Based on the expected market development and the current assessments of the divisions, Daimler expects Group EBIT in 2019 to be in the magnitude of the previous year.
Based on the assumptions for the development of the markets important for Daimler and the current assessments of the divisions, the Group anticipates a slight increase in total unit sales in 2019.
On the basis of the expected growth in unit sales, the Daimler Group’s revenue is expected to increase slightly in 2019. Mercedes-Benz Cars, Daimler Trucks and Daimler Financial Services anticipate slight increases in revenue, while the Mercedes-Benz Vans and Daimler Buses divisions expect significant revenue growth.
The overall rather moderate development of earnings in the automotive business will also be reflected in the free cash flow of the industrial business. The ongoing high upfront expenditure for new products and technologies will have a negative impact. An additional factor will be the costs for “Project Future” to implement the new Group structure. Under these conditions, Daimler expects the free cash flow of the industrial business to be slightly higher than in 2018.
The individual divisions expect the following returns in 2019:
- Mercedes-Benz Cars: return on sales of 6% to 8%
- Daimler Trucks: return on sales of 7% to 9%
- Mercedes-Benz Vans: return on sales of minus 2% to minus 4%
- Daimler Buses: return on sales of 5% to 7%
- Daimler Financial Services: return on equity of 17% to 19%
Against the backdrop of expenses for the adjustment of production capacities in Argentina and Russia in connection with the start of production of the Sprinter in Charleston, USA, as well as ongoing governmental proceedings and measures taken for diesel vehicles, the Mercedes-Benz Vans division has adjusted its expected return on sales for the current financial year.
The sales development will be significantly influenced by lifecycle effects of certain model series. Mercedes-Benz intends to launch more than a dozen new and upgraded vehicles in 2019. The new compact cars in particular, including the new B-Class, the A-Class sedan and the new GLB, the eighth model in the compact-car segment, should have a positive impact on unit sales. Sales are expected to be boosted also by the high-growth SUV segment, especially in the second half of the year.
In both the NAFTA region and the EU30 region, the division expects a slight increase in unit sales compared with last year. Unit sales in Japan should be roughly at the prior-year level. In Brazil, sales are expected to significantly exceed the low level of 2018. Unit sales in India should be higher than last year. Daimler Trucks expects unit sales in Turkey to decline significantly in view of ongoing considerable economic uncertainty in that market. Lower unit sales are expected also in Indonesia.
In addition to the United States, the division anticipates growth especially in the EU30 region. In particular, the new Sprinter, which was launched in mid-2018, is expected to contribute to sales growth in 2019.
The division intends to maintain its market leadership in its most important traditional core markets for buses above 8 tons. This is based on slight growth in the EU30 region and a very positive sales trend in India. Sales in Latin America (excluding Mexico) are expected to remain at the level of last year.
This is mainly due to the development of unit sales in the vehicle divisions. The development of new digital possibilities for customer contacts and the utilization of further market potential in fleet management will contribute to this trend.
This page sums up the most important topics out of the detailed outlook. It was last revised on June 24, 2019 after the adjustment of earnings expectations on June 23, 2019.
This document contains forward-looking statements that reflect our current views about future events. The words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “may,” ”can,” “could,” “plan,” “project,” “should” and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including
- an adverse development of global economic conditions, in particular a decline of demand in our most important markets;
- a deterioration of our refinancing possibilities on the credit and financial markets;
- events of force majeure including natural disasters, acts of terrorism, political unrest, armed conflicts, industrial accidents and their effects on our sales, purchasing, production or financial services activities;
- changes in currency exchange rates and tariff regulations;
- a shift in consumer preferences towards smaller, lower-margin vehicles;
- a possible lack of acceptance of our products or services which limits our ability to achieve prices and adequately utilize our production capacities;
- price increases for fuel or raw materials;
- disruption of production due to shortages of materials, labor strikes or supplier insolvencies;
- a decline in resale prices of used vehicles;
- the effective implementation of cost-reduction and efficiency-optimization measures;
- the business outlook for companies in which we hold a significant equity interest;
- the successful implementation of strategic cooperations and joint ventures;
- changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety;
- the resolution of pending government investigations or of investigations requested by governments and the conclusion of pending or threatened future legal proceedings;
- and other risks and uncertainties, some of which we describe under the heading “Risk and Opportunity Report” in the current Annual Report.
If any of these risks and uncertainties materializes or if the assumptions underlying any of our forward-looking statements prove to be incorrect, the actual results may be materially different from those we express or imply by such statements.
We do not intend or assume any obligation to update these forward-looking statements since they are based solely on the circumstances at the date of publication.
With the guidance for the 2019 financial year, for forecasting the profitability of the divisions, Daimler changed over to using return on sales instead of EBIT for the automotive divisions and return on equity for Daimler Financial Services. This creates a link between our expectations for the current financial year and our strategic targets.
Divisional return on sales and return on equity are forecast on the basis of bandwidths.
For the Daimler Group’s EBIT, we retain the current method of a comparative forecast; however, we adjusted the forecast sensitivities:
- The forecast “at the prior-year level” represents a change compared with the prior-year figure of -5% to +5%.
- The forecast “slightly above/below the prior-year level” represents a change compared with the prior-year figure of > +/-5%.
- The forecast “significantly above/below the prior-year level” represents a change compared with the prior-year figure of > +/-15%.
In addition, for both the Group and the divisions, we adjusted the forecast sensitivities for the less volatile reporting parameters unit sales and revenue as follows:
- The forecast “at the prior-year level” represents a change compared with the prior-year figure of -2% to +2%.
- The forecast “slightly above/below the prior-year level” represents a change compared with the prior-year figure of > +/-2%.
- The forecast “significantly above/below the prior-year level” represents a change compared with the prior-year figure of > +/-7.5%.