Mercedes 2002 Annual Report Download - page 74

1. Operating Results
Operating profit up significantly despite global market
weakness
In 2002, DaimlerChrysler recorded an operating profit of
16.9 billion, compared with an operating loss of 11.3 billion in
the previous year. Gains on the sale of our investments in
T-Systems ITS (formerly debis Systemhaus) and Conti Temic
microelectronic (formerly TEMIC) totaling 12.6 billion had a
positive impact on operating profit for 2002. One-time expens-
es totaling 11.6 billion which mainly resulted from restructur-
ing measures taken at the Chrysler Group and in the Commer-
cial Vehicles segment (11.0 billion) and from impairments on
long-lived assets in the Commercial Vehicles segment (10.2
billion), had a negative impact on operating profit for 2002.
The Services segment incurred costs of 10.4 billion in connec-
tion with the intended sale of portions of the Capital Services
portfolio (financial services activities outside the automotive
sector) and as a result of the decision of the Argentine govern-
ment to reform its financial system and monetary policy.
Analysis of the Financial Situation
Additional one-time expenses in 2002 of 128 million resulted
from the impairment of an e-business investment, which
affected the Chrysler Group and Commercial Vehicles seg-
ments.
Operating loss of the previous year was negatively impacted
by one-time charges totaling 12.7 billion.
The one-time effects affecting operating profit in the 2002
and 2001 financial years for each segment are presented in
the table on page 69.
Adjusted to exclude these one-time effects, operating profit
in 2002 was 15.8 billion, up considerably compared to the
previous year (11.3 billion). Chrysler Group accounted for
a significant portion of this increase in operating profit, which
was achieved despite difficult global market conditions. The
positive impacts from Chrysler Group were principally caused
by the performance improvement measures initiated in 2001.
The other segments also increased their profit contributions
over the previous year’s levels.
Operating profit of Mercedes Car Group up on
previous year
The operating profit of the Mercedes Car Group segment was
13.0 billion in the current year, a slight increase compared to
the previous year.
In the 2002 financial year, the segment generated unit sales
of 1,232,300 units and revenues of 150.2 billion, which
exceeded the previous year’s unit sales (+ 0.2%) and revenues
(+ 5.2%) despite the overall decline of the global market.
With 2002 global unit sales of 1,110,000 vehicles, the
Mercedes-Benz passenger cars brand nearly matched the high
unit sales level of the previous year (1,113,500 vehicles). The
slight decline in unit sales was accompanied by an increase
in expenditures attributable to investments in connection with
the S-Class facelift and the second product initiative. The
second product initiative was successfully continued in 2002
with the market launch of the new E-Class sedan and the
CLK coupe in the first six months of 2002. However, these
negative impacts on operating profit were more than offset
by further increases in efficiency and an improved product
mix, which resulted from the launch of the new E-Class and
the CLK coupe.
smart reduced its operating loss from 2001 to 2002, largely
through unit sales increases from 116,200 to 122,300
vehicles. The rise in unit sales was largely due to positive
market acceptance of the smart city-coupe and the smart con-
vertible, as well as the full availability of the right-hand drive
version in the UK. Development costs for the smart roadster
and the smart roadster coupe, both of which are scheduled for
Group operating profit 36.9 billion (2001: 31.3 billion operating
loss); adjusted for one-time effects operating profit of 35.8
(2001: 31.3) billion |Substantial improvement in earnings despite
difficult market conditions worldwide |Significant progress in
implementation of turnaround plans at Chrysler Group and in the
Freightliner, Sterling and Thomas Built Buses business unit |
Balance sheet particularly impacted by exchange rate effects and
the recording of pension accruals |Cash flows impacted by
improved earnings and disposal gains
Note: The chapters “Business Review”, “Analysis of the Financial Situation” and “Outlook”
correspond to the consolidated business review report of DaimlerChrysler Group based
on the Financial Statements compiled according to generally accepted accounting princi-
ples in the United States of America (U.S. GAAP).
68 |Analysis of the Financial Situation
In millions
Operating Profit (Loss) by Segments
2002
US $
2002
3
2001
3
3,167
639
(360)
3,208
947
(414)
7,187
6,112
3,020
609
(343)
3,060
903
(395)
6,854
5,829
2,951
(5,281)
(514)
612
1,181
(267)
(1,318)
1,345
Mercedes Car Group
Chrysler Group
Commercial Vehicles
Services
Other Activities
Eliminations
DaimlerChrysler Group
Adjusted for one-time effects