Mercedes 2010 Annual Report Download - page 99

Management Report | Liquidity and Capital Resources | 95
Buyback obligations arise for the Daimler Group from agree-
ments under which we guarantee to customers certain trade-in
or resale values for sold vehicles. Most of these guarantees
provide the holder with the right to return purchased vehicles to
the Group if the customer acquires another vehicle from Daimler.
At December 31, 2010, the maximum potential obligation from
these guarantees amounted to €0.7 billion (December 31, 2009:
€0.7 billion); the corresponding provisions amounted to €0.1
billion at the end of 2010 (end of 2009: €0.1 billion).
Further information on other financial commitments and contin-
gent liabilities from guarantees granted as well as on the elec-
tronic toll-collection system and related risks is provided in Note
29 (Guarantees and other financial commitments) and Note 28
(Legal proceedings) of the Notes to the Consolidated Financial
Statements.
Credit ratings
No significant changes were made to the ratings of Daimler AG
and its subsidiaries during the year under review. Only Standard
& Poor’s Ratings Services (Standard & Poor’s) and Fitch Ratings
(Fitch) upgraded the outlook for our long-term credit rating,
whereby the upgrade issued by Fitch of an improvement from
negative to positive was more significant than the change from
negative to stable at Standard & Poor’s.
In their publications during the year 2010, most of the rating
agencies pointed out the significant improvement in Daimler’s
profitability, in particular at Mercedes-Benz Cars. Another factor
is that the recovery of worldwide demand for motor vehicles last
year was stronger than most of the rating agencies had expected.
But in view of uncertainty about the ongoing development of the
automotive industry and additional costs caused by legislation
on emission reductions, there have not yet been any further
adjustments of our ratings.
End of 2010 End of 2009
Long-term credit ratings
Standard & Poor’s BBB+ BBB+
Moody’s A3 A3
Fitch BBB+ BBB+
DBRS A (low) A (low)
Short-term credit ratings
Standard & Poor’s A-2 A-2
Moody’s P-2 P-2
Fitch F2 F2
DBRS R-1 (low) R-1 (low)
On August 26, 2010, Standard & Poor’s affirmed its long-term
credit rating for Daimler AG at BBB+ and changed its outlook
from negative to stable. It justified this step with the substantial
improvement in our financial risk profile during the first half
of 2010. In this context, Standard & Poor’s referred to the signifi-
cant increase in the Group’s profitability.
The rating agency Moody’s Investors Service (Moody’s) did not
alter its ratings for Daimler during the year 2010. On December 7,
2010, Moody’s affirmed its long-term rating at A3 and praised
the material improvements in Daimler’s operating performance.
At the same time, Moody’s made it clear that the improvements
in profitability and cash-flow generation achieved in the first nine
months would have to be maintained beyond the year 2010 to
secure the existing level of rating.
On July 19, 2010, Fitch upgraded our rating outlook from nega-
tive to positive in the context of revising its ratings for European
automobile manufacturers. Our long-term rating was confirmed
at BBB+. As justification, Fitch referred to the continuous improve-
ment in the financial profiles of European carmakers since the
year 2009, the faster-than-expected recovery in global auto sales,
and Fitch’s revised expectations for those companies’ key credit
metrics in the coming years.
On November 29, 2010, the Canadian agency DBRS confirmed
the long-term rating for Daimler AG and its related companies at
A (low) with a stable outlook. It stated that although our financial
profile had deteriorated in the previous year due to the global
economic downswing, our profitability had improved sharply
year-over-year in the first three quarters of 2010.
The short-term ratings of all four rating agencies remained
unchanged during 2010.