OFFICIAL PRESS RELEASE
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Net profit of � 1,332 million (Q1 2007: �1,972 million)
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Revenue of �23.5 billion at prior year�s level
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Full-year EBIT from ongoing operations (excluding Chrysler) expected to be well above 2007; earnings forecasts confirmed for the divisions
Stuttgart, Apr 29, 2008 � Daimler AG (stock-exchange abbreviation DAI) today presents its interim report on the first quarter of 2008. Daimler achieved EBIT of �1,976 million in the first quarter (Q1 2007: �3,292 million).
The Mercedes-Benz Cars division improved its EBIT and thus compensated for the lower earnings recorded by Daimler Trucks and Daimler Financial Services.
Earnings decreased primarily because EBIT in the first quarter of 2007 included a special gain of �1,563 million related to the transfer of EADS shares. In the first quarter of 2008, special gains were realized in connection with the sale of the real-estate properties at Potsdamer Platz (�449 million) and in connection with the transfer of EADS shares (�102 million). There were opposing effects from expenses of �491 million related to Chrysler (special items are shown in the table on page 8).
Net profit amounted to � 1,332 million (Q1 2007: �1,972 million), equivalent to earnings per share of �1.29 (Q1 2007: �1.89).
Unit sales up by 9% in Q1 2008
In the first quarter of 2008, Daimler sold 503,800 cars and commercial vehicles worldwide, thus surpassing the figure for the prior-year period by 9%.
Daimler�s revenue increased slightly from �23.4 billion to �23.5 billion in the first quarter of 2008. Adjusted for exchange-rate effects and changes in the consolidated group, revenue growth amounted to 4%.
At the end of the first quarter of 2008, 273,902 people were employed by Daimler worldwide (Q1 2007: 270,986). Of this total, 166,661 were employed in Germany and 24,108 were employed in the United States (end of Q1 2007: 165,753 and 25,114 respectively).
Details of the divisions in the first quarter of 2008
Mercedes-Benz Cars increased its unit sales by 17% to 318,300 vehicles in the first three months of this year, thus setting a new record for the first quarter. The Mercedes-Benz brand sold 284,000 vehicles, an increase of 10%, also achieving a new record for the first quarter. The smart brand almost tripled its unit sales from 10,800 to 31,200 cars. The division�s revenue grew by 4% to �12.5 billion.
Mercedes-Benz Cars� EBIT improved by 45% to �1,152 million.
The significant increase in earnings was mainly a result of the good development of unit sales for both the Mercedes-Benz and smart brands. Unit sales of the C-Class and the smart fortwo were particularly positive. Further efficiency advances also contributed to the EBIT improvement. Exchange-rate effects and increased raw-material prices had a negative impact on EBIT in the first quarter of 2008.
Daimler Trucks sold 107,700 vehicles worldwide in the first quarter of 2008 (Q1 2007: 119,200). The decrease is primarily due to the significantly lower sales volume in the USA and supplier bottlenecks in Germany. Revenue decreased from �7.3 billion to �6.3 billion.
The Daimler Trucks division posted EBIT of �403 million (Q1 2007: �528 million). The decrease in earnings is primarily due to the tense economic situation in the United States and the weaker demand caused by the introduction of the EPA 07 exhaust-emission standards in the US in 2007. Earnings were also reduced in Europe as a result of production losses caused by a supply bottleneck of one supplier. But Daimler Trucks assumes it will be able to compensate for this production loss during the rest of the year. Earnings were positively affected, however, by the ongoing favorable sales trend in Latin America and in some important Asian markets. There were additional positive effects from efficiency improvements and improved product positioning.
The Trucks Europe/Latin America unit (Mercedes-Benz) sold 33,800 vehicles in the first quarter, once again achieving the high level of the prior-year quarter. Trucks NAFTA (Freightliner, Sterling, Western Star and Thomas Built Buses) sold 27,500 vehicles, which was significantly fewer than in the prior-year quarter (Q1 2007: 46,200). In the first quarter of 2008, there was a significant negative impact on demand from the economic slowdown in the USA. In addition, the introduction of the US emission standard EPA 07 had led to purchases being brought forward until the first quarter of 2007 and a subsequent drop in demand from the large fleet operators. Unit sales of Trucks Asia (Mitsubishi Fuso) increased in the first quarter by 18% to 46,500 vehicles.
Daimler Financial Services increased its contract volume by 2% to �58.3 billion in the first quarter of 2008. In the first quarter of 2008, 15 subsidiaries were fully consolidated for the first time (mainly in Eastern Europe and Asia). Adjusted for these consolidation effects and for exchange-rate effects, the increase was 7%. New business of �6.7 billion was 2% below the prior-year level. After adjusting for the two aforementioned factors, there was also a decrease of 2%.
EBIT of �168 million reported by Daimler Financial Services for the first quarter of 2008 was lower than the result for the prior-year period (Q1 2007: �214 million). The decrease in earnings was mainly due to the expenses incurred to set up a new financial services organization in the NAFTA region following the transfer of a majority interest in Chrysler. Increased risk costs also had a negative impact, but remained below the long-term average. There was a positive impact on earnings, however, from the increased contract volume.
EBIT of the Vans, Buses, Other segment amounted to �371 million (Q1 2007: �1,872 million). The decrease in earnings was primarily caused by the lower special gain of �102 million related to the transfer of EADS shares (Q1 2007: �1,563 million). The sale of the real-estate properties at Potsdamer Platz resulted in a special gain of �449 million in the first quarter of 2008.
The Mercedes-Benz Vans and Daimler Buses units profited from the continued positive development of unit sales and both achieved higher earnings, which are now reported individually for the quarters due to the growing importance of the business. Mercedes-Benz Vans reported EBIT of �186 million and Daimler Buses reported EBIT of �75 million.
Daimler�s share of the earnings of EADS amounted to �22 million (Q1 2007: �165 million). The company�s 19.9% interest in Chrysler, which is accounted for using the equity method, reduced EBIT by �340 million in the first quarter of 2008; this result includes expenses of �94 million resulting from the restructuring actions at Chrysler. As the Group generally applies the equity method of accounting for its interests in EADS and Chrysler with a three-month time lag, these figures mainly reflect the developments in the fourth quarter of 2007.
These results are by no means indicative for the results to be reported by Chrysler Holding LLC due to substantial valuation differences between US-GAAP used by Chrysler and IFRS accounting used by Daimler.
In connection with the transfer of a majority interest in Chrysler, the Group retained certain rights contingent upon the development of economic circumstances, in particular the development of residual values of Chrysler vehicles. At the time of the Chrysler transaction, these rights were measured and recognized as an asset in an amount of �185 million. In light of falling residual values of Chrysler vehicles, Daimler had to impair these assets by �151 million in the first quarter of 2008. Neither the equity result of Chrysler nor the impairment of the assets is cash effective.
The Mercedes-Benz Vans unit increased its unit sales by 11% to 68,600 in the first quarter of 2008, thus setting a new record.
The Daimler Buses unit sold 9,200 buses and chassis in the first quarter of this year, exceeding the high level of the prior-year quarter by 11%. Market developments in Brazil played a particularly important role; unit sales in Latin America increased by 19% to 5,700 vehicles.
Outlook
Although economic growth has slowed down as a result of the international financial crisis � particularly in the United States � making life harder for the automotive industry including Daimler, the Group continues to assume that the unit-sales targets it has set for its divisions will be met in 2008.
Based on the divisions� planning, Daimler expects its total unit sales to increase in the year 2008 (2007: 2.1 million vehicles).
Mercedes-Benz Cars expects to further increase its worldwide unit sales in 2008, thus surpassing the record level of the prior year. The full availability of the sedan and station-wagon versions of the new C-Class and of the new smart fortwo will make a decisive contribution to this development. Mercedes-Benz Cars expects to achieve a renewed increase in EBIT in 2008.
The Daimler Trucks division anticipates rising unit sales for full-year 2008. This will result on the one hand from the positive development of some Asian markets and on the other hand from higher unit sales in Europe � primarily due to the growth of markets in Eastern Europe. Based on these unit-sales expectations and the ongoing implementation of our Global Excellence program, Daimler Trucks assumes that the division�s earnings in full-year 2008 will be higher than in the prior year.
Daimler Financial Services anticipates a moderate increase in its business volume as the year progresses. Despite the expenses connected with developing its own financial services organization in North America, Daimler Financial Services continues to assume that it will achieve a return on equity of at least 14% in full-year 2008.
Due to the strong demand for the new Sprinter and the positive sales trend of the Vito/Viano, Mercedes-Benz Vans expects a significant increase in unit sales and a new unit-sales record in the year 2008.
Daimler Buses also anticipates a continuation of strong demand and is therefore confident that it will match the high level of unit sales achieved in the prior year.
The Daimler Group assumes that total revenue will increase moderately in full-year 2008 (2007: �99.4 billion).
On the basis of the divisions� confirmed projections, in 2008 the Daimler Group continues to expect to post EBIT from ongoing operations of well above the prior-year level. Effects related to Chrysler are not included therein. In the year 2007, earnings included positive contributions in particular from the transfer of shares in EADS and negative contributions from Chrysler and related to the new management model.
The special items shown in the following table affected EBIT in the first quarters of 2008 and 2007:
About Daimler
Daimler AG, Stuttgart, with its businesses Mercedes-Benz Cars, Daimler Trucks, Daimler Financial Services, Mercedes-Benz Vans and Daimler Buses, is a globally leading producer of premium passenger cars and the largest manufacturer of commercial vehicles in the world. The Daimler Financial Services division has a broad offering of financial services, including vehicle financing, leasing, insurance and fleet management. Daimler sells its products in nearly all the countries of the world and has production facilities on five continents. The company�s founders, Gottlieb Daimler and Carl Benz, continued to make automotive history following their invention of the automobile in 1886. As an automotive pioneer, Daimler and its employees willingly accept an obligation to act responsibly towards society and the environment and to shape the future of safe and sustainable mobility with groundbreaking technologies and high-quality products. The current brand portfolio includes the world�s most valuable automobile brand, Mercedes-Benz, as well as smart, AMG, Maybach, Freightliner, Sterling, Western Star, Mitsubishi Fuso, Setra, Orion and Thomas Built Buses. The company is listed on the stock exchanges in Frankfurt, New York and Stuttgart (stock exchange abbreviation DAI). In 2007, the Group sold 2.1 million vehicles and employed a workforce of over 270,000 people; revenue totaled �99.4 billion and EBIT amounted to �8.7 billion. Daimler is an automotive Group with a commitment to excellence, and aims to achieve sustainable growth and industry-leading profitability.
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