Cash flows
Cash provided by operating activities (See table B.24) amounted to €7.9 billion i
The lower profit before income taxes is primarily related to the non-cash-effective increases in provisions included in other operating assets and liabilities. Compared to the previous year, the lower operating profit led to lower income taxes paid, with a positive effect on the cash flow from operating activities. On the other hand, the fine of €870 million paid in conclusion of the administrative offense proceedings against
Cash used for investing activities (see table B.24) amounted to €10.6 billion (2018: €9.9 billion). The change compared with the previous year primarily reflects cash outflows (net) of €0.7 billion relating to the merger of the mobility services of Daimler Group and BMW Group. The main effect resulted from capital increases at the joint ventures. Furthermore, increased investments in intangible assets also affected cash used for investing activities. However, positive effects resulted from the acquisition and sale of marketable debt securities and similar investments conducted in the context of liquidity management. Compared to the previous year, there were higher total cash inflows (net) i
Cash provided by financing activities (see table B.24) amounted to €5.6 billion (2018: €13.2 billion). The decrease was primarily caused by lower net cash inflows from financing liabilities, especially in the context of refinancing the leasing and sales-financing business. There was also an impact from the introduction of lessee accounting and the associated inclusion in the cash flow from financing activities of payments on outstanding leasing liabilities.
B.24 Condensed statement of cash flows
Consolidated | Industrial Business | Daimler Mobility | ||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
In millions of euros | ||||||
Cash and cash equivalents at beginning of period | 15,853 | 12,072 | 12,799 | 9,515 | 3,054 | 2,557 |
Profit before income taxes | 3,830 | 10,595 | 1,699 | 9,215 | 2,131 | 1,380 |
Depreciation and amortization/impairments | 7,751 | 6,305 | 7,597 | 6,177 | 154 | 128 |
Other non-cash expense and income and gains/losses on disposals of assets | -737 | -1,050 | -824 | -1,557 | 87 | 507 |
Change in operating assets and liabilities | ||||||
Inventories | 99 | -3,850 | 1 | -3,738 | 98 | -112 |
Trade receivables | -346 | -884 | -410 | -779 | 64 | -105 |
Trade payables | -1,625 | 1,694 | -1,651 | 1,723 | 26 | -29 |
Receivables from financial services | -4,664 | -10,257 | -8 | -7 | -4,656 | -10,250 |
Vehicles on operating leases | -1,156 | -1,609 | 550 | 1,208 | -1,706 | -2,817 |
Other operating assets and liabilities | 5,641 | 877 | 5,789 | 1,067 | -148 | -190 |
Dividends received from equity-method investments | 1,202 | 1,380 | 1,201 | 1,304 | 1 | 76 |
Income taxes paid | -2,107 | -2,858 | -959 | -1,698 | -1,148 | -1,160 |
Cash used for/provided by operating activities | 7,888 | 343 | 12,985 | 12,915 | -5,097 | -12,572 |
Additions to property, plant and equipment and intangible assets | -10,835 | -10,701 | -10,645 | -10,534 | -190 | -167 |
Investments in and disposals of shareholdings | -1,225 | -417 | -582 | 14 | -643 | -431 |
Acquisitions and sales of marketable debt securities and similar investments | 1,054 | 471 | 883 | 505 | 171 | -34 |
Other | 399 | 726 | 358 | 708 | 41 | 18 |
Cash used for investing activities | -10,607 | -9,921 | -9,986 | -9,307 | -621 | -614 |
Change in financing liabilities | 9,404 | 17,456 | 6,760 | 8,889 | 2,644 | 8,567 |
Dividends paid | -3,740 | -4,220 | -3,725 | -4,215 | -15 | -5 |
Other transactions with shareholders | -36 | -10 | -26 | -20 | -10 | 10 |
Internal equity and financing transactions | – | – | -2,767 | -5,127 | 2,767 | 5,127 |
Cash used for/provided by financing activities | 5,628 | 13,226 | 242 | -473 | 5,386 | 13,699 |
Effect of foreign exchange rate changes on cash and cash equivalents | 121 | 133 | 112 | 149 | 9 | -16 |
Cash and cash equivalents at end of period | 18,883 | 15,853 | 16,152 | 12,799 | 2,731 | 3,054 |
Cash and cash equivalents increased by €3.0 billion compared with December 31, 2018, after taking currency-translation effects into account. Total liquidity, which also includes marketable debt securities and similar investments, increased by €2.1 billion to €27.5 billion.
The parameter used by Daimler to measure the financial capability of the Group’s industrial business is the free cash flow of the industrial business (see table B.25), which is derived from the reported cash flows from operating and investing activities. The cash flows from the acquisition and sale of marketable debt securities and similar investments included in cash flows from investing activities are deducted, as those securities are allocated to liquidity and changes in them are thus not a part of the free cash flow of the industrial business. In contrast, the recognition and measurement of right-of-use assets, which result from the change in lessee accounting and are largely non-cash items, are included in the free cash flow of the industrial business.
B.25 Free cash flow of the industrial business
2019 | 2018 | 19/18 | |
In millions of euros | Change | ||
Cash provided by operating activities | 12,985 | 12,915 | +70 |
Cash used for investing activities | -9,986 | -9,307 | -679 |
Change in marketable debt securities and similar investments | -883 | -505 | -378 |
Right-of-use assets | -987 | – | -987 |
Other adjustments | 239 | -205 | +444 |
Free cash flow of the industrial business | 1,368 | 2,898 | -1,530 |
Other adjustments mainly relate to the acquisitions and disposals of shareholdings within the Group resulting from “Project Future” and are reversed in the free cash flow of the industrial business. Furthermore, effects from the financing of dealerships and effects from internal deposits within the Group are adjusted. In addition, the calculation of the free cash flow includes the cash flows to be shown under cash provided by financing activities in connection with the acquisition or disposal of interests in subsidiaries without loss of control.
The free cash flow of the industrial business amounted to €1.4 billion i
The decrease of €1.5 billion in the free cash flow of the industrial business to €1.4 billion resulted from a number of factors, primarily the fine paid in conclusion of the administrative offense proceedings against
Apart from derivation on the basis of cash flows from operating and investing activities, the free cash flow of the industrial business can be derived from the cash flows before interest and taxes (CFBIT) of the automotive segments. (See table B.26)
B.26 Reconciliation from CFBIT to the free cash flow of the industrial business
2019 | |
In millions of euros | |
CFBIT automotive segments | 3,499 |
Income taxes paid | -959 |
Interest paid | -388 |
Other reconciling items | -784 |
Free cash flow of the industrial business | 1,368 |
The CFBIT of the automotive segments is derived from EBIT and the change in net assets and includes additions to right-of-use assets.
The reconciliation from the CFBIT of the automotive segments to the free cash flow of the industrial business also includes income taxes and interest paid. Other reconciling items include eliminations between the segments and amounts allocated to the industrial business but for which the automotive segments are not accountable.
Starting from financial yea
Table B.27 shows for each of the automotive segments the reconciliation from CFBIT to adjusted CFBIT, as well as the adjusted cash conversion rate.
B.27 Reconciliation CFBIT to adjusted CFBIT of the automotive segments
Mercedes-Benz Cars | Daimler Trucks | Mercedes-Benz Vans | Daimler Buses | Sum automotive segments | |
In millions of euros | |||||
2019 | |||||
CFBIT | 851 | 2,431 | -83 | 300 | 3,499 |
Legal proceedings (and related measures) | 653 | – | 482 | – | 1,135 |
CFBIT adjusted | 1,504 | 2,431 | 399 | 300 | 4,634 |
EBIT adjusted | 5,841 | 2,463 | 284 | 283 | 8,871 |
Cash conversion rate adjusted1 | 0.3 | 1.0 | 1.4 | 1.1 | |
1 Cash conversion rate adjusted is the relationship of CFBIT adjusted to EBIT adjusted. |
The adjustments from legal proceedings include all payments by the automotive segments in connection with ongoing governmental and legal proceedings and related measures taken with regard to Mercedes-Benz diesel vehicles.
I
The net liquidity of the industrial business (See table B.28) is calculated as the total amount as shown in the statement of financial position of cash, cash equivalents and the marketable debt securities and similar investments included in liquidity management, less the currency-hedged nominal amounts of financing liabilities.
B.28 Net liquidity of the industrial business
Dec. 31, 2019 | Dec. 31, 2018 | 19/18 | |
In millions of euros | Change | ||
Cash and cash equivalents | 16,152 | 12,799 | +3,353 |
Marketable debt securities and similar investments | 7,522 | 8,364 | -842 |
Liquidity | 23,674 | 21,163 | +2,511 |
Financing liabilities | -13,289 | -4,771 | -8,518 |
Market valuation and currency hedges for financing liabilities | 612 | -104 | +716 |
Financing liabilities (nominal) | -12,677 | -4,875 | -7,802 |
Net liquidity | 10,997 | 16,288 | -5,291 |
To the extent that the Group’s internal refinancing of the financial services business is provided by the companies of the industrial business, this amount is deducted in the calculation of the net debt of the industrial business.
Due to the introduction of lessee accounting according to IFRS 16 and the associated recognition of leasing liabilities, the net liquidity of the industrial business decreased by €3.2 billion to €13.1 billion at January 1, 2019. Since the beginning of the year, net liquidity decreased by a further €2.1 billion to €11.0 billion. The main driver of the decrease in net liquidity was the dividend payment to
Net debt at Group level, which primarily results from refinancing the leasing and sales-financing business, increased compared with December 31, 2018 by €14.1 billion to €133.7 billion. The effect resulting from the introduction of lessee accounting is €3.4 billion. (See table B.29)
B.29 Net debt of the Daimler Group
Dec. 31, 2019 | Dec. 31, 2018 | 19/18 | |
In millions of euros | Change | ||
Cash and cash equivalents | 18,883 | 15,853 | +3,030 |
Marketable debt securities and similar investments | 8,655 | 9,577 | -922 |
Liquidity | 27,538 | 25,430 | +2,108 |
Financing liabilities | -161,780 | -144,902 | -16,878 |
Market valuation and currency hedges for financing liabilities | 579 | -97 | +676 |
Financing liabilities (nominal) | -161,201 | -144,999 | -16,202 |
Net debt | -133,663 | -119,569 | -14,094 |