Mercedes 2013 Annual Report Download - page 113

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C | Combined Management Report | Sustainability | Overall Assessment of the Economic Situation
In the opinion of the Board of Management, the Daimler Group’s
economic situation is very satisfactory at the time of publi-
cation of this Annual Report. On the basis of a wide-ranging
product offensive at all divisions, we continued along our
growth path during the year under review. We were able to
achieve our growth targets to a very large extent and our
profitability improved significantly as the year progressed.
Although some major sales markets were still difficult,
all of our automotive divisions increased their unit sales and
further improved their market position, in some cases signi-
ficantly. Mercedes-Benz Cars set a new record for unit sales,
the Mercedes-Benz Vans and Daimler Buses divisions both
posted increases, and the Daimler Trucks division improved
on its prior-year unit sales. Along with the positive develop-
ment of the automotive business, the Daimler Financial Services
division also expanded significantly in 2013. The Group’s
total revenue also grew, by 3% to €118.0 billion; adjusted for
exchange-rate effects, there was actually an increase of 7%.
Operating profit (EBIT) from the ongoing business of €7.9 billion
was at a high level, although we did not quite match the prior-
year figure, which was our target for the year 2013. The contin-
uation of high expenditure for the expansion of the product
portfolio and the production network once again had an impact
on our key financial metrics in the year under review. But it
was important that our earnings situation improved continuously
as the year progressed. As a result, we achieved a very good
return on capital employed also in 2013; with a return on net
assets of 22.7% (2012: 19.6%), we once again earned signi-
ficantly more than our cost of capital. This is reflected also by
our value added, which at €5.9 billion was significantly higher
than the prior-year figure of €4.3 billion. This increase was due
not only to the positive development of business operations,
but also to the capital gain on the remeasurement and sale of the
remaining 7.4% of EADS shares in April 2013.
Thanks to the ongoing high level of earnings, we continue
to have sound key financial metrics. At year-end, the Group’s
overall equity ratio was 24.3% (2012: 22.7%) and the equity
ratio of the industrial business was 43.4% (2012: 39.8%). The net
liquidity of our industrial business also remained at a comfort-
ably high level of €13.8 billion at the end of the year (2012: €11.5
billion). The free cash flow from the industrial business – the
parameter we use to measure financial strength – was €4.8 billion
in 2013 (2012: €1.5 billion). This reflects the sale of the remain-
ing shares of EADS in April 2013 yielding a cash inflow of €2.2
billion. On the other hand, there was a payment of €0.6 billion
for the acquisition of a 12% equity interest in the Chinese auto-
mobile manufacturer BAIC. The free cash flow was already
positively influenced in 2012 by the reduction of our EADS share-
holding. When the special effects of both years are excluded,
a significant increase is apparent, which is driven by operating
profit but also by reporting-date factors.
We want our shareholders to participate appropriately in
the earnings achieved by Daimler in 2013. At the Annual Share-
holders’ Meeting on April 9, 2014, the Board of Management
and the Supervisory Board will therefore propose an increase
in the dividend to €2.25 per share (prior year: €2.20). With
this decision, we are also expressing our confidence about the
ongoing course of business.
The generally very positive business development in the
year 2013 was supported by several factors, with which we
are positioning ourselves for a successful future. The motto
of “Doing business efficiently and growing profitably” primarily
relates to the efficient structuring of the most far-reaching
growth program in the Group’s history.
A core element of our successful growth strategy is the wide-
ranging product offensive at all divisions, with which we
are winning new customers and developing additional markets.
Mercedes-Benz Cars currently has the youngest and most
attractive product portfolio of all time, which we upgraded in
2013 with the new E-Class, the new compact coupe CLA,
and the new S-Class. Also with trucks, we have nearly completely
renewed our range of products and engines in recent years.
The most important new models include the Arocs – a construc-
tion-site truck, the new Sprinter van, the new coach Setra
TopClass 500, and the Freightliner Cascadia Evolution – our
new flagship truck in the North American market.
Overall Assessment of the Economic Situation.