Annual Report 2020

Revenue and earnings

We assume that the Daimler Group will generate revenue in 2021 at significantly above the level of the previous year. This applies for both of our automotive divisions: Mercedes-Benz Cars & Vans and Daimler Trucks & Buses. The Daimler Mobility division expects its revenue to be slightly below the prior-year level.

Based on the expected significant growth in unit sales and revenue, we anticipate a significant increase in earnings for the Daimler Group in 2021. This development reflects two opposing effects: EBIT in 2020 was sharply reduced by the effects of the worldwide covid-19 pandemic; furthermore, there were costs from the initiated restructuring measures. On the other hand, we expect positive contributions to EBIT in 2021, in addition to the stimulus from the economic recovery, also from the efficiency and cost-cutting measures we have implemented. They include personnel and material cost savings, portfolio and model adjustments, the continuing implementation of platform strategies, and more stringent capital allocation.

Our ongoing measures to increase efficiency also involve optimizing the utilization of our production facilities. In the context of the regular review of useful lives, the useful lives of property, plant and equipment subject to scheduled depreciation were reassessed and, in some cases, extended at the end of 2020. These amended estimates will be applied as of January 1, 2021. The expected positive impact on earnings before interest and taxes (EBIT) amounts to €0.8 billion for 2021 and mainly relates to Mercedes Benz Cars & Vans.

On the basis of the market developments we anticipate, the aforementioned factors and the planning of our divisions, we assume that Group EBIT in 2021 will be significantly above the level of 2020, which was affected in particular by the covid-19 pandemic. Group EBIT in 2021 will include a positive contribution from the planned fuel-cell joint venture with Volvo, probably of between €1.2 billion and €1.3 billion, which is to be allocated equally to the Mercedes-Benz Cars & Vans and Daimler Trucks & Buses divisions. These transactions will have no effect on the adjusted earnings of the automotive divisions.

The individual divisions have the following expectations for adjusted returns in 2021:

Mercedes-Benz Cars & Vans: adjusted return on sales of 8-10 %

Daimler Trucks & Buses: adjusted return on sales of 6-7 %

Daimler Mobility: adjusted return on equity of 12-13 %

At Mercedes-Benz Cars & Vans, positive effects on the adjusted return on sales will result from rising volumes of unit sales, a more favorable sales structure, further improved pricing and the extended useful lives of property, plant and equipment. However, earnings in the 2021 financial year will be adversely impacted by rising functional costs compared with the previous year, which also featured strict cost-cutting measures.

At Daimler Trucks & Buses, the adjusted return on sales will reflect positive earnings effects from recovering markets, a more favorable unit-sales structure, further improved pricing, and the after-sales business. Measures to increase efficiency, such as material-cost savings, will have a supporting effect. There will be a negative impact in 2021 from increasing functional costs compared with the previous year, which strict savings measures.

Daimler Mobility anticipates positive effects on adjusted return on equity from lower credit-risk costs and improved operating profit in its business with mobility services. Opposing effects are likely to result from expenses for new project investments.

Unit sales
Free cash flow and liquidity