Slide 1: Annual Press Conference 2007 Results
Annual Press Conference 2007 Results Dr. Dieter Zetsche Chairman of the Board of Management Head of Mercedes-Benz Cars February 14, 2008
Slide 2: Strong financial performance
2 Strong financial performance +33 +5 +74 0 % change 4.0 3.8 Net profit 8.7 5.0 EBIT 99.4 99.2 Revenue 2.0 1.5 Dividend (in EUR) 2007 2006 – in billions of € – Group Overview 2007
Slide 3: 2007 group achievements
3 2007 group achievements Set new strategic direction for group – review and confirmation of business strategies Significantly reduced risk factors and volatility through sale of 80.1% stake in Chrysler Substantially improved profitability Achieved milestones for safe and sustainable mobility Furthe
Slide 4: Hitting on all cylinders
4 Hitting on all cylinders Group Overview 2007 Mercedes-Benz Vans Daimler Buses Daimler Financial Services Daimler Trucks Mercedes-Benz Cars Best-ever sales level; Return on Sales at 9.1% in 2007 Profit level above previous year due to success of “Global Excellence” Return on Equity at 14.8% despite
Slide 5: Target for Mercedes-Benz Cars
5 Target for Mercedes-Benz Cars Achieve average RoS of 10% RoS '04 '05 '06 '07 '10 Note: before ’05: RoS based on operating profit (US GAAP); from ’05: RoS based on EBIT (IFRS) Start CORE Major levers • Operational Excellence • Growth through regional strategies • CSI #1 • Brand Strategy "Appreciati
Slide 6: Operational excellence
6 Development Plants Hours per vehicle target Operational excellence Module management and plant performance Mercedes-Benz Cars -30% 2005 2006 2007 2008 commonalities quality HPV Module management Powertrain E/E, Telematics Chassis Exterior Interior Body in White Car lines A/B M/R C/E S
Slide 7: Emerging markets
7 Emerging markets Expanding in high-growth markets Russia, India, and China Mercedes-Benz Cars Local production since ’95 Investment in new plant (SoP ’09) Dealer network in 27 cities +17% Activities New Beijing factory in Sep. ‘06 E-Class CKD since July ’06 C-Class SoP in ’07 Customized EClass >80
Slide 8: Quality/customer experience
8 5. 25. Quality/customer experience Mercedes-Benz quality took a big step up IQS 2006 Total defects/100 vehicles IQS 2007 Mercedes-Benz Cars Total defects/100 vehicles 139 111 124 125 Industry Average Porsche Lexus Hyundai Toyota Jaguar Honda Cadillac Infiniti GMC Acura 120 119 117 117 110 109 106
Slide 9: New products 2007
9 New products 2007 C-Class sedan, C-Class station wagon, and smart fortwo Mercedes-Benz Cars C-Class station wagon smart fortwo C-Class sedan
Slide 10: New products 2008/2009
10 New products 2008/2009 GLK and CLC in 2008, E-Class and CLK in 2009 Mercedes-Benz Cars New: E-Class Sedan E-Class Estate CLK Coupe CLK Convertible New Generations: S-Class GL-Class 2009 2008 New C-Class Sports Coupe CLC New compact SUV GLK New Generations: SL SLK CLS A-/B-Class M-Class New C-Clas
Slide 11: Higher margin target for Daimler Trucks
11 Higher margin target for Daimler Trucks 8% RoS on average over the market cycle RoS '04 '05 '06 '07 '10 “Global Excellence” as major lever Management of cycles Operational excellence Market penetration & growth Future products/technologies Daimler Trucks Ø 8% 3.1% 5.2% 5.8% 7.5% Note: before ’05:
Slide 12: Management of cycles
12 Management of cycles Higher profitability despite regional market downturns Daimler Trucks 394 586 NAFTA Western Europe Japan S Triad Truck Market ’06’07 -33% 1% -18% -20% Profitability (RoS %) Daimler Trucks 5.8 '06 '07 7.5 Management of cycles (started in 2005) proved successful Thousand units
Slide 13: Emerging markets
13 Combined BRIC sales growth Emerging markets Addressing growth markets Brazil, Russia, India, and China Daimler Trucks Brazil MB market leader MB production hub for Latin America, part of global network Modified European and products China Cooperation with Chinese OEM Russia Local plant targeted S
Slide 14: Truck Dedication at Mercedes-Benz Trucks
14 Daimler Trucks Today: Partly mixed Mercedes-Benz outlets (PV/CV) Future: Dedicated Mercedes-Benz truck outlets “Truck Dedication” means: • Well-accessible locations • Spacious workshops • Tailored investments and services • Extended opening hours Quality/customer experience “Truck Dedication” at
Slide 15: New products 2007
15 New products 2007 Freightliner Cascadia, Fuso Super Great and Mercedes-Benz Compact Unimog Daimler Trucks Freightliner Cascadia Fuso Super Great Mercedes-Benz Compact Unimog
Slide 16: New products 2008
16 New products 2008 New Actros and Hybrid LDT and MDT in Europe Daimler Trucks Fuso Canter Eco Hybrid for UK Mercedes-Benz Atego BLUETEC Hybrid New Mercedes-Benz Actros
Slide 17: Mercedes-Benz Vans: New products 2007/2008
17 Mercedes-Benz Vans: New products 2007/2008 Freightliner Sprinter, new Viano type and Sprinter NGT Mercedes-Benz Vans Sprinter NGT (natural gas technology) Viano X-CLUSIVE Freightliner Sprinter
Slide 18: Major performance levers
18 Major performance levers • Next product generation (incl. CSI#1) • Efficiency and standardization program • Growth in core and emerging markets • Production capacity enhancement to cover growing market demand Mercedes-Benz Vans Mercedes-Benz Vans
Slide 19: Daimler Buses: New products 2007/2008
19 Daimler Buses: New products 2007/2008 Orion VII, Mercedes-Benz CapaCity and Conecto, Setra TopClass 400 Daimler Buses Mercedes-Benz Conecto Orion VII Mercedes-Benz Capa-City New Setra TopClass 400
Slide 20: Daimler Buses Major performance levers
20 Daimler Buses Major performance levers Daimler Buses • Next product generation in Europe • Exploit market opportunities for complete buses • Growth in emerging markets • Leadership in alternative propulsion
Slide 21: Target for Daimler Financial Services
21 '04 '05 '06 '07 Target for Daimler Financial Services Return on Equity >14% Major levers • “Global Products, Processes & Systems” project • Penetration of existing markets • Expansion into new markets • New products - Fleet management - Insurance RoE 16.6% 18.0% 14.8% >14% Note: before ’05: RoE b
Slide 22: Operational excellence
22 Operational excellence Cross-regional operating system to be implemented Captive #1 Africa, Asia Pacific Americas Europe Efficient captive operating system Optimal brand support and market penetration Operational Excellence Customer/ Global presence Product architecture Process standardization IT
Slide 23: Growth markets
23 Growth markets Support brand partners and leverage new opportunities Daimler Financial Services Russia: Bank (Nov 2007) Japan: FUSO Financial Malaysia: Market study planned India: Feasibility study China: Operations launched United Arab Emirates: Market entry in progress 2006/07
Slide 24: Daimler
DAIMLER
Slide 25: Safe and sustainable mobility
25 Safe and sustainable mobility Emission-free driving with fuel cell/battery-drive Improved & alternative fuels Efficient cars and trucks with efficient powertrains with or without hybrid modules Sustainable Mobility Today Future
Slide 26: Comprehensive approach to efficient driving
26 Gasoline engines Comprehensive approach to efficient driving With and without hybrid modules Sustainable Mobility Hybrid powertrain Mild/full hybrid Diesel engines Transmission Weight/energy management 2nd generation direct injection: V6/V8 CGI Start/Stop Heat management Energy optimization Vehic
Slide 27: Improved and alternative fuel
27 Improved and alternative fuel Biomass can help stretch oil resources • Synthetic fuel from biomass (e.g. wood) • Potential to cover 20% of the Diesel demand in the EU • Up to 90% less CO2-emissions • 50% less particulates • 90% less CO- and HC-emissions Sustainable Mobility Daimler-Choren coopera
Slide 28: Daimler worldwide leader in fuel cell experience
28 • First vehicle in 1994 • Stability in daily operation: first vehicle surpassed 100,000 km • Customer operation in different climate zones 60 Cars 37 Buses 3 Vans 1,642,450 km 48,000 hrs 2,000,000 km 130,000 hrs 64,000 km 2,300 hrs Daimler worldwide leader in fuel cell experience >100 Daimler veh
Slide 29: Mercedes-Benz Cars "Road to the Future"
29 Mercedes-Benz Cars “Road to the Future” Sustainable Mobility – Mercedes-Benz Cars 2007 2008 2009 2010 … •BLUETEC E-Class •BLUETEC ML/R/GL-Class •mhd/ed smart •Hybrid S-Class •Hybrid ML-Class •BLUETEC Hybrid S-/E-Class •New V-Engines •BLUETEC C-Class •Fuel Cell B-Class •DiesOtto •Other BLUETEC Hyb
Slide 30: Daimler Trucks and Buses leader in efficient drives
30 Daimler Trucks and Buses worldwide leader in efficient drives and alternative fuels Sustainable Mobility – Daimler Trucks • 100,000 Mercedes-Benz BLUETEC trucks • 900 Mercedes-Benz Citaro CNG-buses • 600 Mercedes-Benz Econic NGT trucks • 1,500 ORION Hybrid buses • 200 Mitsubishi Fuso Canter Eco H
Slide 31: CSR / Sustainability initiatives in 2007
31 CSR / Sustainability Manifold initiatives in 2007 40% of all apprenticeships of all German automotive manufacturers Highest health standards for employees (awarded by the EC) Measures to promote diversity among employees Day-care centers for children <3 years at 4 German sites Comprehensive measu
Slide 32: We want to achieve the following profitability targets
32 We want to achieve the following profitability targets Mercedes-Benz Cars Daimler Trucks Daimler Financial Services Return on Equity Summary >14 % Ø 9% Daimler Automotive Return on Sales Mercedes-Benz Vans Daimler Buses
Slide 33: We want to achieve the following profitability targets
33 We want to achieve the following profitability targets Mercedes-Benz Cars Daimler Trucks Daimler Financial Services Return on Equity Summary >14 % Ø 9% Daimler Automotive Return on Sales Mercedes-Benz Vans Daimler Buses
Slide 34: FY 2007 and Q4 Results
February 14, 2008 Annual Press Conference FY 2007 and Q4 2007 Results Bodo Uebber Member of the Board of Management Finance & Controlling and Daimler Financial Services
Slide 35: Important achievements in FY 2007
Important achievements in FY 2007 Improved profitability Significantly improved performance at Mercedes-Benz Cars Daimler Trucks increased earnings despite substantial downturn in the NAFTA region Daimler Financial Services generated solid earnings ratios despite set-up costs for a separate North Am
Slide 36: Transfer of majority in Chrysler to Cerberus
Transfer of majority in Chrysler to Cerberus As a consequence, substantially improved risk profile Negative cash impact of €0.5 billion Net profit impact from the transaction of €2.2 billion Risk from healthcare obligations and pensions transferred Guarantee of US-$1.0 billion pension obligation for
Slide 37: Key financials
Key financials 4.9 3.2 Net profit from continuing operations 4.0 3.8 Net profit 8.7 5.0 EBIT 12.9 9.9 Net liquidity industrial business (at period end) 7.6 2.7 Free cash flow industrial business 3.83 3.66 Earnings per share (in €) FY 2007 FY 2006 – in billions of € – 4
Slide 38: Mercedes-Benz Cars
Mercedes-Benz Cars Higher unit sales and revenue reflect success of new products Unit sales – in thousands of units – Revenue – in billions of € – FY 2006 FY 2007 FY 2006 FY 2007 1,252 1,293 51.4 52.4 337 365 14.4 13.7 Q1-3 / Q4 5
Slide 39: Mercedes-Benz Cars EBIT
Mercedes-Benz Cars + Higher unit sales and better mix + Efficiency enhancements + Extended use of production equipment + Restructuring expenses in FY 2006 — Exchange-rate effects — Financial support of suppliers EBIT increased mainly due to higher volume and substantially improved efficiency – in mi
Slide 40: Daimler Trucks
Daimler Trucks Growth in Europe and Latin America partially offset the strong decline in NAFTA and Japan Unit sales – in thousands of units – Revenue – in billions of € – FY 2006 FY 2007 FY 2006 FY 2007 516 468 31.8 28.5 Q1-3 / Q4 134 119 7.2 8.0 7
Slide 41: Daimler Trucks EBIT
Daimler Trucks + Improved mix and higher volume in Europe and Latin America + Efficiency enhancements + Extended use of production equipment + Sale of real estate in Japan + Changes in pension and healthcare plans — Lower sales in the NAFTA region and Japan — Expenses related to new emission standar
Slide 42: Daimler Financial Services
Daimler Financial Services Contract volume continued to grow in all regions New business – in billions of € – Contract volume – in billions of € – FY 2006 FY 2007 FY 2006 FY 2007 27.8 27.6 59.1 57.0 Q1-3 / Q4 7.0 7.1 9
Slide 43: Daimler Financial Services EBIT
Daimler Financial Services + Higher contract volume — Set-up costs for a separate financial services organization in the NAFTA region — Slightly higher costs of risk Lower EBIT mainly reflects burdens from setting up a new organization in the NAFTA region – in millions of € – EBIT FY 2006 EBIT FY 20
Slide 44: Mercedes-Benz Vans
Increase in sales reflects success of Sprinter and Vito/Viano vans Unit sales – in thousands of units – Revenue – in billions of € – FY 2006 FY 2007 FY 2006 FY 2007 257 289 8.3 9.3 Q1-3 / Q4 73 81 2.6 2.3 Mercedes-Benz Vans 11
Slide 45: Daimler Buses
Growth at Daimler Buses driven by Latin America and Eastern Europe Unit sales – in thousands of units – Revenue – in billions of € – FY 2006 FY 2007 FY 2006 FY 2007 36.2 39.0 4.0 4.4 Q1-3 / Q4 9.4 11.0 1.5 1.2 Daimler Buses 12
Slide 46: Vans, Buses, Other
Vans, Buses, Other + Higher sales at Mercedes-Benz Vans and Daimler Buses + Gain from transfer of interest in EADS — Portion in losses from Chrysler (incl. expenses for restructuring and the UAW contract) — Special income from sale of real estate and the Off-highway activities in 2006 EBIT increased
Slide 47: EBIT improved significantly in Q4 2007
EBIT improved significantly in Q4 2007 (492) (501) Vans, Buses, Other 109 147 Daimler Financial Services 1,426 978 Mercedes-Benz Cars 512 279 Daimler Trucks 1,393 550 Daimler Group (162) (353) Reconciliation / Elimination Q4 2007 Q4 2006 – in millions of € – 14
Slide 48: Value added of the Group
Value added of the Group (after taxes) – in millions of € – FY 2006 FY 2007 631 1,380 FY 2006 FY 2007 48,584 39,187 Value added Average net assets 15
Slide 49: Value added by divisions
Value added by divisions (before taxes) – in millions of € – FY 2006 FY 2007 915 3,892 Mercedes-Benz Cars FY 2006 FY 2007 1,107 1,447 Daimler Trucks FY 2006 FY 2007 218 33 Daimler Financial Serv. FY 2006 FY 2007 277 988 Vans, Buses, Other 16
Slide 50: Key balance-sheet and financial figures
Key balance-sheet and financial figures 12,912 9,861 Net liquidity 17,055 14,447 Gross liquidity 26.8% 16.5% Equity ratio 1) Daimler Group 7,637 2,679 Free cash flow (12-months period) 43.5% 27.1% Equity ratio 1) Industrial Business Dec. 31, 2007 Dec. 31, 2006 – in millions of € – 1) Excluding divid
Slide 51: Share buyback
50 million shares had been bought back by December 31, 2007, equivalent to an amount of €3.5 billion All these shares were canceled by the end of FY 2007 Share buyback will be continued today Share buyback will be continued ... 18
Slide 52: Net profit of the parent company Daimler AG
... on the basis of increased retained earnings at Daimler AG Net profit of the parent company Daimler AG increased to €12.4 billion, of which: €6.2 billion allocated to retained earnings €4.2 billion additionally allocated to retained earnings subject to the decision of the annual meeting €2.0 bill
Slide 53: Assumptions for the automotive markets in 2008
Passenger car and light truck markets: Weakening of the North American market is expected to continue Western European markets should perform at prior-year’s levels High growth rates are anticipated for the emerging markets Commercial vehicle markets: Cyclical recovery of the North American market W
Slide 54: Sales outlook FY 2008
Sales outlook FY 2008 Mercedes-Benz Cars Unit sales expected above the record levels of 2007 Daimler Trucks Increase in unit sales of Trucks NAFTA anticipated; Trucks Europe/Latin America and Trucks Asia slightly above 2007 levels Mercedes-Benz Vans Extension of the Sprinter model range should resul
Slide 55: Earnings outlook
Earnings outlook Mercedes-Benz Cars ... ... expects higher EBIT in 2008 and ROS of 10% on average as of the year 2010 at the latest. Daimler Trucks ... ... expects earnings to increase in 2008, reflecting further efficiency improvements and higher unit sales. Starting in 2010, the division expects a
Slide 56: Questions & Answers
February 14, 2008 Annual Press Conference FY 2007 and Q4 2007 Results Questions & Answers
Slide 57: Special items affecting EBIT
Special items affecting EBIT 73 271 73 185 Disposal of real-estate properties (114) – – – Restructuring program at EADS 1,573 519 12 (241) Gain / expense relating to the transfer of shares in EADS 86 (161) 86 (161) Adjustment of pension plans / healthcare obligations (82) – – – Financial support for
Slide 58: Liquidity
Liquidity December 31, 2007 – in millions of € – FS IB Group (36,151) 1,761 (54,967) 17,055 1,424 15,631 (49,063) 12,912 Net liquidity 0 1,761 Market valuation and currency hedges for financing liabilities (49,948) (5,019) Financial liabilities, net 148 1,276 Marketable securities and term deposits
Slide 59: Funding status of pension and healthcare benefits
Funding status of pension and healthcare benefits – continuing operations – 0.1 Plan assets (0.9) (0.9) Benefit obligations (15.7) (17.2) Benefit obligations (1.9) (3.9) Funded status Pension benefits 13.8 13.3 Plan assets (0.7) (0.8) Funded status 0.1 0.1 Reimbursement Medicare Act Healthcare benef
Slide 60: Disclaimer
Disclaimer 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. Th