Revenue and earnings

We assume that the revenue of the Daimler Group will also increase slightly in 2019, as a result of the overall positive development of unit sales in the automotive divisions. Exchange-rate effects are likely to have a rather negative impact on the development of revenue in the year 2019. This applies above all to our business in China, as well as in various emerging markets and in the United Kingdom.

Our divisions have very attractive product ranges, which have been expanded and systematically renewed in recent years. We assume that Daimler will profit from this fact also under partially difficult market conditions, and will be able to strengthen or defend its position in major markets. At Mercedes-Benz Cars, additional revenue growth should be ensured in 2019 above all by the new A-Class and B-Class, and by the G-Class and the GLE. On the other hand, expected exchange-rate developments and lifecycle effects for some car models as well as a changed sales structure will have a dampening effect on revenue. Overall, Mercedes-Benz Cars anticipates a slight increase in revenue in 2019. Due to generally favorable market conditions and positive sales expectations, the Daimler Trucks, Mercedes-Benz Vans and Daimler Buses divisions plan to achieve significant revenue growth. Daimler Financial Services anticipates a slight increase.

The growth in unit sales and revenue that we anticipate should have a generally positive impact on earnings in 2018. We have laid the foundations for a lasting high level of earnings with various programs for improved profitability, which we already implemented in the years 2013 to 2015. Since then, we have continuously been taking further measures in all divisions for the long-term and structural optimization of our business system. At Mercedes-Benz Cars, for example, we aim to achieve efficiency improvements in the context of the F4L (Fit for Leadership) program in an amount of €4 billion by 2025. Daimler Trucks is also working continuously on efficiency improvements. In combination with the cost optimizations we have so far planned and partially already implemented, we have achieved profit-effective improvements for Daimler Trucks in an amount of €1.4 billion, which will become fully effective in the year 2019. We are standardizing and modularizing our production processes throughout the Group. In this context, we are making intelligent use of vehicle platforms, allowing us to achieve further cost advantages. In parallel, we are pushing forward with digital connectivity in all divisions and at all stages of the value chain – from development to production to sales and service. In this way, we are opening up additional scope to become even faster, more flexible and more efficient – to the benefit of our customers.

However, earnings will be reduced by the continuation of very high expenditure: for our model offensive, for innovative technologies (especially for reducing fuel consumption and for electrification), for the digitization of our products and processes, and for the expansion and modernization of our worldwide production capacities. Furthermore, rising raw-material prices are leading to a significant increase in material costs, and exchange-rate effects are also likely to be negative overall. Another factor is that for the year 2019, a mid-three-digit million amount is planned at Group level for the implementation of the new corporate structure “Project Future”. (See Objectives and Strategy)

On the basis of the market developments we anticipate, the aforementioned factors and the planning of our divisions, we assume, however, that Group EBIT in 2019 will be slightly above the level of the previous year. It will also include significant positive effects on assets and earnings that we expect at the Daimler Financial Services division from the merger of its mobility services with those of the BMW Group.

  • The individual divisions have the following expectations for returns in 2019:
  • Mercedes-Benz Cars: return on sales of 6 % to 8 %
  • Daimler Trucks: return on sales of 7 % to 9 %
  • Mercedes-Benz Vans: return on sales of 5 % to 7 %
  • Daimler Buses: return on sales of 5 % to 7 %
  • Daimler Financial Services: return on equity of 17 % to 19 %

At Mercedes-Benz Cars, positive effects will result from the anticipated growth in unit sales. There will be negative effects, however, from currency exchange rates and the continuation of very high expenditure for new technologies and vehicles. In addition, rising raw-material prices will lead to a significant increase in material costs.

Daimler Trucks, Mercedes-Benz Vans and Daimler Buses should profit from rising unit sales and the efficiency-enhancing measures. A negative impact is likely also in these divisions from the development of prices in the raw-material markets. Furthermore, earnings at Daimler Trucks are likely to be impacted by higher expenditure for new technologies and future Products.

The return on equity expected at Daimler Financial Services on the one hand takes into consideration significant positive effects on assets and earnings from the planned merger of the mobility services of Daimler and BMW. On the other hand, we expect the division’s earnings to be reduced by the normalization of credit-risk costs and further investment in advancing digitization and mobility services. Further growth in contract volume should have a positive impact on earnings.

Free cash flow and liquidity
Unit sales