Daimler and the Capital Market

Global stock markets tended to be significantly stronger in many regions in 2019. The Daimler share price rose by 8 % throughout the year. In 2019, we continued to inform institutional investors, analysts, rating agencies and private investors by means of a wide range of investor relations activities and comprehensive reporting on the Group’s business development and prospects. Our refinancing benefited from a high level of capital-market liquidity and a consistently solid rating. The Board of Management and the Supervisory Board will propose to the Annual Shareholders’ Meeting that a dividend of €0.90 (2018 : €3.25) per share be paid for 2019.

A.01 Development of Daimler’s share price and of major indices

  End of 2019 End of 2018 19/18
    % change
       
Daimler share price (in euros) 49.37 45.91 +8
       
DAX 30 13,249 10,559 +25
Euro STOXX 50 3,745 3,001 +25
Dow Jones Industrial Average 28,538 23,327 +22
Nikkei 23,657 20,015 +18
STOXX Europe Auto Index 509 439 +16

Global stock markets significantly stronger

Global stock markets developed very positively in the first four months of 2019. The favorable outlook regarding a possible settlement of the trade war between the United States and China in order to avoid punitive tariffs, as well as the announcement by the US Federal Reserve bank that it would not be raising interest rates any time in the near future, led to higher demand for stocks around the world. In May, however, stock-market sentiment deteriorated noticeably. Extensive uncertainty on the market was driven by the escalation of the trade war, concerns about economic growth in China, and the resignation of the British Prime Minister in the wake of the Brexit debate in the UK. Indications from central banks regarding the implementation of expansionary measures had a further positive effect on stock markets between June and the end of July. The markets then consolidated, however, with the mood overshadowed by declines in the Purchasing Managers Index and the Business Climate Index. Discussions relating to the possibility of a hard Brexit, as well as the ongoing trade war between the United States and China, also led to more reserved behavior on the part of investors in August. The second half of the third quarter was once again marked by renewed positive news relating to the trade war and Brexit, which led to gains on stock markets. Following a weak phase at the beginning of the fourth quarter, investors became more optimistic again. Global stock markets then picked up, with strong gains made more or less across the board throughout the rest of the quarter. Cyclical stocks and, in particular, shares in the automotive and supplier industries benefited from this development.

The index of the most important equities in the euro zone, the Euro STOXX 50 and the German benchmark index, the DAX, both rose by 25 % in 2019. In Japan, the Nikkei index closed the year at 23,657, which was 18 % higher than a year earlier. In the United States, the Dow Jones reached an all-time high of 28,645 in December and was 22 % above the prior-year level at the end of 2019.

Daimler share price rises 8 % over the year

Over the first three months of 2019, automotive stocks also recovered significantly from the low share prices that had dominated the markets at the end of 2018. This development was mainly due to the continuation of trade negotiations between the United States and China, as well as positive signals from the Federal Reserve, which had significantly increased interest rates in the preceding years. The announcement of our collaboration with BMW in the areas of mobility services and automated driving, and with Geely on the further development of the smart brand, generated additional momentum and led to a substantial increase in our share price until the end of March (+14 %). On April 18, the Daimler share price reached €59.31, which was the highest price for the year. A profit-taking phase then began on the German stock market, and this affected the Daimler share as well. Along with the global trade tensions, there were also increasing concerns about a possible further economic slowdown, which would obviously have a negative impact on earnings in the automotive industry, particularly in view of the global supplier and production networks operated by automotive companies. In this very weak stock-market environment, our shares reached their lowest point of the year 2019 at €40.53 on August 15. Stock prices then began rising significantly again in September (with a brief temporary interruption) as a result of positive news about the trade war and Brexit. Automotive shares particularly benefited from the decision made by the US Department of Commerce to refrain for the time being from imposing punitive tariffs on automobiles imported from Europe and Asia. In the second half of the fourth quarter, the Daimler share price lost some of the gains that had been made in the interim, with the Daimler share closing at €49.37 on December 30. At the end of the year, Daimler had a market capitalization of €52.8 billion (2018 : €49.1 billion). With a total increase of 8 % in 2019, the development of Daimler’s share price was thus weaker than that of the DAX (+25 %) and the STOXX Europe Auto Index (+16 %).

Dividend of €0.90

The Board of Management and the Supervisory Board will recommend the payment of a dividend of €0.90 per share for financial year 2019 (2018 : €3.25) at the Annual Shareholders’ Meeting on April 1, 2020. The total dividend will thus amount to €963 million (2018 : €3,477 million).

A.02 Key figures per share

  2019 2018 19/18
Amounts in euros   % change
       
Net profit 2.22 6.78 -67
Dividend 0.90 3.25 -72
Equity (December 31) 57.34 60.45 -5
Xetra price at year end 1 49.37 45.91 +8
Highest 1 59.31 75.69 -22
Lowest 1 40.53 45.27 -10
1 Closing prices

A broad shareholder structure and a new investor with a long-term focus

Daimler continues to have a broad shareholder base of approximately 1.0 million shareholders (2018 : 1.0 million). Tenaciou3 Prospect Investment Limited, a company controlled by the Chinese entrepreneur Li Shufu, who is also the founder and CEO of Geely, became Daimler AG’s largest individual shareholder in February 2018. Tenaciou3 Prospect Investment Limited currently owns 9.7 % of the company’s shares. The Kuwait Investment Authority (KIA) currently owns 6.8 % of the company’s stock, making it Daimler AG’s second-largest single shareholder. In July 2019, we were informed by the Chinese BAIC Group that it had acquired an interest in Daimler AG via its wholly owned subsidiary Investment Global Co. Ltd. With approximately 5 % of Daimler’s equity capital, the BAIC Group is now Daimler AG’s third-largest single shareholder. The Renault-Nissan Alliance continues to hold 3.1 % of Daimler’s shares. In December 2019, Bank of America Corporation notified us that at 6.17 %, its proportion of the voting rights remained above the 5.0 % reporting limit on December 20, 2019. In October 2018, Harris Associates L. P., Wilmington, notified us that its proportion of the voting rights was 4.93 % on October 16, 2018. BlackRock, Inc., Wilmington, also holds a stake above the 3 % reporting limit pursuant to Germany’s Securities Trading Act (WpHG). In December 2019, BlackRock notified us that its proportion of the voting rights was 4.47 % on November 27, 2019.

The aforementioned and all other voting-rights notifications are published on the Internet at daimler.com/investors/share/voting-rights.

Institutional investors hold a total of 54 % of our equity capital, while private investors own 21 %. Approximately 58 % of our capital is in the hands of European investors and around 15 % is held by US investors. Investors from Asia hold around 17 % of our equity capital.

With a weighting of 3.95 % (2018 : 4.67 %), Daimler was ranked ninth in the German share index DAX 30 at the end of 2019. In the Euro STOXX 50 index, our shares had a weighting of 1.55 % (2018 : 1.93 %), which put Daimler in 29th place. Daimler shares are listed on the stock exchanges in Frankfurt and Stuttgart. A total volume of 1,108 million shares were traded in Germany in 2019 (2018 : 1,093 million). A substantial number of Daimler shares are also now traded on multilateral trading platforms and in the over-the-counter market.

Daimler AR2019 A.03 Daimler share price high low 2019
Daimler AR2019 A.04 Share price index

A.05 Key figures for Daimler shares

  End of 2019 End of 2018 19/18
      % change
       
Share capital (in millions of euros) 3,070 3,070 0
Number of shares (in millions) 1,069.8 1,069.8 0
Market capitalization (in billions of euros) 52.8 49.1 +8
Number of shareholders (in millions) 1.0 1.0 0
Weighting in share indices      
   DAX 30 3.95 % 4.67 %  
   Euro STOXX 50 1.55 % 1.93 %  
Long-term credit ratings      
   S&P A- A  
   Moody’s A3 A2  
   Fitch A- A-  
   Scope A A  
   DBRS A A  

A.06 Stock-exchange data for Daimler shares

ISIN DE0007100000
German Securities Identification Number 710000
Stock exchange symbol DAI
Reuters ticker symbol DAIGn.DE
Bloomberg ticker symbol DAI:GR
Daimler AR2019 A.07 Shareholder structure groups
Daimler AR2019 A.08 Shareholder structure regions

Employee stock purchase plan implemented once again

Staff members entitled to purchase employee stock were able to do so once again in March 2019. As was the case in the previous year, price-reduced shares as well as bonus shares were offered. At 25.5 %, the participation rate in the year under review was once again higher than in the previous years (2018 : 23.5 %). A total of 45,700 employees took part in the program (2018 : 41,900), which is the highest number since 2008. The total number of shares purchased by employees also increased substantially once again, from 717,000 in 2018 to approximately 811,000, of which just under 73,200 were bonus shares (2018 : 64,700) in the year under review. In connection with the attendance bonus program, approximately 15,600 shares were additionally purchased and transferred to the beneficiaries (2018 : 15,000).

Daimler Annual Shareholders’ Meeting in Berlin

Due to the preparations being made for the new Group structure, our 2019 Annual Shareholders’ Meeting was held on May 22 at the Messe Berlin exhibition center. Some 5,000 shareholders (2018 : 6,000) attended the meeting. A total of 52.91 % (2018 : 55.71 %) of equity capital was represented at the meeting (actual attendees and shareholders who voted by absentee ballot). A large majority of the shareholders approved each of the agenda points proposed by the company’s management. For example, the Annual Shareholders’ Meeting approved a dividend payout of €3.25 per share (2018 : €3.65), which means the total dividend amounted to €3.5 billion. Important documents and information related to the Annual Shareholders’ Meeting can be found on the Internet at daimler.com/ir/am2019.

Daimler shareholders voted in favor of the new Group structure by an overwhelming majority of 99.75 %. This structure establishes Daimler AG as the parent company of the legally independent entities Mercedes-Benz AG (for the cars and vans business) and Daimler Truck AG (for business activities relating to trucks and buses). In addition, the Annual Shareholders’ Meeting once again elected Joe Kaeser and Bernd Pischetsrieder to the Supervisory Board as shareholder representatives. Joe Kaeser is the CEO of Siemens AG and Bernd Pischetsrieder is a former CEO of BMW AG and VW AG. Both have been members of the Supervisory Board of Daimler AG since 2014. The terms for both reelected Supervisory Board members will end when the Annual Shareholders’ Meeting is held in 2024.

After more than 13 years as Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, Dieter Zetsche stepped down from his position at the conclusion of the Annual Meeting 2019. At the conclusion of the 2019 Annual Shareholders’ Meeting, Ola Källenius was named Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. Also at the conclusion of the 2019 Annual Shareholders’ Meeting, Bodo Uebber stepped down as the Board of Management member responsible for Finance and Controlling and Daimler Financial Services, a position he had held since 2005. His successor is Harald Wilhelm, who has been a member of the Daimler AG Board of Management since April 1, 2019.

Continuation of comprehensive investor relations ­activities

In 2019, we once again provided institutional investors, analysts, rating agencies and private investors with timely information regarding the company’s business development. We organized roadshows for institutional investors and analysts in the finance capitals of Europe, North America and Asia. We also held many one-on-one meetings at investor conferences. This was especially the case at the international motor shows in Geneva and Frankfurt. We reported on our quarterly results in conference calls and webcasts. At the same time, we have further developed our methods in order to more specifically address long-term investors who may be interested in purchasing shares in Daimler. The presentations are available on our website at daimler.com/investors/events/presentations.

The talks with analysts and investors focused on the latest earnings expectations for 2019, business developments and profitability in individual divisions and regions, and our “Project Future.” Investors are also now focusing more strongly on the transformation of the automotive industry and the shift toward locally emission-free mobility, as well as the impact that research and development expenditure on new technologies is having on profitability. Daimler’s top management also held capital market events in London and New York at which they provided analysts and investors with an update on the Group’s strategy for all of its business units and a preview of the ROI roadmap for the coming years. The costs for the electrification of the complete model range and the impact connected with the transformation of the automobile sector overall will have a negative effect on the earnings situation. They will lead to additional product costs and higher depreciation for the currently very high investment volumes. We intend to counteract these impacts by means of comprehensive measures to reduce costs. The audio/video recordings and charts and illustrations from the event are available at daimler.com/investors/events/capital-market-days.

Awards once again for the Daimler Annual Report

Our 2018 Annual Report and its online version with numerous additional features won prestigious international awards once again.

The 2018 Annual Report received a Platinum Vision Award from the League of American Communications Professionals LLC (LACP). In addition, we were once again given a Silver Stevie Award for the online version of the 2018 Annual Report, which also captured Silver at the 2018 LACP Professionals Vision Awards.

Website: attractive page design, improved user experience

The Investor Relations site at daimler.com/investors is the main source of information for the majority of our shareholders. With this in mind, we made further improvements to the site in 2019. For example, our improved page structure makes it easier for visitors to navigate the site and move more quickly to the sections they wish to view. We’ve also made the site easier to use with mobile terminals. Our news pages, for example, are always available in HTML format and automatically adapt to any mobile device display. Our IR media library is an additional service that offers the most important news, documents and videos at a glance. Our IR website had nearly one million visitors in 2019 and over two million page views, which corresponds to approximately 2,600 visitors and 5,800 page views per day. Our IR site also achieved an outstanding third-place ranking in a benchmark study by Net Federation GmbH, an agency for digital corporate communication, of the websites of the 70 German companies with the highest market capitalization.

Number of online shareholders reaches over 200,000

Our shareholders continue to make good use of our range of personalized electronic information and communication. In March 2019, we sent a notice to shareholders requesting their consent to receive their invitation to the Daimler Annual Shareholders’ Meeting by e-mail rather than by post. Our goal here was to reduce as much as possible the consumption of paper and the costs associated with mailing paper documents, which in 2019 also included the very extensive and complex Hive-down and Acquisition Agreement between Daimler AG, Mercedes-Benz AG and Daimler Truck AG. We were very pleased by our shareholders’ positive reaction to the electronic invitation campaign. Due to this positive response, we were able to increase the number of e-mail invitations to the Daimler Annual Shareholders’ Meeting from 100,000 to 220,000 - and reduce CO2 emissions around 50 tons as a result. We would like to thank those shareholders for helping to protect the environment and cut costs. Access to the e-service for shareholders and additional information can be found at https://register.daimler.com.

Refinancing benefits from a high level of capital-market liquidity and consistently solid ratings

The central banks’ monetary policy had a major effect on bond markets in 2019. As a result of the high level of liquidity, companies with investment-grade ratings saw their risk premiums remain at a moderate level for the most part.

In 2019, the Daimler Group primarily covered its refinancing needs by issuing bonds. A large proportion of those bonds were sold as benchmark bond issuances (bonds with high nominal volumes) in euro and US-dollar markets. In the US capital market, for example, Daimler Finance North America LLC issued bonds worth a total of $7.00 billion. In addition, Daimler AG and Daimler International Finance B. V. issued euro bonds in benchmark format with a total volume of €10.25 billion. In 2019, Daimler AG also issued bonds in China (so-called Panda bonds) worth a total of CNY 10.0 billion. Furthermore, many smaller bonds were issued by the Daimler Group in a variety of currencies and markets.

At the end of 2019, Daimler Group companies had issued bonds that were still outstanding in a volume of 85.6 billion (2018: €76.5 billion). Besides raising funds through the issuance of bonds, Daimler also issued a small volume of commercial paper in 2019.

During the year under review, Daimler issued asset-backed securities (ABS) in five countries. In the United States, the company generated a refinancing volume of $8.7 billion through six transactions in 2019; in Canada, a volume of CAD 1.0 billion was generated in two transactions. Two transactions with a total volume of AUD 1.26 billion were executed in Australia in 2019. Such bonds were also successfully sold to investors in Italy for the first time, in the amount of €0.5 billion. In China, one ABS transaction was conducted successfully with a total volume of CNY 8.5 billion.

During the course of the year under review the rating agencies S&P and Moody’s reacted to the worsened earnings situation, initially with an adjustment of the outlook and, in December 2019, by downgrading the rating of Daimler AG by one notch. The agencies justified this mainly with the challenges posed by the electrification of the product portfolio, as well as the costs for the necessary reduction of CO2 emissions and the expectation of a more difficult economic climate, which was also reflected in lower expected returns.

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