Archive for October 2011

Daimler remains on course: very successful third quarter, Group EBIT from ongoing business of €2,110 million

Daimler AG (stock-exchange symbol DAI) continued its successful course in the third quarter of 2011. Group EBIT amounted to €1,968 million (Q3 2010: €2,418 million). Adjusted for special factors, however, EBIT from the ongoing business of €2,110 million was higher than in the prior-year period (Q3 2010: €2,022 million).

Net profit for the period was €1,360 million (Q3 2010: €1,610 million) and earnings per share amounted to €1.21 (Q3 2010: €1.44).

The development of earnings in the third quarter of 2011 primarily reflects the higher vehicle shipments by all divisions. As already announced in the second quarter, EBIT at Mercedes-Benz Cars was impacted by changes in the product mix and by charges due to the upcoming model changes. All other divisions posted higher earnings than in the prior-year period.

“Daimler operated very successfully also in the third quarter. All divisions developed as we expected,” commented Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. “Our company is extremely well positioned in this jubilee year and has a very sound balance sheet. All the divisions are pursuing their goals very consistently and are right on track. At the same time, we are more flexible than ever before, so that we can react quickly to future developments,” Zetsche pointed out. He affirmed the forecast for full-year 2011: “We continue to expect Group EBIT from the ongoing business to very significantly exceed the level of 2010.”

Net profit for the third quarter of 2011 includes charges from the impairment of Daimler’s investments in Renault and Kamaz of €110 million and €23 million respectively. The investments had to be impaired to their fair values due to the sharp fall in both companies’ share prices.

The special factors that affected EBIT in the third quarter are shown in the table on page 9.

Total unit sales up by 11% in third quarter

In the third quarter of 2011, Daimler sold 525,500 cars and commercial vehicles worldwide, surpassing the figure for the prior-year period by 11%.

Group revenue increased significantly by 5% to €26.4 billion (Q3 2010: €25.1 billion). Adjusted for exchange-rate effects, the increase was 8%.

The net liquidity of the industrial business amounted to €10.4 billion at September 30, 2011 (December 31, 2010: €11.9 billion). Excluding the increase in our investment in Tognum and the contributions to our pension funds, the free cash flow of the industrial business was also significantly positive at €1.5 billion.

At the end of the third quarter, Daimler employed 269,887 people worldwide (September 30, 2010: 259,943). Of that total, 167,948 were employed in Germany (September 30, 2010: 164,589).

Details of the divisions

Mercedes-Benz Cars continued its positive business development and achieved a new record for unit sales in a third quarter of 337,200 vehicles (Q3 2010: 317,500). The Mercedes-Benz brand also set a new third-quarter record with sales of 315,400 units (Q3 2010: 294,400). The division’s revenue increased to €13.8 billion (Q3 2010: €13.7 billion).

The division achieved EBIT of €1,108 million, despite a large number of factors with a negative impact on earnings (Q3 2010: €1,299 million). The division’s return on sales was 8% (Q3 2010: 9.5%). Record unit sales in the third quarter were offset in particular by changes in the product mix, as well as by the impact of higher material costs, exchange-rate movements, upcoming model changes and increased research and development expenses. The high quality of the products led to lower warranty expenses.

Daimler Trucks also continued its successful business development and increased its unit sales by 22% compared with the third quarter of last year to sell 115,600 vehicles. The division’s revenue grew to €7.6 billion (Q3 2010: €6.4 billion).
Daimler Trucks’ EBIT amounted to €555 million and its return on sales was 7.3% (Q3 2010: €496 million and 7.7%).

The positive development of earnings is primarily due to substantial growth in unit sales compared with the prior-year period. Sales growth was particularly strong in the NAFTA region, Europe and Latin America. There were opposing, negative effects on third-quarter earnings from increased material costs, high advance expenditure for the current product offensive and the impairment of the equity interest in Kamaz.

Mercedes-Benz Vans increased its unit sales by 18% to 63,500 vehicles (Q3 2010: 53.700). Revenue of €2.2 billion was also significantly higher than in the third quarter of last year (€1.9 billion).

The division achieved third-quarter EBIT of €200 million (Q3 2010: €122 million). Its return on sales improved to 9%, compared with 6.4% in the prior-year period.
The main drivers of the positive earnings trend were the ongoing market recovery and significantly higher unit sales, especially in Germany and the United States. The excellent market reaction to the new generations of the Vito and Viano also made a significant contribution. Earnings were additionally boosted by better pricing. On the other hand, the division’s EBIT was negatively affected by higher material costs.

Daimler Buses increased its unit sales to 9,200 complete buses and chassis (Q3 2010: 9,100), mainly because of the positive development of chassis sales. Revenue of €1,041 million was also higher than in the prior-year period (Q3 2010: €1,007 million).

The division achieved EBIT of €25 million (Q3 2010: €11 million). Its return on sales therefore increased from 1.1% to 2.4%. As well as the overall increase in unit sales, this positive earnings development was caused by positive exchange-rate effects.

Daimler Financial Services’ contract volume in the sales-financing and leasing business amounted to €65.8 billion at the end of the third quarter, which is 3% higher than at the end of 2010. Adjusted for exchange-rate effects, contract volume increased by 6%. New business of €8.6 billion was 18% higher than in the third quarter of last year.

With EBIT of €337 million in the third quarter of 2011, the division surpassed its earnings of €317 million in the prior-year period. The improvement in earnings was mainly caused by lower provisions for risks and an increased contract volume. There were opposing, negative effects on earnings from higher expenses in connection with the repositioning of business activities in Germany.

The divisions’ EBIT is reconciled to Group EBIT. This reconciliation primarily reflects the proportionate share of the results of the equity-method investment in EADS as well as other gains and losses at the corporate level.

Items accounted for at the corporate level resulted in a total expense of €250 million (Q3 2010: income of €191 million), mainly reflecting the impairment of the investment in Renault by an amount of €110 million.

In the third quarter Daimler and Rolls-Royce Holdings plc have received all the relevant regulatory approvals for the takeover of Tognum AG. The public tender offer made by Engine Holding GmbH, in which Daimler and Rolls-Royce each hold 50%, was closed in September 2011. At the end of the third quarter, Engine Holding held approximately 98% of the shares in Tognum AG. This business is allocated to the Daimler Trucks division.


On the basis of current estimates, the Daimler Group continues to assume that it will post EBIT from the ongoing business in 2011 that will be very significantly higher than the level of 2010. The course of business so far this year shows that the Group continues to make good progress towards achieving its targeted rates of return on a sustained basis as of the year 2013. Those targets for return on sales are 10% for Mercedes-Benz Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for Daimler Buses; the target for return on equity for Daimler Financial Services is 17%. The targets are based on the assumption of a stable global economic and political environment and intact automotive markets.

Based on the divisions’ planning, further growth in total revenue to significantly more than €100 billion is expected for full-year 2011. That growth will probably be driven by all of the automotive divisions.

Total unit sales will also increase significantly (2010: 1.9 million vehicles). Unit sales in 2011 are expected to be higher than in the prior year for all divisions.

In view of the continuation of generally good market prospects combined with numerous model changes and new products, Mercedes-Benz Cars assumes that the Mercedes-Benz brand will further increase its unit sales to a new record in 2011. Thanks to an up-to-date and competitive model range, the division will profit also in the year 2011 from strong demand for its numerous new models in the C-Class segment and from the continuing market success of its SUVs. In September, shipments of the new M-Class started in the United States. The roadster version of the Mercedes-Benz SLS AMG will follow in the fourth quarter. And in November, the new B-Class will be launched – the first of five new models in the compact-car segment.

On the engines side, Mercedes-Benz Cars is introducing its particularly fuel-efficient four, six and eight-cylinder engines and the eco-start-stop technology in additional models. With the new generation of the C-Class, for example, the C 220 CDI is available with fuel consumption of just 4.4 liters per 100 kilometers and CO 2 emissions of 117 grams per kilometer.

For the smart brand, unit sales are anticipated at roughly the same level as in 2010 due to the full availability of the new generation of the smart fortwo.
Daimler Trucks expects to post significant growth in unit sales in full-year 2011. The need to catch up in both the European market and the NAFTA region is the main reason for the strong revival of demand compared with last year. Reconstruction activities in Japan following the natural disaster this March are boosting the demand for transport in that country. This is supporting the trend of sales returning to their levels of before the disaster.

The so-called RIC markets (Russia, India and China) are growing dynamically and Daimler Trucks is expanding its production capacities accordingly: In India, BharatBenz will open its truck plant in April 2012; in Russia, Daimler Trucks is broadening its cooperation with Kamaz; and in China, Beijing Foton Daimler Automotive Co., Ltd. (BFDA) has obtained final approval from the authorities for the joint venture between Daimler and Foton.

The order situation confirms the expectations for this year: Orders received for 107,200 units in the third quarter remained at a high level, and the order backlog is significantly larger than a year ago. The division anticipates unit sales in the fourth quarter at a higher level than in the prior-year period.

Due to the ongoing market recovery, Mercedes-Benz Vans also expects to achieve growth in unit sales in its key markets in full-year 2011. In Western Europe, the division will defend its leading market position for medium-sized and large vans and will participate in the market’s growth. It expects to see significant increases in unit sales particularly in the United States and Eastern Europe. Furthermore, increased production capacities in Argentina will additionally boost the growth in Latin America.

Daimler Buses assumes it will sell more than 40,000 complete buses and bus chassis in the year 2011. There will be a structural shift from complete buses towards bus chassis.

Daimler Financial Services anticipates growth in its worldwide new business in full-year 2011. After adjusting for exchange-rate effects, contract volume should increase again in the fourth quarter. The division expects a decrease in worldwide credit-risk costs in the full year.

Due to the strong demand for its products, Daimler assumes that its worldwide workforce will expand this year compared with the end of 2010.

The special factors listed in the following table affected EBIT in the third quarters of 2011 and 2010:
Source: Daimler AG

Copyright © 2011, Mercedes-Benz-Blog. All rights reserved.

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Indian F1 Grand Prix 2011: Race Report - Jenson P2, Lewis P7 (VMM)

- MP4-26A-01
- Started: 4th
- Finished: 2nd
- Fastest lap: 1m27.967s (+0.718s, 4th)
- Pitstops: Two: laps 18 and 46 (Op-Op-Pr)
- 2011 points: 240 (2nd)

“In terms of team effort, we did everything right today – our car just wasn’t quite quick enough to actually win.

“I got a good start, made up places on the first lap and then settled down to keep Mark [Webber] behind me for five or six laps. Eventually, I think we ‘broke’ his rear tyres, which enabled me to establish a gap. Then I could set about Seb [Vettel] – but it was very difficult to close him down.

“At the final stop, it was a risk going to the harder tyre earlier than Seb, but we had to give it a go and it worked pretty well as I was able to close him down by a further three seconds. My car felt really good: before Seb could find his rhythm on the Prime, I was able to get the gap down to 2.8 seconds, but it wasn’t quite enough.

“Still, this was a very good result for us – and I think we delivered the maximum possible. I loved the whole experience this weekend. And I think every driver will be excited about coming back here because it’s such a phenomenal circuit; fast and flowing with a bit of everything. It gets a big tick from me.

“The Indian people have really welcomed us to their country; I’ve never seen so many people smiling before. And the crowd has been wonderful. I hope that Formula 1 grows in India in the future and that we get an even bigger crowd here next year.”

- MP4-26A-03
- Started: 5th
- Finished: 7th
- Fastest lap: 1m28.721s (+1.472s, 9th)
- Pitstops: Three: laps 16, 24 and 45 (Op-Op-Op & front wing- Pr)
- 2011 points: 202 (5th)

“The contact with Felipe [Massa] was just one of those things. I really didn’t feel like I was at fault – it was a racing incident.

“On the grid, just before the one minute’s silence, he and I were standing next to each other and I put my arm around him and told him: ‘Have a great race today.’ I’ve still got great respect for him.

“During the race, it felt like there was a vibration in the car through the right-handers: it felt like the floor was scraping on the ground, in fact. I was pushing as hard as I could, but couldn’t find the performance, so we’ll have to look into that.

“It’s been an eventful year, but there are more races ahead and I’ll try to score as many world championship points as possible in both of them. Jenson did a great job today, so clearly we were quick enough. I just need to try to pick up on that for the next race.”

Team principal, Vodafone McLaren Mercedes

“Jenson made a great start and then drove a brilliant first few corners, working his way from fourth on the grid to second by the end of the first lap.

“He followed that with a truly excellent race-long performance, managing tyre wear where necessary yet still managing to keep up impressive race pace throughout. He didn’t ever have quite enough race pace to mount a concerted attack on Seb, but he got the maximum out of his car and beat everyone else fair and square.

“Lewis had a frustrating afternoon, but recovered well from his coming-together with Felipe to score a very useful half-dozen world championship points. We don’t yet know whether contact with the Ferrari caused damage to Lewis’s car – other than to the nosecone, obviously, which we changed in the pits – but, as I say, as a result of the 24 world championship points that he and Jenson notched up today, Vodafone McLaren Mercedes has now secured second place in the 2011 Constructors’ World Championship. It’s always our aim to go one better than that – to win – and second isn’t good enough – but we’re pleased to have consolidated that position nonetheless.

“Last but far from least, I want to say that I thought the 2011 Indian Grand Prix was a fantastic success: a glittering spectacle and a marvellous addition to the international sporting calendar. Next, we go to Abu Dhabi, and then to Brazil, and we at Vodafone McLaren Mercedes will be doing our utmost to win both those grands prix.”

* Official photos and report courtesy of VODAFONE MCLAREN MERCEDES *

Copyright © 2011, Mercedes-Benz-Blog. All rights reserved.

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Indian F1 Grand Prix 2011: Qualifying Report - Jenson P4, Lewis P5 (VMM)

- MP4-26A-01
- P3 programme: 2nd, 1m25.191s (0.367s), 15 laps
- Qualifying:
- Q1: 3rd, 1m26.225s (on Options)
- Q2: 5th, 1m25.299s (on Options)
- Q3: 5th overall*, 1m24.950s (on Options)

* will start fourth

“The car felt great this morning but I couldn’t find any grip this afternoon, particularly on the Prime tyre. So we need to work out why we can’t find that balance because I want to try to improve things for tomorrow.

“I struggled with traffic all afternoon – it was difficult to find a clear lap, and, when I did, I’d taken too much out of my tyres already. On my final run, I saw Felipe [Massa] heading into the gravel as I came up to him. I definitely would have been quicker on that run, but I got into the yellow flag zone, saw his car, spotted the smoke and backed out of it a little bit. I definitely lost time in the sector – the data showed that I was 14km/h down in fact.

“I hope I can take the car I had yesterday, as opposed to the car I had this afternoon, into the race. It felt stronger on high-fuel during Friday running, so hopefully we can find that again tomorrow.”

- MP4-26A-03
- P3 programme: 2nd, 1m25.288s (+0.464s), 16 laps
- Qualifying:
- Q1: 8th, 1m26.563s (on Primes)
- Q2: 2nd, 1m25.019s (on Options)
- Q3: 2nd overall*, 1m24.474s (on Options)

* will start fifth following three-place grid penalty

“To be able to split the Red Bulls on qualifying pace is something that everybody in the team should feel proud about. In fact, I’ve been really happy with my qualifying performance throughout the whole year – it’s been getting more and more consistent. On my last run, I was only a tenth down going into the penultimate corner, but I chose to abort the lap and save the tyres for tomorrow as it’s going to be a long race.

“It’s a little bit unfortunate to have a grid penalty, but that’s life. I think we’ve got good pace, but it’s going to be a long race. Still, with the long, wide straights and two DRS zones, overtaking should be easier here than it is at some of the other circuits, so I’m optimistic about what we can do around here tomorrow.

“I also think it’s cool that you throw up a bit of dust when you go off-line – that’s how racing should be: there should be grass and dirt when you go off the track.

“Finally, I want to say a big thank-you to the organisers. This circuit is smooth, fast and flowing. It’s beautiful, in fact; the facilities are fantastic and the people have been extremely welcoming. This is one of the best circuits in the world and it’s definitely a race people should come to visit.”

Team principal, Vodafone McLaren Mercedes

“Lewis drove very well in qualifying this afternoon, his best lap-time eclipsed by only that of Seb [Vettel], but he won’t start tomorrow’s race from the front row owing to the three-grid-position penalty he incurred yesterday morning.

“Jenson’s efforts were frustrated in the last moments of this afternoon’s qualifying session by yellow flags deployed as a result of Felipe’s accident, causing him to lift during what would otherwise have been a pretty quick lap.

“But this circuit is a great racetrack, our drivers are brilliant racers, and I’m sure that both of them will be aiming to score very heavily tomorrow. As a result, I expect the first ever Indian Grand Prix to be a fabulous race.”

* Official photos and report courtesy of VODAFONE MCLAREN MERCEDES *

Copyright © 2011, Mercedes-Benz-Blog. All rights reserved.

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