increased our unit sales by 12% to 2.9 million
passenger cars and commercial vehicles despite difficult condi-
tions in some major markets. Thanks to numerous new and
successful products, Mercedes-Benz Cars and Mercedes-Benz
Vans set new records for unit sales and Daimler Trucks also
achieved a small increase, although the market situation in two
key markets (Brazil and Indonesia) was extraordinary difficult.
Only Daimler Buses did not quite match its unit sales of the pre-
vious year due to the market weakness in Latin America.
Driven by the positive development of the automotive business,
the Daimler Financial Services division also expanded signi-
ficantly in the reporting period. The Group’s revenue therefore
also grew significantly – by 15% to €149.5 billion. Adjusted
for exchange-rate effects, there was an increase of 9%.
We made significant progress in 2015 also in terms of the
profitability of our business. Operating profit (EBIT) from the
ongoing business of €13.8 billion was 36% above the prior-
year level (€10.1 billion). This was primarily due to the Mercedes-
Benz Cars and Daimler Trucks divisions, but Mercedes Benz
Vans and Daimler Financial Services also significantly increased
their EBIT. At Mercedes-Benz Cars, the return on sales from
the ongoing business for the first time reached the division’s
target of 10%, and Daimler Financial Services’ return on equity
of 18.3% was once again above its target (17%). We laid a corner-
stone for this positive development with the efficiency pro-
grams that we implemented in all divisions in recent years. By
the end of 2014, we achieved a total contribution to earnings
of approximately €4 billion through sustained improvements
in cost structures as well as additional business activities.
The full impact of these programs was reflected for the first time
in the year 2015. In addition to these measures with short-
term effects, we are implementing fundamental initiatives for
the long-term and structural optimization of business systems
in all divisions.
As a result of the positive development of earnings, we once
again achieved a very good return on net assets of 21.6%
(2014: 18.8%). We therefore once again earned substantially
more than our targeted minimum return on capital employed
(8%). This is reflected by our value added, which increased very
significantly to €5.7 billion (2014: €4.4 billion).
In line with the ongoing high level of earnings, we continue to
have very sound key financial metrics. At year-end, the Group’s
overall equity ratio rose to 23.6% (2014: 22.1%) and the equity
ratio of the industrial business was 44.2% (2014: 40.8%). The net
liquidity of the industrial business increased to €18.6 billion
(2014: €17.0 billion), although we made an extraordinary contri-
bution of €1.2 billion to the pension fund assets in Germany
and the United States and applied €0.7 billion for the acquisition
of the digital mapping business HERE. At €5.9 billion, the free
cash flow of the industrial business – the parameter we use to
measure financial strength – was once again higher than in the
previous year after adjusting for special items (2014: €5.2 billion),
and is thus significantly higher than the proposed dividend
distribution.
Overall Assessment of the Economic Situation