Daimler continued along its successful growth path in the first half of 2017 and set new records for unit sales and revenue in the second quarter. In the months of April through June, Daimler sold 822,500 cars and commercial vehicles worldwide (+8%), which is another record for unit sales.
Contributions to the Group’s best-ever unit sales came from all automotive divisions, in particular the records set by Mercedes-Benz Cars (595,200 vehicles, +9%) and Mercedes-Benz Vans (103,400 vehicles, +4%) and the sales growth at Daimler Trucks (116,400 vehicles, +8%). Group revenue reached the best-ever figure of €41.2 billion and was thus 7% higher than in the second quarter of last year. Adjusted for exchange-rate effects, revenue increased by 5%.
The second quarter of this year had the strongest quarterly unit sales in the history of Mercedes-Benz Cars. Worldwide, 595,200 automobiles of the Mercedes-Benz and smart brand were sold in the months of April through June (+9%). Record unit sales were posted for example in Europe (+6%), the United Kingdom, France, Belgium, Switzerland and Sweden, as well as China including Hong Kong (+28%). Unit sales increased in Germany by 2%, in South Korea by 42% and in Australia by 22%. Second quarter unit sales in the United States were lower than last year (-10%), while unit sales increased in the other NAFTA countries (+8% in Canada and +57% in Mexico).
The Daimler Group achieved EBIT of €3,746 million in the second quarter of this year, which is a significant 15% higher than the EBIT of €3,258 million posted in the prior-year quarter. Net profit improved slightly to €2,507 million (Q2 2016: €2,452 million). Net profit attributable to the shareholders of Daimler AG amounted to €2,439 million (Q2 2016: €2,429 million), equivalent to earnings per share of €2.28 (Q2 2016: €2.27).
Mercedes-Benz revenue increased by 7% to €23.6 billion. In the second quarter of 2017, the division’s EBIT was €2,404 million, which is considerably higher than the prior-year figure of €1,410 million. Its return on sales was 10.2% (Q2 2016: 6.4%). The positive development of earnings in the second quarter of 2017 was influenced by growing unit sales of the new E-Class and the SUVs. Positive exchange-rate effects also had a favorable impact on EBIT. However, there were negative effects on earnings from advance expenditure for new technologies and future products. In the second quarter of the previous year, it was mainly expenses in connection with Takata airbags of €440 million and net expenses from the measurement of inventories of €284 million that had negative effects on earnings.
“We had an excellent second quarter. This strong core business is the best basis to exploit new business models around the CASE topics,” stated Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. CASE stands for the four strategic pillars of connectivity (Connected), autonomous driving (Autonomous), flexible use (Shared & Services) and electric drive (Electric), which Daimler is linking up intelligently. “Our strategy is taking effect. We have set ourselves ambitious goals. And we are achieving them – in terms of unit sales and profitability. Step by step, we are optimizing efficiency throughout the Group. The transformation of Daimler is going ahead at full speed. And we have everything we need for it: the resources to invest and the scope to innovate.”
The significant earnings growth at the Mercedes-Benz Cars division in the second quarter of 2017 was aided by the positive development of unit sales of the new E-Class and the SUV models. An additional factor is that special items had a negative impact on earnings in the second quarter of last year. Earnings at the Daimler Trucks division reflect expenses for customer-service measures at Mercedes-Benz Trucks, and despite efficiency gains, did not match the earnings of the prior-year quarter. Mercedes-Benz Vans and Daimler Buses achieved high levels of EBIT but lower than the amounts posted in the prior-year quarter. In the automotive business, the operating return on sales once more achieved its target at 9.2% (Q2 2016: 8.3%). The Daimler Financial Services division’s EBIT slightly surpassed the prior-year figure. Exchange-rate effects had a positive impact on operating profit at all divisions.
“We are successfully utilizing growth opportunities and making systematic use of business potential as well as the opportunities of digitization,” said Bodo Uebber, Member of the Board of Management of Daimler AG responsible for Finance & Controlling and Daimler Financial Services. “We will therefore invest more and comprehensively in the future, so from today’s perspective, investment in property, plant and equipment and research and development expenditure will be increased significantly this year and in the coming years. We have the financial resources that are required for this growth path.”
Free cash flow and net liquidity
In the first half of 2017, the free cash flow of the industrial business amounted to €3.0 billion (Q1-2 2016: €2.1 billion). This increase resulted primarily from the positive business performance and the development of working capital. A cash inflow of €0.4 billion resulted from the dividend distributed by Beijing Benz Automotive Co. (BBAC). The sale of real estate by Mitsubishi Fuso Truck and Bus Corporation at the Kawasaki site in Japan led to a cash inflow of €0.3 billion. Opposing effects resulted from increased investments in intangible assets and property, plant and equipment and from the acquisition of an interest in LSH Auto International Limited.
Compared with December 31, 2016, the net liquidity of the industrial business decreased from €19.7 billion to €18.4 billion. The dividend payment to shareholders of Daimler AG and exchange-rate effects at the balance-sheet dates led to a decrease in net liquidity that was partially offset by the positive free cash flow.
“On the basis of our financial strength, we undertake refinancing on the international money and capital markets at attractive conditions,” stated Bodo Uebber. “We use those funds for our automotive financial services, to make attractive offers for end-customers, dealerships and fleet managers, thus providing additional support for our growth path.”
In the first half of 2017, Daimler had a cash inflow of €10.7 billion from the issuance of bonds (Q1-2 2016: €12.6 billion). In June, Daimler AG issued a multi-tranche bond in the European capital market with a volume of €4.1 billion and maturities of up to 20 years. Furthermore, in early May, Daimler Finance North America LLC issued bonds with maturities of eighteen months, three years and five years in a total volume of $2.0 billion in the US capital market.