Daimler-Benz Doubles Operating Profit to DM 3.8 Billion
30 July 1998
Daimler-Benz Doubles Operating Profit to DM 3.8 Billion
STUTTGART, Germany--July 30, 1998---- Twelve percent return on capital employed to be achieved this year -- Positive development of earnings will continue in second half of
the year
-- Juergen E. Schrempp: "We are perfectly prepared for the
DaimlerChrysler merger"
Daimler-Benz in the First Half Year 1998
Daimler-Benz Group 1st Half Year 1st Half Year Change
1998 1997
Operating Profit in DM million 3,763 1,849 +104%
Net income in DM million 2,010 992 +103%
Earnings per DM 5 share (EPS) 3.81 1.89 +102%
Cash Flow from Operating
Activities in DM million 8,510 4,681 +82%
Revenues in DM million 67,714 55,892 +21%
Foreign share of revenues 69% 67% +2%age
points
Employees (June 30) 303,347 291,025 +4%
Employees outside Germany 74,733 69,102 +8%
Operating Profit by Segments
in DM million
Division Passenger Cars 2,071 1,547 +34%
Division Commercial Vehicles 870 -9 ++
Division Aerospace 346 74 +368%
Division Services 358 220 +63%
Directly managed business units 156 134 +16%
Revenues by Divisions
in DM million, unconsolidated figures
of the business
Division Passenger Cars 30,648 24,980 +23%
Sales (units) 427,715 335,794 +27%
Division Commercial Vehicles 21,685 17,846 +22%
Sales (units) 228,940 191,994 +19%
Division Aerospace 7,558 6,679 +13%
Division Services 8,718 7,166 +22%
Directly managed business units 2,956 2,480 +19%
In the first six months of 1998 Daimler-Benz more than doubled its operating profit to DM 3.8 billion. In the first six months of last year operating profit stood at DM 1.8 billion. For the second half of 1998 Daimler-Benz expects the positive development of earnings in the operational area to continue.
Between January and June of this year the group's revenues rose by 21% to DM 67.7 billion (first six months 1997: DM 55.9 billion), all divisions posting a two-digit growth rate. Daimler-Benz was particularly successful in the U.S., where its revenues increased by 43% to just under DM 16 billion (first six months 1997: DM 11.2 billion).
On the occasion of the group's half year results press conference in Frankfurt, Daimler-Benz Chairman Juergen E. Schrempp said: "In the first six months of this year Daimler-Benz has achieved the best result in the history of the company. This means that we are perfectly prepared for the DaimlerChrysler merger. This merger offers both Daimler-Benz employees and shareholders excellent prospects for the future."
At the end of the first week in August Daimler-Benz will publish further details regarding the merger in the form of the Merger Report. This report will also explain the positive effects of the merger at length. On September 18, 1998 Daimler-Benz and Chrysler shareholders will vote on the merger at separate extraordinary shareholders meetings. It is planned that Daimler-Benz shareholders will have the chance to exchange their share certificates for shares in DaimlerChrysler AG in the period between September 24 and October 23, 1998 thus ensuring their participation in the earnings prospects of the new German-American company.
Daimler-Benz Chief Financial Officer Dr. Manfred Gentz explained the results reported in the first half year in Frankfurt: "The decisive factor for this marked growth in operating profit was, in addition to the strong rise in revenues in almost all business units, the fact that the programs for the increase of productivity, started in recent years, have by now been implemented for the most part."
Commercial Vehicles posts strongest increase in operating profit
The strongest improvement in results was posted by the Commercial Vehicles division which contributed DM 870 million to the group's operating profit (first six months 1997: DM -9 million). Once again, the Passenger Cars division made a strongly increased contribution worth DM 2.071 billion (first six months 1997: DM 1.547 billion) to the operating profit.
The Aerospace division completed its turnaround, contributing DM 346 million (first six months 1997: DM 74 million) to operating profit. The Services division continued to increase its contribution to results considerably from DM 220 million to DM 358 million. Regarding the directly managed businesses, Automotive Electronics (Temic) and MTU/Diesel engines further improved their positive results, whereas the contribution of Adtranz was negative.
Product success leads to significant increases in revenues
The Passenger Cars division increased revenues by 23% to DM 30.6 billion and sales by 27% to 427,700 passenger cars thanks to the success of recently launched new products. In the U.S. sales increased by 68%, in Western Europe (excluding Germany) by 32% and in Germany by 20%. As far as Commercial Vehicles were concerned, the division increased revenues by 22% to DM 21.7 billion and sales by 19% to 228,900 vehicles. In this division, the North American subsidiary Freightliner was most successful. Trucks Europe also posted significant volume increases with the ACTROS and the ATEGO.
Aerospace recorded revenues of DM 7.6 billion, up 13%. Incoming orders doubled to DM 13.4 billion; the decisive factors in this sharp increase being the success of the Airbus program and a part of the Eurofighter contract. Services' revenues increased by 22% to DM 8.7 billion; proof that debis' dynamic growth is continuing. Rail Systems increased revenues by 14% to DM 1.5 billion, Automotive Electronics by 44% to DM 0.7 billion, and MTU/Diesel Engines by 12% to DM 0.8 billion.
The number of employees within the Daimler-Benz group rose by 4% in the first six months of 1998 to reach 303,347 (first six months 1997: 291,025).