Statement of income of the Daimler Group
The Daimler Group’s revenue of €154.3 billion in 2020 was significantly below the prior-year figure (2019: €172.7 billion). Also adjusted for negative exchange-rate effects, it was significantly lower than in 2019. (See tables B.13 and B.14)
In the 2019 Management Report, we had forecasted revenue at the prior-year level for the Daimler Group. Due to the major impact of the covid-19 pandemic in the automotive segments, we adjusted this forecast in the context of our capital market reporting during 2020 to an expectation of revenue significantly below the prior-year level.
Cost of sales amounted to €128.7 billion in 2020, decreasing by 10.3 % compared with the previous year. The decrease in cost of sales was caused by production and cost adjustments in response to the covid-19 pandemic. On the other hand, expenses in connection with the adjustment and realignment of capacities within the global production network at the Mercedes-Benz Cars & Vans segment adversely affected cost of sales. Cost of sales increased at the Daimler Mobility segment due to higher expenses for credit-risk provisions and the impairment of software in the context of streamlining the IT-architecture.
In the prior-year period, a reassessment of risks in connection with ongoing governmental and court proceedings and measures taken with regard to Mercedes-Benz diesel vehicles in various regions had significant negative effects on earnings through cost of sales. Furthermore, expenses connected with an updated risk assessment for an expanded recall of Takata airbags in Europe and other markets and expenses in connection with terminating production of the X-Class had a negative impact on cost of sales in the previous year. (See table B.14)
|In millions of euros||% change|
|Mercedes-Benz Cars & Vans||98,576||106,897||-8|
|Daimler Trucks & Buses||34,671||44,429||-22|
|thereof United States||37,801||45,422||-17|
|Consolidated||Industrial Business||Daimler Mobility|
|In millions of euros|
|Cost of sales||-128,721||-143,580||-104,153||-118,626||-24,568||-24,954|
|General administrative expenses||-3,534||-4,050||-2,752||-3,139||-782||-911|
|Research and non-capitalized development costs||-6,116||-6,586||-6,116||-6,586||-||-|
|Other operating income/expense||1,280||-1,632||1,119||-2,517||161||885|
|Profit/loss on equity-method investments, net||797||479||1,157||1,245||-360||-766|
|Other financial income/expense, net||-354||-262||-323||-265||-31||3|
|Profit before income taxes||6,339||3,830||4,913||1,699||1,426||2,131|
|thereof attributable to non-controlling interests||382||332|
|thereof attributable to shareholders of Daimler AG||3,627||2,377|
|Earnings per share (in euros)
for profit attributable to shareholders of Daimler AG
Overall, gross profit in relation to revenue decreased from 16.9 % to 16.6 %.
The effects of the covid-19 pandemic and the measures taken in response led to cost reductions also in other functional-cost areas.
Selling expenses decreased by €1.7 billion to €11.1 billion. As a percentage of revenue, selling expenses decreased from 7.4 % to 7.2 %. (See table B.14)
At €3.5 billion, general administrative expenses decreased by €0.5 billion. As a percentage of revenue, general administrative expenses remained at the prior-year level of 2.3 % (2019: 2.3 %). (See table B.14)
Research and non-capitalized development expenditure of €6.1 billion in 2020 wasbelow the prior-year level (2019: €6.6 billion). It is mainly related to the development of new models, advance expenditure for the renewal of existing models, and the further development of fuel-efficient and environmentally friendly drive systems as well as safety technologies, automated and autonomous driving and the digital connectivity of our products. As a proportion of revenue, research and non-capitalized development costs increased from 3.8 % to 4.0 %. Further information on the Group’s research and development is provided in the chapter »Investment and research activities« of this Combined Management Report. (See table B.14)
Other operating income of €1.3 billion was above the level of the previous year (2019: expense of €1.6 billion). In 2019, it included significantly higher expenses in connection with ongoing governmental and court proceedings and measures relating to Mercedes-Benz diesel vehicles in various regions. Furthermore, the previous year included income of €0.7 billion from the merger of the business units for mobility services of the Daimler Group and the BMW Group. (See table B.14)
In 2020, profit from equity-method investments of €0.8 billion was above the prior-year level (2019: €0.5 billion). Earnings were boosted by a €0.5 billion reduction in the negative impact on earnings from the mobility services of the YOUR NOW group and a €0.2 billion increase in earnings from There Holding B. V. This was partially offset by an impairment loss of €0.3 billion on the equity interest in BAIC Motor Corporation Ltd. (BAIC Motor) in 2020. (See table B.14)
Other financial expense worsened from €0.3 billion to €0.4 billion. (See table B.14)
The Daimler Group achieved earnings before interest and taxes (EBIT) of €6.6 billion in 2020, which is significantly higher than in the previous year (2019: €4.3 billion). The Daimler Group’s adjusted EBIT amounted to €8.6 billion (2019: €10.3 billion). Net exchange-rate effects had a positive impact on operating profit. (See table B.14)
The reconciliation from EBIT to adjusted EBIT is shown in table B.16.
We had originally forecasted a significant increase in the EBIT of the Daimler Group. Due to the ongoing covid-19 pandemic, we adjusted this forecast in the context of our capital market reporting during 2020 to an expectation of EBIT at the prior-year level. Despite the difficult conditions, the Daimler Group was able to significantly exceed this expectation due to a strong fourth quarter.
Net interest expense improved by €0.2 billion to €0.3 billion (2019: €0.5 billion). (See table B.14)
The tax expense of €2.3 billion (2019: €1.1 billion) stated under income taxes increased mainly due to the increased profit before income taxes. The effective tax rate for 2020 was 36.8 % (2019: 29.3 %). In 2020, the impairment of deferred tax assets as well as non-tax-deductible expenses, mainly in connection with our shareholdings, led to an increase in the effective tax rate. (See table B.14)
Net profit of €4.0 billion is significantly above the prior-year figure (2019: €2.7 billion). Net profit of €0.4 billion is attributable to non-controlling interests (2019: €0.3 billion). Net profit attributable to the shareholders of Daimler AG amounts to €3.6 billion (2019: €2.4 billion), representing an increase in earnings per share to €3.39 (2019: €2.22). (See table B.14)
The calculation of earnings per share is based on an un-changed average number of outstanding shares of 1,069.8 million.
Further information on the individual items of the statement of income is provided in Notes 4 ff. of the Notes to the »Consolidated Financial Statements«.
Revenue and EBIT by segment
Due to the significant decrease in unit sales caused by the worldwide covid-19 pandemic, the revenue of the Mercedes-Benz Cars & Vans segment in the year 2020 fell by 8 % to €98,576 million (2019: €106,897 million). The segment’s revenue was therefore significantly lower than in the previous year, in line with our forecast as adjusted during 2020; in the 2019 Management Report, we had originally forecasted revenue at the prior-year level.
The decline in unit sales, particularly in Europe and North America, had a major negative impact on gross profit. On the other hand, there was a positive effect from a more favorable sales structure and improved pricing. Expenses for enhanced vehicle equipment and a higher level of depreciation reduced gross profit in relation to revenue, but this was offset by the efficiency measures introduced as a consequence of the covid-19 pandemic. As a result, gross profit in relation to revenue rose from 16.5 % to 17.6 %. In addition, the measures introduced, including the use of short-time working in Germany and continued successful cost discipline, led to cost reductions in the other functional cost areas.
The segment’s earnings were also reduced by restructuring expenses of €1,476 million. This includes expenses of €871 million for the adjustment and realignment of capacities within the global production network in connection with the intended sale of the car plant in Hambach (France) as well as capacity adjustments at the plants in Aguascalientes (Mexico), Tuscaloosa (USA) and Iracemápolis (Brazil). The restructuring expenses also included €605 million for personnel-cost optimization programs. Effects from ongoing governmental and court proceedings and measures taken relating to Mercedes-Benz diesel vehicles led to a reduction in earnings of €154 million. Earnings in the previous year were reduced primarily by individual items relating to ongoing governmental and court proceedings and measures taken relating to Mercedes-Benz diesel vehicles (€4,491 million) as well as expenses connected with an updated risk assessment for an expanded recall of Takata airbags (€941 million). Earnings in 2019 were also reduced by restructuring expenses in connection with terminating production of the X-Class (€828 million).
EBIT amounted to €5,172 million (2019: minus €109 million) and adjusted EBIT amounted to €6,802 million (2019: €6,151 million). The adjusted return on sales of 6.9 % was above the adjusted prior-year figure of 5.8 %. In the Management Report on the year 2019, an adjusted return on sales of between 4 % and 5 % was forecasted for the segment. Within the framework of our capital market reporting during 2020, we adjusted this forecast to the expectation of an adjusted return on sales of 4.5 % to 5.5 %. Due to a strong fourth quarter, the Mercedes-Benz Cars & Vans segment significantly exceeded this expectation. (See table B.15)
Due to the strong decrease in unit sales, the revenue of the Daimler Trucks & Buses segment decreased in the year 2020 by 22 % to €34,671 million (2019: €44,429 million). The segment achieved revenue significantly below the prior-year figure, thus confirming the forecast we made at the beginning of the year.
The development of revenue in 2020 was substantially adversely affected by declining unit sales in all regions, primarily due to contracting markets caused by the expected cycle as well as the covid-19 pandemic. There was a negative impact from a smaller contribution from the aftersales business due to weaker demand. Cost of sales was therefore significantly lower than in the previous year, and was also affected by additions to provisions for warranty claims. Gross profit in relation to revenue decreased from 18.5 % to 15.2 %. The measures initiated to adjust costs and capacities in response to the covid-19 pandemic, including the use of short-time working in Germany, led to cost reductions in all functional cost areas. In particular, there was a positive impact from a significant reduction in fixed costs, which was achieved through strict cost controls and the gradual implementation of restructuring measures. There was an opposing effect from expenses of €153 million for the optimization of personnel costs in all functional-cost areas.
EBIT amounted to €525 million (adjusted €678 million; 2019: €2,672 million). The segment’s adjusted return on sales was below the prior-year figure at 2.0 % (2019: 6.0 %). Daimler Trucks & Buses therefore confirmed the forecast as adjusted during the year in the context of our capital-market reporting due to the covid-19 pandemic of an adjusted return on sales of between 1 % and 2 %. In the Management Report on the year 2019, we had originally anticipated an adjusted return on sales for the segment of 5 %. (See table B.15)
|Industrial Business||Mercedes-Benz Cars& Vans||Daimler Trucks& Buses||Reconciliation|
|In millions of euros|
|Cost of sales||-104,153||-118,626||-81,194||-89,266||-29,400||-36,198||6,441||6,838|
|General administrative expenses||-2,752||-3,139||-1,458||-1,575||-1,351||-1,479||57||-85|
|Research and non-capitalized development costs||-6,116||-6,586||-4,808||-5,061||-1,381||-1,613||73||88|
The business development of the Daimler Mobility segment stabilized towards the end of the year despite the difficult market environment. However, new business was below the prior-year level and contract volume was therefore also lower than in 2019. The revenue generated by Daimler Mobility was also slightly lower than in the previous year and thus reached the level we forecasted after adjusting for the lower contract volume as a consequence of the covid-19 pandemic; we had originally forecasted revenue at the prior-year level.
Gross profit in relation to revenue was mainly impacted by an increase in the allowance for credit defaults against the backdrop of the economic development in connection with the covid-19 pandemic, as well as an impairment loss on capitalized software development costs in the context of optimizing the IT architecture. Although functional costs were affected by expenses of €67 million in connection with personnel cost optimization programs, positive effects occurred overall in all functional cost areas as a result of the measures initiated to improve the cost position. The decrease in other operating income was due to a positive effect of €718 million in 2019 from the merger of the mobility services of the Daimler Group and the BMW Group. Income from investments accounted for using the equity method included in particular the earnings of YOUR NOW Holding GmbH. Compared with the previous year, however, there was a €313 million lower adverse effect on earnings from restructuring measures in 2020.
EBIT amounted to €1,436 million in 2020 (2019: €2,140 million) and adjusted EBIT amounted to €1,595 million (2019: €1,827 million). Adjusted return on equity of 10.9 % was below the adjusted prior-year figure of 13.1 %. At the beginning of the year, we forecasted an adjusted return on equity of 12 %. We adjusted this during 2020 in the context of our capital-market reporting to the expectation of an adjusted return on equity of 9 % to 10 %. The Daimler Mobility segment exceeded this expectation.
The reconciliation of the divisions’ EBIT to Group EBIT comprises gains and/or losses at the corporate level and the effects on earnings of eliminating intra-Group transactions between the divisions.
Items at the corporate level resulted in expenses of €652 million (2019: €361 million), including the impairment of Daimler’s equity investment in BAIC Motor. Furthermore, expenses of €86 million in connection with cost-optimization programs are included. In the previous year, mainly expenses in connection with “Project Future” had a negative impact on EBIT.
The elimination of intra-Group transactions resulted in earnings of €122 million in 2020 (2019: expenses of €29 million).
The reconciliation from EBIT to adjusted EBIT is shown in table B.16.
|Mercedes-Benz Cars & Vans||Daimler Trucks & Buses||DaimlerMobility||Reconciliation||Daimler Group|
|In millions of euros|
|Legal proceedings (and related measures)||154||-||-||10||164|
|Return on sales/return on equity (in %)||5.2||1.5||9.8|
|Adjusted return on sales/return on equity (in %)1||6.9||2.0||10.9|
|Legal proceedings (and related measures) as well as Takata||5,432||-||-||16||5,448|
|Return on sales/return on equity (in %)||-0.1||6.0||15.3|
|Adjusted return on sales/return on equity (in %)1||5.8||6.0||13.1|
|1 Return on sales adjusted is calculated as the ratio of adjusted EBIT to revenue. Adjusted return on equity is determined as the ratio of adjusted EBIT to average quarterly equity.|
As described in the chapter »Performance Measurement System« in chart B.03, value added is calculated as the difference between the measure of earnings and the cost of capital. The measure of earnings for the reportable segments is EBIT and for the Group is net operating profit, which also includes earnings effects for which the segments are not accountable, such as income taxes and other reconciliation items. The cost of capital used in the calculation of value added is based on average net assets multiplied by the cost of capital rate.
Table B.17 shows value added for the Group and for the individual segments. The reconciliation of the segments’ EBIT to net operating profit as well as the average net assets are shown in tables B.18 and B.19. Table B.20 shows how net assets are derived from the consolidated statement of financial position.
The Daimler Group’s value added increased by €1.5 billion in 2020 but remained negative at minus €0.6 billion, representing a return on net assets of 7.0 % (2019: 4.8 %). The Group's cost of capital rate of 8 % was therefore not achieved. The positive development of value added was mainly due to the increase in the segments’ EBIT by €2.4 billion. In addition, the decrease of €3.9 billion in average net assets as a result of lower average inventories and higher average provisions for other risks positively impacted value added, but was partly offset by increased capitalized development costs.
At the Mercedes-Benz Cars & Vans segment, value added of €1.2 billion was significantly higher than the prior-year amount of minus €4.3 billion. This was primarily due to the positive earnings development. An additional positive impact on value added resulted from the decrease in average net assets by €2.3 billion, which was mainly caused by lower average inventories and higher average provisions for other risks. This was partly offset by the increased capitalized development costs.
Value added at Daimler Trucks & Buses fell sharply by €2.0 billion to minus €0.6 billion as a result of the EBIT development. This development was slightly offset by the significant decrease in average net assets to €9.5 billion, which was primarily the result of lower average inventories.
At the Daimler Mobility segment, value added of minus €0.3 billion was significantly below the prior-year level of plus €0.3 billion. The segment’s return on equity amounted to 9.8 % (2019: 15.3 %). The development of value added primarily reflects the decrease in earnings of €0.7 billion.
|In millions of euros||Change|
|Mercedes-Benz Cars & Vans||1,239||-4,317||+5,556|
|Daimler Trucks & Buses||-616||1,361||-1,977|
|In millions of euros||Change|
|Mercedes-Benz Cars & Vans||5,172||-109||+5,281|
|Daimler Trucks & Buses||525||2,672||-2,147|
|EBIT of the segments||7,133||4,703||+2,430|
|Net operating profit||4,199||3,057||+1,142|
|1 Adjusted for tax effects on interest income/expense.|
|In millions of euros||% change|
|Mercedes-Benz Cars & Vans||32,768||35,070||-7|
|Daimler Trucks & Buses||9,513||10,921||-13|
|Net assetsof the segments||56,882||59,952||-5|
|Assets and liabilities from income taxes3||2,088||2,720||-23|
|1 Total equity.|
|2 To the extent not allocated to the segments.|
|3 To the extent not allocated to Daimler Mobility.|