DaimlerChrysler Group Annual Results
2002: Significant Profitability Improvement in 2002
DaimlerChrysler published its consolidated financial statements and its divisions’ results for 2002. “In view of the economic situation, on the whole we are satisfied with the results for 2002. This is one important step on the road to sustainable profitability,” said CEO Jürgen Schrempp at the annual press conference.
DaimlerChrysler achieved an adjusted operating profit of EUR 5.8 billion in 2002 (EUR 6.9 billion including one-time effects). Despite difficult market conditions worldwide, this result was four times higher than the EUR 1.3 billion reported for 2001. All of the Group’s divisions and the successful implementation of the plans for increasing efficiency at Chrysler Group and Freightliner contributed to this increase.
Including one-time effects there was an operating profit of EUR 6.9 billion (2001: operating loss of EUR 1.3 billion). Positive one-time effects amounting to EUR 1.0 billion were reported for 2002. These include one-time gains totaling EUR 2.6 billion from the sale of a 49.9% interest in T-Systems (formerly debis Systemhaus) and of a 40% stake in TEMIC. One-time expenses occurred at Chrysler Group (in connection with the turnaround plan announced in February 2001) in an amount of EUR 0.7 billion, at the Commercial Vehicles division in an amount of EUR 0.5 billion, and at the Services division in an amount of EUR 0.4 billion.
DaimlerChrysler invested EUR 7.1 billion in property, plant and equipment and spent EUR 6.2 billion on research and development in 2002.
Higher dividend of EUR 1.50 proposed
Due to the significant improvement in profitability, the Board of Management and the Supervisory Board will propose to the Shareholders’ Meeting that the dividend for the 2002 financial year be raised to EUR 1.50 per share (2001: EUR 1.00). The total dividend distribution will then increase from EUR 1,003 million to EUR 1,519 million.
The Mercedes Car Group division, which operated under the name of Mercedes-Benz Passenger Cars & smart until December 31, 2002, and includes the brands Mercedes-Benz, Maybach, smart, Mercedes-Benz AMG and Mercedes-Benz McLaren, surpassed the previous year’s strong results in terms of unit sales, revenues and operating profit. With unit sales worldwide of 1,232,300 vehicles (2001: 1,229,700), the division was unaffected by the generally unfavorable markets and strengthened its position in nearly all important markets. Revenues rose by 5% to EUR 50.2 billion (2001: EUR 47.7 billion). Operating profit of EUR 3.02 billion was slightly higher than in the previous year (EUR 2.96 billion).
Despite intense competition
in North America and the need for generous sales incentives, Chrysler
Group achieved an operating profit excluding one-time effects of EUR
1.32 billion (2001: operating loss of EUR 2.18 billion). Operating profit
including one-time effects amounted to EUR 0.61 billion (2001: operating
loss of EUR 5.28 billion). The 2002 breakeven target announced in the
turnaround plan of February 2001 (excluding one-time effects) was therefore
significantly surpassed. Worldwide, Chrysler Group sold 2.82 million
passenger cars, minivans, sport-utility vehicles and light trucks (2001:
2.76 million). The division reported revenues of EUR 60.2 billion, 5%
below the previous year’s level of EUR 63.5 billion due to currency-translation
effects. Measured in US dollars, revenues were at the same level as
in the previous year.
The Commercial Vehicles division sold 485,400 trucks, buses and vans worldwide in 2002 (2001: 492,900), thus maintaining its position as the world’s largest manufacturer of commercial vehicles in a very difficult market environment. The division generated revenues of EUR 28.4 billion as against EUR 28.6 billion in the previous year. As planned, operating profit adjusted for one-time effects of EUR 176 million exceeded the previous year’s figure of EUR 51 million. Including one-time effects there was an operating loss of EUR 343 (2001: operating loss of EUR 514) million. One-time charges arose at various business units in a total amount of EUR 519 million, primarily as a result of structural changes, but also due to a special depreciation of production facilities in the context of the long-term product and production strategy.
Despite difficult conditions worldwide, DaimlerChrysler Services’ operating profit excluding one-time effects of EUR 964 million was 67% better than the previous year’s result. Operating profit including one-time effects amounted to EUR 3.1 billion (2001: EUR 612 million). This figure includes a one-time gain of EUR 2.5 billion from the sale of the remaining 49.9% stake of T-Systems ITS (formerly debis Systemhaus) to Deutsche Telekom. On the other hand, there was a one-time charge of EUR 107 million due to the economic crisis in Argentina (further devaluation of the Argentine peso against the US dollar), as well as losses from the sale of parts of the Capital Services’ portfolio and a valuation adjustment to the remainder totaling EUR 281 million. As expected, the division’s revenues of EUR 15.7 billion were lower last year than in 2001.
The Other Activities segment comprises the MTU Aero Engines business unit, the Group’s at-equity valued holdings in EADS (33%) and Mitsubishi Motors Corporation (37.1%), together with Corporate Research, DaimlerChrysler’s real-estate activities and holding and finance companies. This segment’s revenues, which are mainly generated by MTU Aero Engines, decreased by 40% from the previous year’s figure to EUR 2.7 billion.
Last year, the segment’s adjusted operating profit rose by EUR 542 million to EUR 747 million (2001: EUR 205 million). Operating profit including one-time effects amounted to EUR 903 million (2001: EUR 1,181 million). Contributions to operating profit from both Mitsubishi Motors and EADS were higher in 2002 than in the year before.
A further increase in political and macroeconomic uncertainty seems likely in 2003, with possible effects on DaimlerChrysler’s business developments. DaimlerChrysler plans to achieve higher earnings this year than in 2002. However, a precondition for this anticipated increase is that conditions remain stable in the most important markets.
Stuttgart/Auburn Hills, Feb 20, 2003