Annual Report 2019

As described in the »Performance measurement system« section of the Corporate Profile chapter in graphic B.03, the cost of capital is the product of net assets and cost of capital expressed as a percentage, which is subtracted from earnings in order to calculate value added. Tables B.21 and B.22 show value added and net assets for the Group and for the individual divisions. Table B.23 shows how net assets are derived from the consolidated statement of financial position.

B.21 Value added

B.22 Net assets (average)

B.23 Net assets of the Daimler Group at year-end

The Group’s value added decreased by €5.7 billion to minus €2.0 billion in 2019, representing a return on net assets of 4.8 % (2018: 14.8 %). The minimum required rate of return of 8 % was therefore not achieved in the year under review. The significant decrease in value added was mainly due to the development of the divisions’ EBIT. In addition, further negative effects on value added resulted from the sharp increase of €9.9 billion in average net assets caused by higher investments in non-current assets, the first-time capitalization of right-of-use assets from leasing contracts and increased average inventories. These effects were partially compensated by higher provisions for other risks.

Value added at Mercedes-Benz Cars of minus €0.5 billion was significantly below the prior-year amount of €4.1 billion. This was primarily due to the negative earnings development. An additional negative impact on value added resulted from the increase in average net assets to €32.4 billion mainly caused by higher investments in non-current assets as well as the first-time capitalization of right-of-use assets from leasing contracts. In addition, average net assets were also impacted by rising average inventories, partially offset by higher provisions for other risks.

Daimler Trucks’ value added fell by €0.5 billion compared to previous year as a result of the development of earnings and the increase in average net assets of €2.0 billion. This increase resulted from the first-time capitalization of right-of-use assets from leasing contracts and an increase in average inventories.

At Mercedes-Benz Vans, value added decreased significantly by €3.3 billion to minus €3.4 billion, reflecting the sharp decline in earnings. On the other hand, higher provisions for other risks led to lower average net assets, which partially offset the negative development of value added.

The value added of the Daimler Buses division of €110 million remains nearly unchanged (2018: €117 million). Average net assets increased slightly to €1.4 billion.

Value added at Daimler Mobility of €0.3 billion was higher than the prior-year level of minus €0.2 billion. The division’s return on equity amounted to 15.3 % (2018: 11.1 %). The development of value added primarily reflects the increase in earnings of €0.8 billion. On the other hand, the rise in average equity of €1.5 billion had a negative impact on value added.