Consolidated statement of income

The Group’s total revenue increased by 2.5 % to €153.3 billion in 2016; adjusted for exchange rate effects, it increased by 3.3 %. The revenue growth reflects the demand for our products at Mercedes-Benz Cars and Mercedes-Benz Vans, as well as the increased contract volume at Daimler Financial Services. Further information on the development of revenue is provided in the  Business development section of this Management Report. (See B.18)

Cost of sales amounted to €121.3 billion in 2016, increasing by 2.8 % compared with the previous year. The rise in cost of sales was caused by higher business volumes and consequentially higher material expenses. Personnel expenses and depreciation of equipment on operating leases also increased. Further information on cost of sales is provided in Note 5 of the Notes to the Consolidated Financial Statements. (See B.18)

Gross profit therefore increased by 1.6 % overall.

B.18 Consolidated statement of income

  2016 2015 16/15
In millions of euros     % change
Revenue 153,261 149,467 +3
Cost of sales1 -121,298 -118,017 +3
Gross profit 31,963 31,450 +2
Selling expenses -12,226 -12,147 +1
General administrative expenses1   -3,419 -3,363 +2
Research and non-capitalized development costs   -5,257 -4,760 +10
Other operating income 2,350 2,114 +11
Other operating expense -1,298 -555 +134
Share of profit from equity-method investments, net   502 464 +8
Other financial expense, net 275 -27 .
Interest income 230 170 +35
Interest expense -546 -602 -9
Profit before income taxes 12,574 12,744 -1
Income taxes -3,790 -4,033 -6
Net profit 8,784 8,711 +1
thereof attributable to non-controlling interests   258 287 -10
thereof attributable to shareholders of Daimler AG   8,526 8,424 +1

1 In the year 2015, €347 million was reclassified from general administrative expenses into cost of sales (see Note 5 of the Notes to the Consolidated Financial Statements).

Due to the growth in unit sales, selling expenses increased by €0.1 billion to €12.2 billion. In addition, there were higher expenses for marketing. As a percentage of revenue, selling expenses decreased from 8.1 % to 8.0 %. (See B.18)

General administrative expenses of €3.4 billion were at the same level as in the previous year (2015: €3.4 billion). As a percentage of revenue, general administrative expenses remained unchanged compared with the previous year at 2.2 %. (See B.18)

Research and non-capitalized development costs increased by €0.5 billion to €5.3 billion in 2016. They were 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, autonomous driving, and the digital connectivity of our products. As a proportion of revenue, research and non-capitalized development costs increased from 3.2 % to 3.4 %. Further information on the Group’s research and development costs is provided in the “Research and development” section of the “Sustainability” chapter of this Management Report. (See B.18)

Other operating income increased to €2.4 billion (2015: €2.1 billion). Other operating expense increased significantly in the year 2016 to €1.3 billion (2015: €0.6 billion), due in particular to expenses connected with legal proceedings of €0.4 billion. Further information on the composition of other operating income and expense is provided in Note 6 of the Notes to the Consolidated Financial Statements. (See B.18)

In 2016, our share of profit from equity-method investments amounted to €0.5 billion and was at the prior-year level (2015: €0.5 billion). The negative impact on earnings of €0.2 billion from the impairment of the shares in BAIC Motor was almost fully offset by the improved earnings from Beijing Benz Automotive Co., Ltd. (BBAC). (See B.18)

Other financial expense/income increased from an expense of €27 million to income of €0.3 billion. This significant increase is primarily the result of recognizing a gain of €0.6 billion from the contribution of the equity interests in Renault and Nissan at fair value into the pension-plan assets. Those gains were previously presented within other comprehensive income/loss. (See B.18)

Net interest expense improved by €0.1 billion to €0.3 billion (2015: €0.4 billion). (See B.18)

The tax expense of €3.8 billion (2015: €4.0 billion) stated under income tax expense decreased at a higher rate than profit before income taxes. The effective tax rate for 2016 was 30.1 % (2015: 31.6 %). This was mainly due to the contribution of our shares in Renault and Nissan into the pension-plan assets. The gain resulting from the contribution was largely tax free. Adjusted for this gain, profit subject to normal income taxes decreased in 2016 compared with the previous year, which is the reason for the lower tax expense. (See B.18)

Net profit for the year amounts to €8.8 billion (2015: €8.7 billion). Net profit of €0.3 billion is attributable to non-controlling interests (2015: €0.3 billion). Net profit attributable to
the shareholders of Daimler AG
amounts to €8.5 billion (2015: €8.4 billion), representing earnings per share of €7.97 (2015: €7.87). (See B.18)

The calculation of earnings per share (basic) is based on an unchanged average number of outstanding shares of 1,069.8 million.