Mercedes-benz Group Ag · XETR:MBG
Mercedes-benz — Daimler — Investor Day (November 2019)
51 slides from Mercedes-benz's investor day presentation, Nov 14, 2019
Slide 1: Capital Market Day
CAPITAL MARKET DAY London – November 14, 2019 New York – November 15, 2019
Slide 2: Mercedes-Benz Our purpose
Mercedes-Benz Our purpose FIRST MOVE THE WORLD Mercedes-Benz EQC 400 4MATIC: combined power consumption: 20.8-19.7 kWh/100 km; combined CO2 emissions: 0 g/km* *Electrical energy consumption and range have been determined on the basis of Regulation (EC) No. 692/2008. Electrical energy consumption and
Slide 3: Mercedes-Benz Current situation
Mercedes-Benz Current situation Brand value No.1 premium Pricing Leading vs. peers & products OEM brand power Disciplined pricing Highly competitive Product innovation product portfolio supports pricing Sales YoY sales record Variable Growing due to volume Growth recently lower complexity and conten
Slide 4: Headwinds going into 2020/21
Mercedes-Benz Headwinds going into 2020/21 CO2 measures Investment Softening growth xEV push to meet High investment for xEVs Overall economic CO2 targets uncertainty Continued investment Cost increase only partly into various powertrains Sales growth approx. covered by pricing 3% in 2020 (w/o smart
Slide 5: Roadmap to EU CO2 compliance
Mercedes-Benz Roadmap to EU CO2 compliance CO2 g/km, M1 fleet (Cars & Vans), NEDC ~138 2019 xEV, 48V Technical Super Phase-In Outlook Target & portfolio prognosis Credits 2020 2020 2020 ▸ Shift from NEDC to WLTP after 2020 (2021 target based on WLTP) ▸ Technical target deviation to be compensated Me
Slide 6: Electrifying our entire portfolio
Mercedes-Benz Electrifying our entire portfolio ▸ COMPREHENSIVE ROLL-OUT OF 48 VOLT TECHNOLOGY ▸ >20 NEW XEV LAUNCHES UNTIL 2022 ▸ ROS EFFECT: APPROX. -1% P.A. (2019-22) 2019 2020 2021 Gradual ~2% xEV share ~9% xEV share ~15% xEV share xEV increase
Slide 7: Investment
Mercedes-Benz Investment INCREASED COMPLEXITY IN PLATFORMS AND POWERTRAINS DURING ICE/BEV TRANSITION PHASE ▸ CONTINUED HIGH INVESTMENT LEVEL IN BOTH ICE AND BEV OVER THE COMING YEARS ▸ HIGHER PRODUCT/VARIABLE COST ▸ GROWING FIXED COST BASE
Slide 8: Countermeasures
Mercedes-Benz Countermeasures Significant R&D Personnel savings in & CapEx cost reduction material cost cap >1 billion Euro Reduction Improvement of Architecture & platform of other working complexity reduction overhead cost capital in the longer term ▸ RIGHTSIZING COST STRUCTURE AND INVESTMENT WHIL
Slide 9: Countermeasures: material cost
Mercedes-Benz Countermeasures: material cost Reviewing existing contracts for adjustment Pushing technical continuous improvement process Enhancing benchmark-based cost optimization of series vehicles (e.g. switches, light packages, hybrid systems) Reducing complexity (models, drivetrains, options)
Slide 10: Countermeasures: investment cap
Mercedes-Benz Countermeasures: investment* cap in billion Euro 16 14 Cap Prioritization Simplification Partnering 2018 2019 2020 2021 2022 *CapEx, R&D, and non-recurring expenses
Slide 11: Countermeasures: personnel cost
Mercedes-Benz Countermeasures: personnel cost ▸ BY END 2022 >1 BILLION EURO SAVINGS TARGET ▸ REDUCTION OF MANAGEMENT POSITIONS BY 10% ▸ REDUCTION OF STAFF – MAIN FOCUS ON INDIRECT AREAS ▸ INCREASED LABOR PRODUCTIVITY THROUGH HPV REDUCTION ▸ PROACTIVE USE OF ATTRITION & ALL OTHER MEASURES ▸ NEGOTIATI
Slide 12: Countermeasures: working capital
Mercedes-Benz Countermeasures: working capital Inventory Optimizing stock range • Raw material • Work in progress • Finished vehicles Reducing transit times of finished vehicles Receivables Tighter collections Analyze further factoring potential to optimize outstanding receivables Payables Review pa
Slide 13: Countermeasures: architectures and platforms
Mercedes-Benz Countermeasures: architectures and platforms Reducing overall MB architectures & platforms starting with successor to MFA2 (current compact car architecture) leading to: ▸ LESS R&D SPENDING AND PP&E* (MID- TO LONG-TERM) ▸ LOWER COST BASE (LONG-TERM) ▸ SAFEGUARDED PRODUCTION FLEXIBILITY
Slide 14: The way forward: 2019-2022
Mercedes-Benz Key assumptions Sales at market growth 2020 Sales above market growth 2021-22 World economy slowdown, no recession The way forward: 2019-2022 Underlying performance: utilization of provisions for FX headwind assumed disclosed items and restructuring charges excluded Tariffs US-China, B
Slide 15: Premium automotive has growth potential
Mercedes-Benz Premium automotive has growth potential Total and premium automotive sales in million units (source: IHS) +1.6% 103 98 90 88 86 85 Volume +2.6% Premium 2018 2019 2020 2021 2025 2029 share of premium 12% 13% 13% 13% 13% 14% ▸ PREMIUM OUTGROWS THE MARKET AS GLOBAL WEALTH POCKETS RISE – E
Slide 16: Our strategy – sustainable modern luxury
Mercedes-Benz Our strategy – sustainable modern luxury Brand & positioning Market & growth Sustainability & xEV ICE powertrain • From product to customer • Ownership+ for individual • Brand promise: • Investment cycle experience centric ownership-based mobility CO2 neutral by 2039 until ~2023 • Furt
Slide 17: Perspective 2022+
Mercedes-Benz Perspective 2022+ ▸ PREMIUM CAR MARKET KEEPS GROWING AS GLOBAL WEALTH POCKETS RISE – ESPECIALLY IN ASIA ▸ LEADING BRAND, COMPETITIVE PRODUCT PORTFOLIO ▸ ROADMAP TO MEET CO2 TARGETS ▸ RIGHT-SIZING OF COST STRUCTURE AND CAPEX/R&D ▸ MID-TERM SIMPLIFICATION OF PORTFOLIO AND BUSINESS MODEL
Slide 18: Mercedes-Benz Vans
N = Lu aa) MERCEDES VANS
Slide 19: Mercedes-Benz Vans The way forward 2019-2022
Mercedes-Benz Vans The way forward 2019-2022 Return on sales in % >6 >3 Key assumptions & measures Break even Stable markets Product cost increase offset by efficiency measures Significant savings in material cost Personnel cost -100 million Euro 2019 2019 2020 2022 underlying ▸ RIGHTSIZING COST STR
Slide 20: Daimler Truck Our purpose
Daimler Truck Our purpose FOR ALL WHO KEEP THE WORLD MOVING
Slide 21: Daimler Truck Current situation
Daimler Truck Current situation Trucks Daimler MB Trucks MB FUSO Bharat Nafta Buses Europe LatAm Trucks Asia India Undisputed Benchmark Variable cost Weak market Successful Restructuring Japan sales Break even market leader, margins too high, position: reduction ongoing, too low, profit in very benc
Slide 22: RoS below benchmark, cash conversion remains good
Daimler Truck RoS below benchmark, cash conversion remains good Return on Sales (%) Cash conversion rate Average 0.9 Benchmark* 1.1 Benchmark* ~10% 0.9 ~0.9 ~9% 7.1 0.7 0.7 6.8 6.7 6 ~6 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 * Best in class among global truck manufacturers – based on publ
Slide 23: Headwinds in 2020/21
Daimler Truck Headwinds in 2020/21 Market slowdown in major truck markets High investment level Preparation to meet EU CO2 targets in 2025 Electrification of overall Truck and Bus portfolio Bring fuel cell to series production Autonomous Hub2Hub transport Exchange rate exposure Weakening of USD assu
Slide 24: Markets normalizing
Daimler Truck Markets normalizing NAFTA CL.8 EU 30 HDT -25 -35% -10 -20% 340k 310k 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 BRAZIL HDT JAPAN TRUCKS HDT +5 -15% -5 -15% 70k 50k 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Numbers beyond 2019 represent expectations
Slide 25: Countermeasures
Daimler Truck Countermeasures Nafta Adjust capacity and cost structure Japan Restructuring to new market environment aftersales and retail New purpose-built truck for vocational segment Strengthen aftermarket business Bus Daimler Buses efficiency program Torc Partnerships to share CASE to increase l
Slide 26: Turning around Mercedes-Benz Latin America
Daimler Truck Turning around Mercedes-Benz Latin America MEASURES IN FUTURE CORE MARKET BRAZIL PRODUCT STRATEGY Contribution margin increase: Reduction from 8 to 3 platforms Pro@Trucks (Net Pricing Extra-heavy high-end segment: optimization) rollout HD SFTP platform to Product cost & complexity Braz
Slide 27: Turning around Mercedes-Benz Europe
Daimler Truck Turning around Mercedes-Benz Europe Technology New Actros Personnel Quick win leadership cost capacity measures 5% fuel efficiency reduction Personnel cost Active safety features reduction program Mirror cam >300 million 10% Reduction of MB Uptime Euro management positions Sales Restru
Slide 28: The way forward: 2019-2022
Daimler Truck The way forward: 2019-2022 Key assumptions Market slowdown Nafta Market slowdown Europe Weakening USD Return on Sales in % CCR underlying 2019-2022: 0.9 >7% ~6% >5% Inflation & Transformation Inflation & Transformation 2019 Market Cost FX Sales Var. cost Fixed 2020 Market Cost FX Sales
Slide 29: Our strategy
Daimler Truck Our strategy Product & portfolio • Increased focus on HD segment and increased commonalization • Growing importance of software and electronics supporting scale Sustainability & CO2 • BEV and fuel cell, both important and complementary Autonomous • Hub2Hub
Slide 30: EU legislation requires alternative powertrain solutions
Daimler Truck EU legislation requires alternative powertrain solutions CO2 baseline setting ~ 1.1% p.a. -15% -30% ~ 2.7% p.a. Fuel cell BEV 1996 2016 2019 MB SK MB Actros Actros V 1996 2016 2019 2025 2030
Slide 31: Autonomous Hub2Hub transport as profit opportunity
Daimler Truck Autonomous Hub2Hub transport as profit opportunity ▸ Development target: Level 4 driverless truck on the US highway
Slide 32: Summary
Daimler Truck Summary ▸ STRONG MARKET POSITIONS & GOOD CASH CONVERSION ROS BELOW BENCHMARK IN EUROPE, LATAM AND ASIA FUNDING DISCIPLINE TO KEEP CCR HIGH INSTRUMENTS IN PLACE TO RESPOND TO MARKET VOLATILITY ▸ CLEAR PLAN TO RESTORE PERFORMANCE PRODUCT LEADERSHIP IN HEAVY-DUTY SALES PUSH IN EUROPE COST
Slide 33: Daimler Mobility Our purpose
Daimler Mobility Our purpose WE MOVE YOU WE FACILITATE SALES OF AUTOMOTIVE PRODUCTS AND SERVICES WE BUILD CUSTOMER LOYALTY AND ENSURE RETENTION WE GENERATE DIVIDENDS AND CREATE VALUE FOR THE GROUP WE ENABLE MOBILITY FROM YEARS TO MINUTES
Slide 34: Serving a variety of customer demands
Daimler Mobility Serving a variety of customer demands DEMAND DEMAND DEMAND TYPE A TYPE B TYPE C Customer wants Customer wants fleet/ Customer wants financing/leasing/ rental/subscription on-demand mobility insurance solution DIGITAL Products MOBILITY Mobility as a Service SOLUTIONS Ownership+ servi
Slide 35: Daimler Mobility Current situation
Daimler Mobility Current situation Daimler Portfolio 160 billion Euro (Q3/2019) Mobility RoE ~17% (incl. disclosed in 2019 one-off item of +718 million Euro) Financing, Conservative risk management 153 billion Euro portfolio Leasing & with low net credit losses 50% penetration rate Insurance Stable
Slide 36: Headwinds in 2020/21
Daimler Mobility Headwinds in 2020/21 Financing, Slower growth in industrial divisions Leasing & Normalization of credit risk Insurance Margin pressure Regulation/equity demands Fleet Integration of additional fleet activities Mgmt. & Preparation for further growth and markets Operations Digital Com
Slide 37: Measures
Daimler Mobility Measures Financing, Digitalize customer experience ▸ Digitalization, Leasing & Innovative products to support efficiency & funding Insurance Daimler sales Controlled growth at Strengthen ABS On/Off-Balance target profitability Fleet Leverage digital fleet operator ▸ Regional growth
Slide 38: Portfolio of digital mobility solutions
Daimler Mobility Portfolio of digital mobility solutions YourNow JV Participations Captive Ride Hailing JV GEELY Car-Sharing Parking & Charging Others Mercedes pay ▸ FOCUS/PRIORITIZATION ▸ OPEN TO PARTNERSHIPS
Slide 39: The way forward: 2019-2022
Daimler Mobility Key assumptions The way forward: 2019-2022 Stable penetration rate Stable interest rate Stable regulatory environment Return on Equity in % ~17% 14%* ~12% >12%* 2019 2019 2020 2022 RoE incl. One-off Underlying Higher - Margin Fleet Underlying Higher + Efficiency Fleet Mobility gain
Slide 40: Summary
Daimler Mobility Summary ▸ SUPPORT SALES OF AUTOMOTIVE PRODUCTS AND SERVICES ▸ GROW FLEET MANAGEMENT BUSINESS IN SIZE AND PROFITABILITY ▸ ENSURE TARGET PROFITABILITY ▸ CREATE VALUE AND PAY DIVIDEND TO THE GROUP 40
Slide 41: New group structure
Daimler New group structure CAPITAL MARKET ACCESS DAIMLER GOVERNANCE CAPITAL PERFORMANCE PEOPLE ALLOCATION - TARGETS DEVELOPMENT FRAMEWORK - MEASUREMENT - INCENTIVES MERCEDES-BENZ DAIMLER TRUCK DAIMLER MOBILITY
Slide 42: Rightsizing the group
Daimler Rightsizing the group ▸ 10% MANAGEMENT POSITIONS REDUCTION ACROSS THE GROUP ▸ SIGNIFICANT PERSONNEL COST REDUCTION IN DIVISIONS AND ON GROUP LEVEL ▸ NEGOTIATIONS WITH LABOR SIDE INITIATED RESTRUCTURING COST TO BE DETERMINED ▸ OVERHEAD COST REDUCTION
Slide 43: Role of the parent company
Daimler Role of the parent company as is to be ~2,000 FTE ~4,000 FTE GOVERNANCE SHARED SERVICES ▸ RIGHTSIZING PARENTCO Deliver benchmark ▸ EFFICIENCY OPPORTUNITIES Protect, guide and SHARED SERVICES enable Daimler business services Digitize/automate Improve End2End Externalize
Slide 44: Financial framework
Daimler Financial framework Equity & debt markets DAIMLER Dividend Funding MERCEDES-BENZ DAIMLER TRUCK DAIMLER MOBILITY (Subgroup) (Subgroup) (Subgroup) ▸ CAPITAL MARKET ACCESS ▸ GROUP FUNDING AND LIQUIDITY MANAGEMENT ▸ CAPITAL STRUCTURE ▸ CAPITAL ALLOCATION ▸ SET AND MONITOR PERFORMANCE TARGETS ▸ D
Slide 45: Strong balance sheet
Daimler Strong balance sheet - in billion Euro - 23.0 Gross industrial liquidity Industrial debt Net industrial liquidity OBJECTIVES NIL target >10 9.6 ▸ MAINTAIN “A” RATING -13.4 ▸ NET INDUSTRIAL LIQUIDITY >10 BILLION EURO ▸ HEALTHY DEBT COVERAGE RATIO ▸ DMO LEVERAGE <12 (DEBT TO EQUITY) YTD 09/201
Slide 46: Capital allocation
Daimler Capital allocation CapEx M&A Prioritization Disciplined allocation Cap/CCR Proactive portfolio management KPIs (IRR, FCF profile*) Preference for partnerships R&D/Projects Dividend policy Prioritization 40% of net profit Cap/CCR Dividend should be covered by KPIs (IRR, FCF profile*) industri
Slide 47: Balanced mix of funding instruments
Daimler Balanced mix of funding instruments Other Fin. lease (IFRS 16) 1% 3% Bank loans 20% Bank loans 25% Q3 Cap. market TARGET Cap. market 2019 55% PICTURE 50% Deposits 160 billion Euro & ABS Deposits & ABS 30% 17% INCREASED RATING INDEPENDENCY
Slide 48: Summary KPIs
Daimler Summary KPIs Trend Trend Trend Return on Sales (underlying*) in % 2019 2020 2022 Mercedes-Benz (Cars & Vans) >5 >4 (>3**) >6 (>5**) Daimler Truck (Trucks & Buses) ~6 >5 >7 Daimler Mobility (RoE) ~17 >12*** 14*** Cash Flow Cash Conversion Rate Cars & Vans (underlying) 0.4 0.8 0.8 Cash Convers
Slide 49: Cash flow component in management compensation
Daimler Cash flow component in management compensation Split of permanent financial target criteria as is Non-financial targets to be Non-financial targets + + Transformation targets Transformation targets + + Financial targets EBIT Financial targets EBIT + Free cash flow component
Slide 50: Summary
Summary ▸ GROWING PREMIUM MOBILITY MARKET ▸ DAIMLER STRATEGY SET TO DEFEND LEADERSHIP ROLE FOR PREMIUM CARS AND COMMERCIAL VEHICLES ▸ AWARENESS OF THE CHALLENGES AHEAD ▸ ACTIONS LAUNCHED TO RIGHTSIZE DAIMLER ▸ STRATEGY SET FOR COMPETITIVE, SUSTAINABLE BUSINESS MODEL ▸ PERFORMANCE AND FREE CASH FLOW
Slide 51: Forward-looking statements
Forward-looking statements: This document contains forward-looking statements that reflect our current views about future events. The words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “may,” ”can,” “could,” “plan,” “project,” “should” and similar expressions are used to identi