Mercedes 1999 Annual Report Download - page 28

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BUSINESS REVIEW
22
■New records for earnings, unit sales and revenues
■Operating profit grows faster than revenues - up 28% to €11.0 billion
■Net income increases from €4.8 billion to €5.7 billion
■Synergy targets significantly overachieved with benefits of €1.4 billion
■€2.35 dividend proposed (1998: €2.35)
■Almost 4.9 million passenger cars and commercial vehicles sold (1998: 4.5 million)
■Dasa, Aérospatiale Matra and CASA merge to form EADS
EARNING POWER INCREASES. DaimlerChrysler continued to
grow profitably in 1999. Operating profit increased to €11.0
billion (1998: €8.6 billion). After adjusting for one-time
effects such as income from the sale of debitel shares,
operating profit was up 20% to €10.3 billion and still
outpaced revenues. Particularly sharp increases were posted
by the Mercedes-Benz Passenger Cars & smart and Chrysler
Group divisions. Net income at DaimlerChrysler increased
by 19% to a record €5.7 billion; adjusted for one-time effects,
net income rose to €6.2 billion (up 16%).
Net operating income, the basis for calculating return on net
assets, increased to €7.0 billion (1998: €6.4 billion).
Representing a return of 13.2% (1998: 12.7%) it again
significantly exceeded the minimum rate of return of 9.2%
required to cover cost of capital and to increase corporate
value, meaning that the company achieved further profitable
growth. The difference between operating profit and capital
costs (value added) increased by €0.4 billion to roughly €2.1
billion, significantly increasing the value of the company.
DaimlerChrysler is thus one of the most profitable automotive
companies in the world. (see p. 60)
€2.35 DIVIDEND PROPOSED. We are proposing to our
shareholders a dividend of €2.35 (1998: €2.35) per share for
1999. With a total dividend payout of €2,358 million,
DaimlerChrysler is paying the highest dividend among the
companies included in the DAX30 and is one of the top divi-
dend paying companies in the automotive industry.
WORLD ECONOMIC GROWTH SLOWS. The positive trend of
global economic growth eased off slightly during the year
under review. When weighted to reflect the share of the
Group’s revenues generated in each country, economic
expansion in DaimlerChrysler’s markets decreased to 2.9%
from 3.2% in 1998. This was primarily a result of slow growth
in Western Europe, particularly in Germany, as well as the
economic crisis in South America. On the other hand, the
beginning of a recovery in Japan and other Asian countries
had an overall positive effect. The economic situation in North
America remained favorable. As was the case in 1998, the US
economy grew by 4%, driven mainly by sustained consumer
spending and high levels of investment.
The international exchange rate structure, in particular the
strength of the dollar, the pound and the yen compared to the
euro, generally had a favorable impact on our operating
businesses.
B U S I N E S S R E V I E W
Earning Power
increases once again
DaimlerChrysler Group
Mercedes-Benz Passenger Cars
& smart
Chrysler Group
(Chrysler, Jeep®, Dodge, Plymouth)
Commercial Vehicles
(Mercedes-Benz, Freightliner,
Sterling, Setra, Thomas Built Buses)
Services
Aerospace
Others
DaimlerChrysler Group adjusted
Operating Profit
in millions US $
99 98
11,089 11,012 8,593
2,722 2,703 1,993
5,086 5,051 4,255
1,075 1,067 946
2,053 2,039 985
735 730 623
(402) (399) (130)
10,388 10,316 8,583
99
€€