Mercedes 2012 Annual Report Download - page 132

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3 | Management Report | Outlook
In the medium term, we aim to achieve an annual average return
on sales in our automotive business of 9% across market
and product cycles. This is based on target returns on sales
for the individual divisions: 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%. Due to signifi-
cantly worsened market conditions, the achievement of these
profitability targets has become much more challenging for
the Group and the individual divisions. We therefore assume
that these targets will not be achieved as originally planned
in the year 2013, but at a later date. In order to make sure we
meet our profitability targets in the long term, we are carrying
out far-reaching programs to improve our efficiency and com-
petitiveness in all divisions.
We want our shareholders to participate appropriately in
Daimler’s financial success also in the coming years. In setting
the dividend, we aim to distribute approximately 40% of
the Group’s net profit attributable to the Daimler shareholders.
On this basis, the Board of Management and the Supervisory
Board will propose the distribution of a dividend of €2.20 per
share at the Annual Meeting of the Shareholders to be held
on April 10, 2013 (prior year: €2.20). The total dividend paid out
will thus amount to €2,349 million (prior year: €2,346 million).
For the years 2013 and 2014, we aim to have liquidity available
in a volume appropriate to the general risk situation in the
financial markets and to Daimler’s risk profile. We want to con-
tinue to cover our funding needs primarily by means of bonds,
bank loans, customer deposits in the direct banking business
and the securitization of receivables in the financial services
business. We assume that we will continue to obtain refinancing
at attractive conditions during the planning period. Our goal
is to take various measures in order to secure a high degree
of financial flexibility.
Opportunities and risks
Our forecasts for the years 2013 and 2014 are based on the
assumptions that political conditions will remain generally
stable and the world economy will not slip back into recession.
We also anticipate growth in worldwide demand for motor
vehicles in 2013 and 2014, although at first only with a moderate
rate of expansion. In addition to the assessments that we
describe in this Outlook, further opportunities and risks exist
that may have a positive or negative impact on our potential
unit sales, revenue or earnings. This includes the development
of currency exchange rates and raw-material prices, as well
as the market success of our products and the intensity of com-
petition in our key markets.
We see significant risks for the year 2013 in the renewed
worsening or escalation of the sovereign-debt crisis in the euro
zone and the resulting turbulence in financial markets and
the banking sector, uncertainty about budget and fiscal policy
in the United States, a sharp growth slump in China, high price
volatility in commodity markets due to geopolitical unrest
in the Middle East, increasing inflationary pressure and nascent
protectionism. If one of those risk events should occur,
the world economy might enter another recessive phase.
A detailed description of the risks associated with our business
activities can be found in the Risk Report. E see pages 125 ff
We have already excluded the risks arising for our business
from exchange-rate fluctuations for the year 2013 to a large
extent by means of appropriate financial instruments. Specifi-
cally for the US dollar, we were hedged by approximately
70% as of mid-February 2013.
Even though risks predominate at the beginning of 2013, there
are also chances of a generally more positive development
of the world economy. The biggest positive growth stimulus
would be from a quick and lasting solution to the European
sovereign-debt crisis. The quicker investors and consumers
overcome the current crisis of confidence and return to more
optimistic expectations of the future, the faster and stronger
the revival of domestic demand will be. That would significantly
benefit the financial markets and the banking sector. In such
a case, credit could be expected to start flowing more freely
again. Higher investment and increased consumption would
also generate positive employment effects and thus reduce the
high unemployment rates of many industrialized countries.
This would result in significant acceleration of growth, especially
in the industrialized countries. Higher economic growth rates
would also make it much easier to maintain the still-necessary
budget discipline. The dampening effects on the economy
of state consolidation measures would then be considerably
weaker than assumed. A quick and lasting agreement in
the United States on carrying out the required consolidation
measures would supply more impetus for domestic demand.
Due to the great importance of the US economy for the global
economy, this would have positive spill-over effects on other
economies. But the emerging markets might also supply stronger
impetus in 2013, especially if the overall economic upward
trend in the major markets of China, India, Brazil and Russia
were amplified. A stronger revival in China would of course
be of prime importance.
Such a scenario would open up the possibility of a significantly
more favorable business development at Daimler in the
years 2013 and 2014. We see opportunities for additional unit
sales and earnings in particular if the weak European auto-
mobile market recovers faster than assumed.
In the medium term, additional growth potential will be
presented above all by the expansion of our presence in Asia
and Eastern Europe. Our local activities there will enable us
to utilize those opportunities. Together with our local partners,
we are expanding our production capacities in China. In India,
we have been producing trucks under the BharatBenz brand
in a new plant since the year 2012. In Russia, we are intensifying
our partnership with truck manufacturer Kamaz, while in
Hungary, a new car plant for the production of our new com-
pact class went into operation in 2012.