q1 2009 earning report of daimler chrysler ag

Download Q1 2009 Earning Report of Daimler Chrysler AG

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  • 1. Conference Call Q1 2009 Results Bodo UebberMember of the Board of Management Finance & Controlling and Daimler Financial Services

2. Final separation from all Chrysler issues signedDaimler, Chrysler, Cerberus and US-Pension Benefit Guaranty Corporation (PBGC) achieved agreement on Daimlers final separation from Chrysler, independently from Chryslers future Redemption of Daimlers 19.9% share in Chrysler Holding Waiver of 2nd Lien Note and Subordinated Loan by Daimler Daimler released from all possible legal litigations by Chrysler and Cerberus Daimler safeguards pension payments for former DaimlerChrysler employees of total USD 0.6 bn in three equal installments in the upcoming three years PBGC guarantee reduced from USD 1.0 bn to USD 0.2 bn Daimler remains supplier to Chrysler of components and services (i. e. dealer financing until end of September 2009) and warrantor for certain guarantees Maximum negative EBIT effect in Q2 2009 of up to USD 0.7 bn Total cash burden of USD 0.6 bn in 2009 - 2011 2 3. Summary Q1 2009 Financial and economic crisis worsenedWeak markets led to lower unit sales in all automotive divisionsRevenue decreased in line with lower unit sales to 18.7 billionEBIT fell to minus 1.4 billionNet profit decreased from 1.3 billion to minus 1.3 billionNet liquidity of industrial business at 3.7 billionGroup-wide measures initiated in order to reduce or avoidexpenses and cash outflows by 4 billionInvestment of Aabar (Abu Dhabi) strengthened financial position 3 4. Key financialsQ1 2008 Q1 2009 in billions of (1.4) EBIT 2.0(1.3) Net profit 1.3(1.40) Earnings per share (in )1.29 (1.1) Free cash flow industrial business 1.03.7 Net liquidity industrial business (2008: year-end) 3.14 5. Group EBIT decreased in Q1 2009 due to financial and economic crisis - in millions of - 1,976(2,886) 106(281) (335) Cars 76Cars (2,002) (7) Cars (349)Trucks (573) Trucks 96Vans (315)(1,426)Buses 4ActualVolume/Foreign Other Financial OtherActualQ1 2008 Structure/ exchangecost ServicesQ1 2009Net pricingrates changes5 6. Mercedes-Benz CarsUnit sales and revenue declined due to weak worldwide demand and model change of E-Class Unit sales Revenue in thousands of units in billions of 12.5318 9.1 231Q1 2009Q1 2008Q1 2008Q1 20096 7. Mercedes-Benz CarsDecrease in EBIT results primarily from lower unit sales in millions of - 2,2751,152 - Countermeasures/Efficiency enhancements(e. g. short time work)- Exchange rates - Lower unit sales- E-Class model changeover- Less favorable model mix and market pressure onprices(1,123)- Cost increases/fixed cost burdens EBIT EBIT Q1 2008Q1 2009 7 8. Mercedes-Benz CarsProduct highlightsE-Class coupe E-Class sedan Compact SUV GLKS 400 Hybrid 8 9. Daimler TrucksLower unit sales reflect weak demand in all major regions Unit sales Revenue in thousands of units in billions of 108 6.3 4.965Q1 2009Q1 2008Q1 2008Q1 2009 9 10. Daimler TrucksLower EBIT primarily due to tough market environment almost worldwide in millions of - 545 403- Countermeasures/Efficiency enhancements - Lower sales in Europe, America and Asia- Repositioning of Daimler Trucks North America (142) EBIT EBIT Q1 2008Q1 2009 10 11. Daimler TrucksProduct highlights Mercedes-Benz Construction Actros Mitsubishi Fuso Canter Eco Hybrid11 12. Mercedes-Benz VansVan markets were especially weak in Europe and the U.S. Unit sales Revenue in thousands of units in billions of 2.3 69 1.329Q1 2009Q1 2008Q1 2008Q1 200912 13. Mercedes-Benz VansLower EBIT due to sharp decline in sales in millions of - 277186 - Countermeasures/Efficiency enhancements- Exchange-rate effects - Significantly lower sales in all major markets (91) EBITEBIT Q1 2008 Q1 200913 14. Mercedes-Benz VansProduct highlightsMercedes-Benz Sprinter 14 15. Daimler BusesOverall stable bus business in Europe and NAFTA; weak chassis demand in Latin America Unit sales Revenue in thousands of units in billions of 9.20.90.96.8Q1 2009Q1 2008Q1 2008Q1 2009 15 16. Daimler BusesDecrease in EBIT due to overall sales decline in millions of - 10 7565- Higher sales volume in Europe- Countermeasures/efficiency enhancements- Lower sales in Latin AmericaEBIT EBIT Q1 2008Q1 200916 17. Daimler BusesProduct highlights Mercedes-Benz Citaro G BlueTec Hybrid17 18. Daimler Financial ServicesDecrease in contract volume compared to year-end 2008 New business Contract volume in billions of in billions of 63.462.06.7 5.912/31/3/31/ Q1 2009Q1 2008 20082009 18 19. Daimler Financial ServicesDaimler Financial Services affected by higher cost of risk in millions of - 335168 - Countermeasures/Efficiency enhancements - Higher cost of risk- Cost of liquidity measures/sale of non-automotivelease-portfolio in the U.S. (167) EBITEBIT Q1 2008 Q1 200919 20. Net profit and earnings per share Net profitEarnings per share in millions of in 1,3321.29(1.40)(1,286)Q1 2008Q1 2009 Q1 2008 Q1 2009 20 21. Key balance-sheet and financial figuresDec. 31, 2008 Mar. 31, 2009 in billions of Daimler Group Equity ratio 1)23.8%24.3%16.7Gross liquidity8.0Industrial business Equity ratio 1)42.1%42.7%3.7Net liquidity3.1 (1.1)Free cash flow (January to March)1.0 1) Excluding dividend payment21 22. Changes in net liquidity industrial business in billions of 1.95 (0.2) 3.7 3.1(1.1)Working capitalreduction +1.3Sales, earnings and other cash flow impact -2.4Net liquidity Free cash flow Capital Other Net liquidity industrial industrialincreaseindustrial 12/31/2008business3/31/200922 23. Financing liabilities (nominal) thereof maturing in Mar 31,Q2 Q3Q4 in billions of 2009 2009 20092009Bonds 32.90.8 4.5 1.3 Bank loans14.63.1 1.3 2.0 ABS 1.4 0.5 0.1 0.1 Commercial paper1.5 1.2 0.2 0.1 Account deposits11.75.6 0.8 0.6 Other 0.9 0.1 0.1 0.1 Total 63.1 11.36.94.223 24. Increase of share capital by 10%Aabar Investments of Abu Dhabi new major shareholder Cash inflow of 1.95 billion will further improve Daimlers sound financialposition Cash inflow gives greater flexibility to invest in innovative automotivetechnologies during a period of economic uncertainty and macroeconomicinstability The investment complements a broad range of initiatives already undertakenby Daimler to react to the changing market environment24 25. Countermeasures 2009 vs. actual 2008 totaling 4 bn Safeguard of positive net pricing despite severe headwind from markets Selective price increases of new products in markets where Daimler products hold an outstanding premium brand status Net proceeds20% Earlier market launch of new E-Class sedan in the U.S. Optimization of pricing potential of extras/packages and fuel efficiency features Short-time work in production and other functions Package of measures agreed with Employee Council to reduce labor costs of Daimler AGPersonnel costs40% No (paid) overtime, restricted hiring and no external temps Significant reduction of bonus Achieving lower prices based on declining raw material world-market prices (e. g. steel) Accelerated implementation of module strategyMaterial costs 15% All taken measures implemented in a way that does not overstretch suppliers financial capabilitiesImmediate expense cut and spending stop (e. g. external services, consultants, reduction of travel costs) Prioritization of investment projects (e. g. maintenance projects) Further overheads 25% Focusing of marketing budget (e. g. reduction of expenses for automotive fairs) Optimization of non-productive material (e. g. better bundling, re-negotiations) Total: 4 bn25 26. Consequent reduction of working capital to free up invested capitalRigorous adoption of production program to sales Finished goods inventory programSignificant reduction of used cars inventory in Q1 Used cars inventory2009 Management by benchmark based days-of- Manufacturing supplies/inventory (DIO) targets for different inventories goods in progress/Optimization of logistics chain and production spare partssystemRollout of corporate project Procurement-to-Pay Trade payables/Consequent harmonization of payment terms receivables26 27. Assumptions for automotive markets in 2009Passenger vehicle marketsWorldwide market decrease of 10% to 20% vs. 2008 expected Truck marketsSignificant decreases of medium and heavy duty truck markets expected globallyWestern Europe -40% to -50%NAFTA -20% to -30%Japan -40% to -50%Market recovery not before end of 2009/beginning of 2010 expected Van marketsNo significant improvement compared to the market decline in Q1 expected Bus marketsCity bus market expected stable in 2009Continuous difficult coach market 27 28. Outlook 2009 for Daimler sales Mercedes-Benz Cars Momentum from new E-Class and new GLK Overall sales reduction vs. 2008 Market shares at least on prior years level Daimler Trucks Significantly lower unit sales expected Market shares should be maintained in the core markets Mercedes-Benz Vans Significantly lower unit sales expected Daimler Buses Unit sales expected to be below 2008, but on a solid level 28 29. Outlook 2009 for EBIT Mercedes-Benz Cars Low point reached in Q1 Positive earnings in H2 2009 expected due to cost measures and start of new E-Class Daimler Trucks Further burdens on earnings expected for Q2 caused by sharp decline of demand worldwide Mercedes-Benz Vans Further burdens on earnings expected for Q2 caused by sharp decline of demand worldwide Daimler Buses Positive EBIT expected Daimler Financial Services Significantly lower earnings expected due to substantially higher cost of risk Low point reached in Q1 Daimler Group Group-wide measures initiated in order to reduce or avoid expensesand cash outflows by 4 bn Gradual improvement of operational earnings during the course of the year,but EBIT in Q2 2009 expected to be significantly negative29 30. Conference Call Q1 2009 Results Questions & Answers 31. Special items affecting EBIT1st Quarter in millions of 20082

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