Mercedes 2010 Annual Report Download - page 85

Management Report | Profitability | 81
The Daimler Group’s total revenue increased by 23.9% to €97.8
billion in 2010 (2009: €78.9 billion); adjusted for positive currency
effects, the increase was 19.1%. The revenue growth was primar-
ily due to increase vehicle shipments compared with the crisis-hit
weak prior year. Further information on the development of reve-
nue is provided in the “Business development” section of this
Management Report.
Cost of sales amounted to €75.0 billion in the year under review,
increasing by 14.4% compared with 2009 (€65.6 billion). The
increase in cost of sales was caused by higher business volumes
and the resulting increase in material and personnel expenses.
There were opposing effects from further cost reductions, due
in part to the efficiency-enhancing programs, and from lower
expenses for risk provisions and refinancing at Daimler Financial
Services. Overall, cost of sales rose at a lower rate than revenue,
so gross profit accounted for a significantly higher proportion
of revenue than in the prior year (23.3% compared with 16.9%).
Further information on cost of sales is provided in Note 5 of the
Notes to the Consolidated Financial Statements.
Due to the growth in unit sales, selling expenses increased
by €1.3 billion to €8.9 billion (2009: €7.6 billion). The increase
is a reflection among other things of higher expenses for person-
nel, IT and marketing. Partially due to efficiency-enhancing pro-
grams within the sales organisation, as a percentage of revenue,
selling expenses fell from 9.6% in 2009 to 9.1% in 2010.
General administrative expenses increased by 5.7% to €3.5
billion in 2010 (2009: €3.3 billion). This increase was mainly
the result of expenses relating to the repositioning of Daimler
Financial Services in Germany and for the repositioning of Daimler
Trucks North America and Mitsubishi Fuso Truck and Bus Corpo-
ration. Higher other personnel expenses were also a factor.
As a percentage of revenue, general administrative expenses
were 3.6% (2009: 4.2%).
Research and non-capitalized development costs amounted
to €3.5 billion in 2010 (2009: €2.9 billion). The increase was mainly
caused by higher personnel expenses and increased expenses
of purchased of goods and services. The focus of research and
development work was on the development of successor models
as well as new generations of engines and alternative drive systems.
As research and non-capitalized development expenses increased
at a lower rate than revenue, their proportion of revenue fell
slightly from 3.7% to 3.6%. Further information on the Group’s
research and development costs is provided in the “Research
and development, environmental protection” section of this
Management Report.
Other operating income increased to €1.0 billion (2009: €0.7
billion). This was primarily due to income recognized following
the positive outcome of a legal dispute involving Daimler AG
(€218 million) and gains on the sale of real estate.
Other operating expense amounted to €0.7 billion (2009: €0.5
billion).
Further information on the composition of other operating
income and expense is provided in Note 6 of the Notes to the
Consolidated Financial Statements.
In 2010, our share of loss from investments accounted for
using the equity method amounted to €0.1 billion and was thus
lower than the prior-year result (profit of €0.1 billion). There was
a negative impact primarily from Daimler’s share of the loss
reported by EADS (2010: expense of €0.3 billion; 2009: income
of €0.1 billion), which was mainly the result of expenses relating
to the A400M program.
Other financial income, net developed from an expense of €1.3
billion in 2009 to income of €0.1 billion in 2010. The improve-
ment is due to lower expenses from the compounding of non-cur-
rent other provisions following the decline in interest rate levels
(2010: expense of €0.2 billion; 2009: expense of €1.0 billion).
In addition, the Group realized a gain of €0.3 billion on the sale
of its shares in Tata Motors. In the prior year, other financial
expense included expenses of €0.3 billion relating to the agree-
ments concluded with Chrysler.