Annual Report 2019

The profitability of Daimler AG in the 2019 financial year was affected by the hive-down of business operations to Mercedes-Benz AG and Daimler Truck AG. The change in profitability resulted in particular from the decrease in financial income of €7.9 billion to a financial expense of €0.5 billion, as well as by the lower tax expense of €1.1 billion. (See table B.37)

B.37 Condensed income statement of Daimler AG

Daimler AG generated revenue of €2.0 billion primarily from the provision of services to companies of the Group (2018: €112.5 billion). The decrease in revenue was almost solely the result of hiving down the business operations to Mercedes-Benz AG and Daimler Truck AG.

Cost of sales comprises the services provided to Group companies to generate sales revenue and, due to the new management holding-company function, decreased to €2.0 billion (2018: €103.2 billion).

Due to the new corporate structure of Daimler AG, no selling expenses were incurred in 2019 (2018: €7.9 billion).

General administrative expenses amounted to €1.0 billion (2018: €2.3 billion). They include costs in connection with “Project Future” amounting to €0.2 billion. The decrease in general administrative expenses is caused by the hive-down.

Other operating expense amounted to €0.3 billion (2018: €0.3 billion) and primarily comprises expenses of €0.2 billion from increases in provisions for Group-external derivatives of the vehicle business.

Financial income fell by €7.9 billion to a financial expense of €0.5 billion, primarily due to a decrease of €11.8 billion in income from investments in subsidiaries and associated companies. This was mainly the result of expenses from the reassessment of risks in connection with ongoing governmental and legal proceedings and measures relating to Mercedes-Benz diesel vehicles in various regions and markets, as well as expenses in connection with an updated risk assessment for an expanded recall of Takata-Airbags, which led to a loss transfer from the affected company. On the other hand, interest expense decreased by €4.2 billion, primarily in connection with company pensions (€3.8 billion). This positive effect was mainly the result of lower expenses from the change in the discount rate and the compounding of the retirement benefit obligation due to the transfer of pension obligations to Mercedes-Benz AG and Daimler Truck AG, as well as the increased return on the special-purpose assets compared with 2018. In addition, the contribution of pension obligations and special-purpose assets to Daimler Pensionsfonds AG resulted in a one-time interest expense in 2018.

The income tax expense amounted to €0.0 billion (2018: €1.1 billion). The decrease is due to the tax-loss situation of the corporate group for tax purposes.

Net loss amounts to €1.7 billion (2018: net profit of €5.0 billion). This result is thus significantly below the expectation stated in the Outlook chapter of Annual Report 2018. This development is primarily due to the stronger than expected decrease in financial income, which was mainly caused by the lower income from subsidiaries and associated companies due to loss transfers from major subsidiaries.

The economic situation of Daimler AG in its management holding-company function depends mainly on the development of its subsidiaries. Daimler AG participates in the operating results of its subsidiaries through dividend distributions and profit-and-loss transfers. The economic situation of Daimler AG is therefore fundamentally the same as that of the Daimler Group, which is described in the chapter »Overall Assessment of the Economic Situation«.