Daimler AG Financial Year 2007: Net profit of euro 4.0 billion; positive results for Mercedes-Benz Cars division

The German Daimler AG today presented its preliminary and unaudited figures for the Group and the divisions for the 2007 financial year. Daimler achieved EBIT of euro 8,710 million (US$12,719 million) in 2007 (2006: euro 4,992 million, US$7,290 million), surpassing the earnings target of at least euro 8.5 billion (US$12.4 billion) that had previously been announced for the year 2007.

There was a positive impact from the significantly higher EBIT from the Mercedes-Benz Cars division, which profited from the efficiency improvements it achieved and from the favorable development of unit sales. The Daimler Trucks division achieved earnings in excess of the high prior-year level despite the decrease in unit sales in the NAFTA region and Japan. Daimler Financial Services was unable to equal its prior-year earnings, primarily due to the expense of setting up its own financial
services organization in the NAFTA region following the separation from Chrysler Financial.

The EBIT posted by Vans, Buses, Other was higher than
in 2006 due to earnings improvements in the vans and buses units, but also due to special gains realized in connection with the transfer of interest in EADS.

However, this segment’s EBIT was negatively impacted by the
Group’s share of the results of EADS and Chrysler.

Moreover, EBIT was negatively impacted by unfavorable currency hedging
conditions. Earnings in both years were impacted by special items, as shown
in the table on pages 14 and 15. In the year 2007, earnings included gains
on the transfer of shares in EADS as well as charges relating to the new
management model and the 19.9% interest in Chrysler.

Despite charges totaling euro 2.2 billion (US$3.2 billion) related to
the Chrysler transaction, net profit of euro 4.0 billion (US$5.8 billion)
was higher than in the prior year (2006: euro 3.8 billion, US$5.5 billion).
Earnings per share reached euro 3.83 (US$5.59), compared with euro 3.66
(US$5.35) in 2006.

The Board of Management recommends to the Supervisory Board that for
the year 2007, a dividend of euro 2.00 (US$2.92) be distributed for each
share entitled to a dividend (2006: euro 1.50, US$2.19)). Related to the
number of shares entitled to a dividend as of December 31, 2007, this
constitutes a dividend distribution of euro 2,028 million (US$2,961
million) (2006: euro 1,542 million, US$2,252). The proposed dividend takes
into account both the development of operating result and cash flow in 2007
as well as the outlook for the following years.

The Group’s value added increased by euro 0.8 billion (US$1.2 billion)
to euro 1.4 billion (US$2 billion) in 2007, representing a return on net
assets of 10.5% (2006: 8.3%). This significantly exceeded the minimum
required rate of return of 7%, i.e. value was created. All divisions
contributed to this development.

Unit sales and revenue

Daimler sold a total of 2.1 million vehicles in 2007, thus surpassing
the number sold in the 2006 by 1%. Group revenue of euro 99.4 billion
(US$145.2 billion) equaled the prior-year level; adjusted for currency
translation effects, the increase amounted to 3%.


As of December 31, 2007, Daimler employed a workforce of 272,382 people
worldwide (2006: 274,024). Of that total, 166,679 were employed in Germany
(2006: 166,592) and 24,053 in the United States (2006: 27,629). The number
of apprentices and trainees at year-end was 9,300 (2006: 9,352). The size
of the workforce decreased compared with the end of the prior year, due to
the implementation of the new management model and other
efficiency-enhancing programs.

Profit sharing

For the year 2007, the Board of Management decided on a voluntary
profit- sharing bonus of euro 3,750 (US$5,476) per person for the
approximately 131,000 eligible employees of Daimler AG, significantly
exceeding the euro 2,000 (US$ 2,920) paid out in the prior year. The 2007
bonus will be paid out in April 2008. With this high level of profit
sharing, the Group is honoring the employees’ major contribution to the
achievement of operating profit as well as to the successful realignment of
Daimler during the year under review.

Investment in safeguarding the future

Expenditure for research and development increased significantly to
euro 4.1 billion (US$6 billion) in 2007 (2006: euro 3.7 billion, US$5.4
billion). This figure includes expenditure to secure Daimler’s leading
position in safety standards and for the further development of alternative
drive systems, fuel cell and battery technology.

At Mercedes-Benz Cars, research and development expenditure increased
to euro 2.7 billion (US$3.9 billion) from euro 2.3 billion (US$3.4 billion)
in 2006. Daimler Trucks spent euro 1.0 billion (US$1.5 billion) on research
and development (2006: euro 1.0 billion, US$1.5 billion).

A key area for Daimler’s research and development activities in 2007
was once again the ongoing development of innovative drive technologies. In
order to reduce CO2 emissions even further and to be able to offer vehicles
that are compatible with future requirements over the long term, the
company is also working on alternative drive systems such as fuel cells,
electric vehicles and lightweight construction methods. The vision of
accident-free driving is another main area of research at the Daimler Group
and has high strategic importance.

Daimler invested euro 2.9 billion (US$4.2 billion) in property, plant
and equipment in 2007. This investment focused on new vehicle models that
were already launched in 2007 or will be launched in the following years.
Of the total capital expenditure on property, plant and equipment, euro 2.0
billion (US$2.9 billion) was invested in Germany.

Share buyback program

In order to optimize its capital structure, the Group initiated a share
buyback program in August 2007. In this context, it was announced that up
to euro 7.5 billion (US$11 billion) would be applied to buy back nearly 10%
of the company’s own shares. By the middle of December 2007, 50 million
shares had been acquired for euro 3.5 billion (US$5.1 billion). These
shares were canceled by the end of the year. The share buyback program will
be continued today.

The program is based on the retained earnings in the balance sheet of
Daimler AG. In its 2007 financial statements, Daimler AG will report a net
profit of euro 12.4 billion (US$18.1 billion), of which a dividend pay-out
of euro 2.0 billion (US$2.9 billion) is proposed. This means that the
company will have sufficient retained earnings to carry out further share

The divisions in detail

Mercedes-Benz Cars, comprising the brands Mercedes-Benz, Maybach,
smart, Mercedes AMG, and Mercedes-Benz McLaren, sold 1,293,200 vehicles in
2007, exceeding the record figure set in the prior year by 3%. The
Mercedes-Benz brand increased unit sales in the year under review by 3% to
1,180,100 vehicles. The smart brand sold 103,100 vehicles, thus equaling
the prior-year level (102,700).

The division posted revenue of euro 52.4 billion (US$76.6 billion) in
2007, which was 2% higher than the prior-year level.

Mercedes-Benz Cars improved its EBIT to euro 4,753 million (US$6,941
million) (2006: euro 1,783 million, US$2,604 million), and its return on
sales of 9.1% significantly surpassed its original target of 7%. The cost
efficiency of the Mercedes-Benz Cars division was further improved. The
significant increase in earnings was also due to the positive development
of unit sales. However, currency effects had a negative impact on EBIT in

The new C-Class was the most important new product launched by
Mercedes- Benz in 2007. Mercedes-Benz unveiled the new C-Class station
wagon at the Frankfurt International Motor Show (IAA) in September 2007,
just a few months after the sedan’s launch.

Demand was still very strong for the full-size premium cars of
Mercedes- Benz also in the fifth year after market launch, especially for
the sedan and the station wagon of the E-Class. The S-Class was also very
successful: it defended its leading position as the top-selling luxury
sedan in 2007.

In October 2007, Mercedes-Benz sold the 250,000th vehicle of the second
generation of the M-Class since its market launch in April 2005.

The new smart fortwo has met with outstanding response from customers,
also in the United States, where it was launched in January 2008.

Under the motto of “Fascination and Responsibility”, Mercedes-Benz
presented an array of new, particularly economical and low-emission
vehicles at the Frankfurt Motor Show. Alongside its F 700 research vehicle
with DIESOTTO and hybrid drive, the brand presented 19 future models on the
“Road to the Future,” including seven hybrids from five model series and
the B-Class F-Cell equipped with zero-emission fuel-cell drive. This
demonstrates the division’s ambition to continue offering its customers
superior, luxurious, safe and environmentally friendly automobiles.

Daimler Trucks sold 467,700 vehicles in 2007 (-9%). The decline was
largely due to significantly lower market volumes in some of the division’s
key sales markets: the United States, Canada, and Japan. Unit sales in
Europe and Latin America increased significantly, however. Revenue of euro
28.5 billion (US$41.6 billion) (2006: euro 31.8 billion, US$46.4 billion)
was also down from the prior year as a result of the lower unit sales
(-10%). Nonetheless, with EBIT of euro 2.1 billion (US$3.1 billion), the
division once again succeeded in surpassing its very high prior-year
earnings by 15%. The return on sales rose from 5.8% to 7.5%.

The increase in earnings was primarily due to the efficiency
improvements achieved in the context of the Global Excellence program, a
more favorable model mix, and higher unit sales of trucks in Europe and
Latin America.

Trucks Europe/Latin America increased its unit sales by 13% to the
record level of 159,900 vehicles in 2007, benefitting in particular from
strong demand for the Mercedes-Benz Actros. In anticipation of the new
EPA07 emission limits, which took effect in the United States and Canada at
the beginning of 2007, many customers brought forward their purchases to
2006, resulting in exceptionally good sales figures for that year. However,
due to this development and a cyclical decline in the US market, the Trucks
NAFTA unit sold 119,000 vehicles in 2007, as expected, this was a
significant decrease compared to the prior year (2006: 187,400). Sales of
188,700 vehicles by Trucks Asia were slightly higher than the prior-year
level due to the positive development of unit sales outside Japan.

Trucks equipped with the environmentally friendly BLUETEC technology
continued to enjoy outstanding success in 2007. Well over 100,000 of these
trucks have been put on the road since the technology was introduced in

In May 2007, Freightliner presented its new Cascadia Class 8 heavy-duty
truck, which is designed primarily for long-distance haulage and sets the
benchmark in the NAFTA region. Built on an entirely new platform, the
Cascadia is the top-performing, most efficient, and driver-friendliest semi
truck on the US market. The Cascadia has benefited in many ways from
Daimler Truck’s worldwide development network. For example, it is the first
truck that will be equipped with an engine from the new Heavy Duty Engine
Platform and with systems from the new joint electrical/electronic

Daimler Trucks further intensified its activities in emerging markets
in the year under review: In December 2007, Daimler reached an
understanding with the Indian Hero Group on the establishment of a joint
venture; the first step is to be the local production of light, medium and
heavy-duty commercial vehicles for the Indian volume market. Variants of
current Daimler Trucks models will be produced that are tailored for the
Indian market. And in response to the dynamic growth of the commercial
vehicle market in Russia, the Group is now considering the development of
its own production facilities there.

The development of Daimler Financial Services was generally stable in
2007. The financial year was affected by the separation of Chrysler’s
financial services business in North America, which had become necessary
due to the transfer of a majority interest in Chrysler. Worldwide contract
volume increased by 4% to euro 59.1 billion (US$86.3 billion); adjusted for
exchange- rate effects, the increase was 9%. At the end of the year 2007,
the division’s portfolio comprised 2.3 million leased and financed
vehicles. New business of euro 27.6 billion (US$40.3 billion) was at the
high level of the prior year; adjusted for exchange-rate effects, new
business grew by 3%.

Daimler Financial Services posted EBIT of euro 630 million (US$ 920
million), which was lower than in 2006 (euro 807 million, US$1,179). The
positive business development of Daimler Financial Services could not
offset the expenses connected with setting up a separate financial services
organization in the NAFTA region following the transfer of a majority
interest in Chrysler. Nonetheless, with a return on equity of 14.8% in
2007, the division achieved its previously announced target of more than

The Vans, Buses, Other segment primarily comprises the Mercedes-Benz
Vans and Daimler Buses units, the Group’s 19.9% equity interest in Chrysler
Holding LLC, its holding in the European Aeronautic Defence and Space
Company (EADS), which was 24.9% at year-end, and real-estate activities.

Primarily due to stronger demand for vans and buses, the revenue
generated by the Vans, Buses, Other segment increased by 7% to euro 14.1
billion (US$20.6 billion).

The EBIT of the Vans, Buses, Other segment amounted to euro 1,956
million (US$2,856 million) in 2007 (2006: euro 1,327 million, US$ 1,939
million). The Mercedes-Benz Vans and Daimler Buses units profited from the
good development of unit sales and both achieved higher earnings. The
segment’s EBIT was also boosted by special gains realized in connection
with the transfer of interest in EADS (2007: euro 1,573 million, US$2,297
million and 2006: euro 519 million, US$758 million). In the fourth quarter,
however, prorated charges of euro 235 million (US$343 million) were
recognized in connection with the A400M project (continuing operations,
therefore not included in the tables below).

Like Daimler’s stake in EADS, as of August 4, 2007, its interest in
Chrysler Holding LLC is also accounted for in the Vans, Buses, Other
segment using the equity method with a time lag of three months. In the
year 2007, this resulted in a negative contribution to earnings of euro 377
million (US$551 million), including expenses of euro 322 million (US$470
million) relating to additional restructuring measures and expenses due to
the new agreement reached with the UAW in the fall of 2007, which were
recognized without a time lag.

In accordance with IFRS, further expenses due to the new agreement
reached between Chrysler and the UAW in the fall of 2007 had to be
recognized immediately at their present value. On the other hand, the same
agreement also results in significantly lower future healthcare costs.

Mercedes-Benz Vans set a new record by selling 289,100 vehicles
worldwide in 2007 (2006: 256,900). Nearly all markets and product lines
contributed to this strong performance. Worldwide sales of the Sprinter van
totaled 184,300 units (2006: 157,200).

Daimler Buses sold 39,000 complete vehicles and chassis worldwide in
2007, thus surpassing the prior year’s high figure by 8% and successfully
defending its leading position in all core markets.

Although Airbus, Eurocopter, and EADS Astrium all made positive
contributions to the business development of EADS, the year under review
was also negatively impacted by delays in the A380 and A400M programs, as
well as by the weakness of the US dollar. Daimler’s share of the result of
EADS amounted to a profit of euro 13 million (US$19 million) (2006: loss of
euro 193 million, US$282 million).


The North American market for cars and light trucks is likely to
continue suffering from the impact of falling house prices. In Western
Europe, the market for passenger cars is likely to remain flat, with total
sales of approximately 14.8 million units. Therefore, global growth in 2008
is once again expected to be primarily driven by the high growth rates of
the major emerging markets, especially China, India and Russia.

Worldwide markets for commercial vehicles are likely to continue
expanding in 2008. In North America, Daimler Trucks expects a recovery of
demand for medium and heavy-duty Class 5 to 8 trucks in the second half of
the year. A volume similar to the prior-year is expected for the Japanese
market for commercial vehicles. In Western Europe, the robust development
of the market for medium and heavy-duty trucks seems likely to continue, so
demand should be similar to the very high prior-year level.

Daimler anticipates a moderate increase in revenue in 2007. From
today’s perspective, all operations should contribute to this growth. The
regional focus of expansion is likely to be mainly in the growth markets of
Asia and Eastern Europe.

Mercedes-Benz Cars expects to further increase its unit sales in 2008,
thus surpassing the record level of the prior year. After posting lower
unit sales in 2007 for market-cycle reasons, the Daimler Trucks division
expects to increase its unit sales once again in 2008. An ongoing rise in
unit sales is anticipated for the Mercedes-Benz Vans unit in 2008 and 2009.
The Daimler Buses unit expects to maintain its unit sales in the coming
years at levels similar to the high level it achieved in 2007. The Daimler
Financial Services division anticipates further growth in its worldwide
contract volume in 2008.

On the basis of the divisions’ planning, the Daimler Group expects
total unit sales to increase significantly in the year 2008. Further growth
is also anticipated in 2009.

Mercedes-Benz Cars expects to achieve a renewed increase in EBIT in
2008. As previously announced, the division has the goal of increasing its
return on sales to an average of 10% by 2010 at the latest.

Further efficiency improvements in connection with the expected growth
in unit sales should result in a renewed increase in earnings for Daimler
Trucks this year. As of the year 2010, the division intends to achieve an
average return on sales of 8% throughout its business cycle; until recently
the target was to exceed 7%.

The profitability of the Mercedes-Benz Vans unit should continue
improving in the coming years. Taking into consideration further
productivity and efficiency advances, Daimler Buses expects to achieve a
high earnings level also in the future.

Daimler Financial Services is confident that it will be able to achieve
a return on equity of at least 14% in 2008, despite the expenses connected
with developing its own financial services organization in North America
following the transfer of a majority interest in Chrysler.

On the basis of the divisions’ projections, Daimler expects to post
EBIT from continuing operations of well above the prior-year level in 2008.
In the year 2007, earnings included positive contributions in particular
from the disposal of shares in EADS and negative contributions related to
Chrysler and the new management model (see table below).

In the automotive business, the Group aims to achieve an average return
on sales of 9% throughout the market and product cycles.

A fundamental condition for the targeted increase in earnings is a
generally stable economic and political environment, as well as the
anticipated moderate rise in the worldwide demand for cars and commercial
vehicles. Opportunities and risks may arise from the development of
currency exchange rates and raw-material prices.

The Annual Report 2007 will be published on the Internet on February 27
and will be available in printed form as of the beginning of March.

In both 2007 and 2006, the development of earnings was affected by
special items, which are shown in detail in the following tables:

Amounts in millions of US$ 2007 2006
Mercedes-Benz Cars

Financial support for suppliers -120 –
Discontinuation of smart forfour – -1,381
Headcount reductions in the context of CORE – -418
Expenses relating to new early
retirement contracts – -315

Amounts in millions of US$ 2007 2006
Daimler Trucks

Adjustment of pension plans /
healthcare obligations 126 -235
Disposal of real-estate properties in Japan 114 –
Expenses relating to new early
retirement contracts – -196
Disposal of the off-highway business – 19

Amounts in millions of US$ 2007 2006
Vans, Buses, Other

Gain / expense relating to the
transfer of shares in EADS 2,297 758
Restructuring program at EADS -166 –
Expenses relating to restructuring
and UAW contract at Chrysler -470 –
Disposal of real estate properties 107 396
Disposal of off-highway business – 369
Expenses relating to new early
retirement contracts – -42

Amounts in millions of US$ 2007 2006
Reconciliation / elimination

New Management Model -374 -510

The figures in this document are preliminary and have neither been
approved yet by the Supervisory Board nor audited by the external auditor.

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, 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 euro 99.4 billion (US$145 billion) and EBIT amounted to euro 8.7
billion (US$ 12.7 billion). Daimler is an automotive Group with a
commitment to excellence, and aims to achieve sustainable growth and
industry-leading profitability.

This document contains forward-looking statements that reflect our
current views about future events. The words “anticipate,” “assume,”
“believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,”
“should” and similar expressions are used to identify forward-looking
statements. These statements are subject to many risks and uncertainties,
including an economic downturn or slow economic growth in important
economic regions, especially in Europe or North America; changes in
currency exchange rates and interest rates; the introduction of competing
products and the possible lack of acceptance of our products or services
which may limit our ability to raise prices; price increases in fuel, raw
materials, and precious metals; disruption of production due to shortages
of materials, labor strikes, or supplier insolvencies; a decline in resale
prices of used vehicles; the business outlook for Daimler Trucks, which may
be affected if the U.S. and Japanese commercial vehicle markets experience
a sustained weakness in demand for a longer period than originally
expected; the effective implementation of cost reduction and efficiency
optimization programs; the business outlook of Chrysler, in which we hold
an equity interest, including its ability to successfully implement its
restructuring plans; the business outlook of EADS, in which we hold an
equity interest, including the financial effects of delays in and
potentially lower volumes of future aircraft deliveries; changes in laws,
regulations and government policies, particularly those relating to vehicle
emissions, fuel economy and safety, the resolution of pending governmental
investigations and the outcome of pending or threatened future legal
proceedings; and other risks and uncertainties, some of which we describe
under the heading “Risk Report” in this Annual Report and under the
headings “Risk Factors” and “Legal Proceedings” in the Annual Report on
Form 20-F filed with the Securities and Exchange Commission. If any of
these risks and uncertainties materialize, or if the assumptions underlying
any of our forward-looking statements prove incorrect, then our actual
results may be materially different from those we express or imply by such
statements. We do not intend or assume any obligation to update these
forward-looking statements. Any forward-looking statement speaks only as of
the date on which it is made.

Further information on Daimler is available on the Internet at:

Daimler – Figures for 2007 (in US-$)

All values, including the 2006 figures, are converted from Euro figures

the exchange rate of 1 euro = US-$ 1.4603 (based on the noon buying
rate on

December 31, 2007).

Daimler Group 2007 2006

Revenues, in millions of US-$ 145,152 144,894
EBIT, in millions of US-$ 12,719 7,290
Net profit, in millions of US-$ 5,819 5,524
Earnings Per Share (EPS), in US-$ 5.59 5.35
Dividend proposed, in US-$ 2.92 2.19
Value Added, in millions of US$ 2,015 922
Employees (at year-end) 272,382 247,024

EBIT by divisions 2007 2006
in millions US-$ US-$

Mercedes-Benz Cars 6,941 2,604
Daimler Trucks 3,097 2,703
Daimler Financial Services 920 1,179
Vans, Buses, Other 2,856 1,938

Revenue by divisions 2007 2006
in millions US-$ US-$

Mercedes-Benz Cars 76,564 75,074
Daimler Trucks 41,569 46,422
Daimler Financial Services 12,721 11,837
Vans, Buses, Other 20,624 19,204

Unit sales by divisions and operating units 2007 2006

Daimler Group(1) 2,089,000 2,072,900
Mercedes-Benz Cars 1,293,200 1,251,800
Daimler Trucks 467,700 516,100
Vans 289,100 256,900
Buses 39,000 36,200

(1) Since Q1/2007 Mitsubishi L200 Pickup and Mitsubishi Pajero vehicles
manufactured in South Africa are included at Mercedes-Benz Cars; for
prior periods, these vehicles were included only at Group level.
These figures are preliminary and have neither been approved yet by the
Supervisory Board nor audited by the external auditor.

Daimler – Figures for the 4th Quarter 2007 (in US-$)

All values, including the 2006 figures, are converted from Euro figures

the exchange rate of 1 euro = US-$ 1.4603 (based on the noon buying
rate on

December 31, 2007).

Daimler Group Q4/2007 Q4/2006

Revenues, in millions of US-$ 38,704 39,463
EBIT, in millions of US-$ 2,034 803
Net profit (loss), in millions of US-$ 2,478 (18)
Earnings Per Share (EPS), in US-$ 2.50 0.02
Employees (at year-end) 272,382 274,024

EBIT by divisions Q4/2007 Q4/2006
in millions US-$ US-$

Mercedes-Benz Cars 2,082 1,428
Daimler Trucks 748 407
Daimler Financial Services 159 215
Vans, Buses, Other (719) (732)

Revenue by divisions Q4/2007 Q4/2006
in millions US-$ US-$

Mercedes-Benz Cars 20,043 21,021
Daimler Trucks 10,571 11,626
Daimler Financial Services 3,287 3,051
Vans, Buses, Other 6,291 5,254

Unit sales by divisions and operating units Q4/2007 Q4/2006

Daimler Group(1) 575,400 556,500
Mercedes-Benz Cars 364,600 337,400
Daimler Trucks 118,700 134,300
Vans 81,000 72,800
Buses 11,000 9,400

(1) Since Q1/2007 Mitsubishi L200 Pickup and Mitsubishi Pajero vehicles
manufactured in South Africa are included at Mercedes-Benz Cars;
for prior periods, these vehicles were included only at Group level.
These figures are preliminary and have neither been approved yet by the
Supervisory Board nor audited by the external auditor.


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.