Mercedes 2010 Annual Report Download - page 121

Management Report | Outlook | 117
Revenue and earnings
Following the substantial increase in 2010, we assume that
Daimler’s revenue will continue growing at more moderate rates
in 2011 and 2012. This growth will probably be driven by all the
automotive divisions.
The following factors are particularly important for the earnings
situation of the Daimler Group in the years 2011 and 2012:
– We made use of crisis year 2009 and also of the year 2010 to
achieve a sustainable improvement in our cost basis. We inten-
sified the efficiency-enhancing programs running in all divisions,
supplementing some of them with structural components.
We will consistently continue our efforts to improve efficiency
on the basis of the existing programs.
– At the same time, we are now profiting from the fact that we
continued with the projects designed to safeguard our future
also during the financial and economic crisis. This is the reason
why we can now convince our customers with a large number
of highly attractive products and new technologies. Within the
framework of our initiative “The Road to Emission-free Mobility,”
we intend to further improve the environmental friendliness
and fuel efficiency of our vehicles with the application of new
technologies, while attracting and retaining customers with
our typical product features.
– In the BRIC countries, we have developed production facilities
and distribution structures and can therefore participate in the
above-average growth of those markets.
– In order to secure and strengthen our competitive position,
we will significantly increase our advance expenditure to safe-
guard our future in the years 2011 and 2012.
– The increases in raw-material prices - some of them quite sub-
stantial – that we have to anticipate also for the year 2011 are
likely to have a negative impact on our earnings.
On the basis of current assessments, we expect Daimler to post
EBIT from the ongoing business in 2011 significantly in excess
of the level of the year 2010.
In the coming years, we want to improve the earnings of the indi-
vidual divisions and thus of the entire Group, and to achieve
our return targets on a sustainable basis. We intend to profit to
an above-average extent from the anticipated growth of auto-
motive markets.
As of the year 2013, we aim to achieve on a sustained basis an
annual average return on sales for our automotive business of 9%
over market and product cycles. This is based on target returns
on sales for the individual divisions of 10% for Mercedes-Benz Cars,
8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6%
for Daimler Buses. For the Daimler Financial Services division,
we have set a target return on equity of 17%.
The years 2011 and 2012 will feature high expenditure for new
products and technologies and to penetrate new markets. Further-
more, the numerous model changes scheduled for Mercedes-
Benz Cars during the planning period will only have a positive
impact on our earnings after a certain delay. Another factor
to be considered is that despite their strong growth rates, the
major commercial-vehicle markets will only reach their volumes
of the record years before the financial and economic crisis in
the medium term.
After deciding not to pay a dividend last year in view of the
net loss in 2009, we want our shareholders to participate again
appropriately in our financial success in the coming years.
In setting the dividend, we aim to distribute approximately 40%
of the Group’s net profit attributable to the Daimler share-
holders. On this basis, the Board of Management and the Super-
visory Board have decided to recommend to the shareholders
for their appro val at the Annual Meeting to be held on April 13,
2011 that a dividend of €1.85 per share be paid out.
Opportunities and risks
Our forecasts for the years 2011 and 2012 are based on the
assumptions that political conditions will remain generally stable
and that there will be no serious setback in the development
of the global economy and that the upward trend of worldwide
demand for motor vehicle will continue in 2011 and 2012.
Additional opportunities and risks may result from the develop-
ment of currency exchange rates and raw-material prices,
as well as from our assessments of the future market success
of our products.
In our view, the biggest individual risks for the world economy
are renewed financial-market turbulence including currency risks,
the exacerbation of public authorities’ debt problems, a growth
slump in China, high price volatilities in raw-material markets,
production interruptions due to bottlenecks at supplier compa-
nies, nascent protectionism, and the possible destabilizing effects
of excessively expansive monetary policy. There would be reason
to fear that the world economy could enter another recessive phase
only if several of those factors occurred simultaneously.
We have already hedged most of the risks arising for our business
in the year 2011 from severe exchange-rate fluctuations. The
hedging rate for the US dollar and the British pound is approxi-
mately 75%.