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Daimler Trucks aiming for further growth in 2014 – targets 2013 reached

Sales increase by 5% in 2013 to the highest level since 2006 EBIT from ongoing business up slightly from prior year Leadership in core markets expanded Outlook for 2014: Sales and EBIT expected to increase Daimler Trucks strategy is based on technology leadership, a global market presence, and smart platforms Dr. Wolfgang Bernhard: “We accomplished … Continued

  • Sales increase by 5% in 2013 to the highest level since 2006
  • EBIT from ongoing business up slightly from prior year
  • Leadership in core markets expanded
  • Outlook for 2014: Sales and EBIT expected to increase
  • Daimler Trucks strategy is based on technology leadership, a global market presence, and smart platforms
  • Dr. Wolfgang Bernhard: “We accomplished what we planned for 2013. And we will remain on course for success in 2014.”

Daimler Trucks achieved its targets in 2013 and plans to grow further in 2014. Sales for full-year 2013 rose by 5% to approximately 484,200 vehicles (2012: 462,000), which is the highest sales figure recorded since 2006. Stable revenues of €31.5 billion (2012: €31.4 billion) led to a slight increase in earnings from ongoing business, to €1.75 billion last year (2012: €1.7 billion). Return on sales rose to 5.6% (5.4%). Daimler Trucks has also announced it will record significant growth in sales and EBIT for full-year 2014.

“We accomplished what we set out to do in 2013, despite operating in a challenging environment,” said Dr. Wolfgang Bernhard, Member of the Daimler Board of Management with responsibility for Trucks and Buses, on the occasion of the presentation of the annual results for Daimler Trucks. “I would like to thank all of our employees. They made this success possible. As a team, we will continue to work hard to expand our lead as the number one company in the truck sector.”

Bernhard is cautiously optimistic about 2014. “We began the new year as we expected to,” Bernhard said. “Our products have won over customers by offering them the lowest total cost of ownership in the sector. I’m therefore optimistic that we will remain on course for success in 2014 and move a good step closer toward achieving our medium-term targets.”

Double-digit gains in Western Europe
Truck sales increased in nearly all relevant markets in 2013. In Western Europe, sales rose by 14% to 65,900 units (2012: 58,000). The Mercedes-Benz brand also further improved its leading position in the region by recording a market share of 24.1% (2012: 22.9%). A total of 33,500 trucks (+8%) were delivered to customers in Germany last year (2012: 31,100) as market share rose to 39.7% (2012: 39.2%). The sales increase was largely due to early availability of all Mercedes-Benz Trucks models in Euro VI. Sales were also boosted by earlier-than-planned purchases of Euro V trucks in the last months leading up to the introduction of the more stringent Euro VI emission standard on January 1, 2014.

Daimler Trucks also remained on track for success in North America in 2013. Stable sales of 135,200 units (2012: 135,000) in the NAFTA region in a somewhat weaker overall market led to a substantial increase in market share to 38.2% (2012: 34%) in the segment for medium-duty and heavy-duty trucks (Class 6-8). The division was thus able to significantly expand its leading position in the region. Like their counterparts in Europe, customers in North America were very impressed by the advanced technology featured in trucks made by Daimler. For example, the new Freightliner Cascadia Evolution consumes up to 7% less fuel than its predecessor. With mor than 22.000 orders, the new model, which was launched in March 2013, was a major contributor to Daimler Trucks’ sales success in the NAFTA region.

Daimler Trucks also made substantial gains in its main Latin American market, Brazil, where sales rose by one-third to 38,800 units.
In Asia, Daimler Trucks has combined the strengths of its Mitsubishi Fuso Truck and Bus Corp. (MFTBC) and Daimler India Commercial Vehicles Pvt. Ltd. (DICV) subsidiaries into the Trucks Asia organization. Daimler Trucks is using its Asia Business Model to exploit synergies along the entire value chain and enter new growth markets in Asia and Africa. The division has been mass producing BharatBenz brand trucks in Chennai, India, since the summer of 2012. In the second quarter of 2013, the Chennai plant also began manufacturing FUSO brand vehicles for selected export markets in Southeast Asia and Africa.

Successful launch of the BharatBenz brand
Sales in FUSO’s home market in Japan increased by 10% in 2013, to approximately 38,300 units. At 20.2%, the brand’s share of the overall Japanese truck market remained at the prior year’s level. In India, a sluggish economy held back demand for trucks. Nevertheless, the young BharatBenz brand was immediately able to advance to fourth place in the country’s medium-duty and heavy-duty truck segment. A total of 6,500 BharatBenz trucks were sold in 2013, despite the fact that the product line has yet to be fully completed. The product range will be significantly expanded in 2014. The successful launch of Daimler’s new truck brand was also underscored by several awards, including the coveted Apollo Award for Commercial Vehicle Maker of the Year. The BFDA joint venture launched by Daimler and Foton in China in mid-2012 also made a big splash in 2013, as the company sold 103,300 Auman-brand trucks in its first full year of operation.

Strong second half of the year — higher return on sales
The development of revenues at Daimler Trucks was negatively impacted by exchange-rate effects in 2013. Adjusted for such effects, growth in revenues outpaced that of sales, whereby a continual upward trend established itself as the year progressed. The same applies to earnings. As predicted in the spring of 2013, earnings rose steadily throughout the remainder of the year. After a difficult first quarter for the sector as whole in 2013 (with adjusted EBIT of €128 million), Daimler Trucks increased its EBIT in the second quarter to €516 million. This was followed by adjusted EBIT of €530 million in Q3 and €578 million in Q4. The return on sales rose from 5.4% to 5.6% during the year as a whole.

Three strategic pillars: Technology leadership, a global market presence, and smart platforms
Daimler Trucks utilizes three strategic approaches to exploit the opportunities of long-term growth in the transport sector. These strategic pillars are technology leadership, a global market presence, and smart platforms.

Technology leadership: Assistance systems such as Predictive Powertrain Control reduce fuel consumption, and therefore help to make customers’ business operations more successful by decreasing the total cost of ownership. The latest emergency braking systems help prevent accidents. Daimler Trucks is also a leader when it comes to networking, as the automatic monitoring of engines and transmissions warn drivers before an expensive technical failure occurs. Such systems also guide drivers to the nearest repair center. What’s more, satellite monitoring of trucks enables shipping companies to optimally coordinate fleets and supply chains.

Global presence: Daimler Trucks seeks to expand business in both its core markets and in new ones. Products with cutting-edge technologies will enable Daimler Trucks to further consolidate its leading position in the triad. Daimler Trucks also cooperates with competent partners in key growth markets such as China and Russia. These partnerships with companies such as Foton and Kamaz allow Daimler Trucks to serve local markets in the best possible way. Daimler Trucks is pursuing a different approach in India, where it will exploit anticipated growth opportunities via its own BharatBenz brand. India also plays a key role for other growth markets in Asia and Africa, which is why Daimler Trucks established its Asia Business Model. The model intelligently integrates subsidiaries in India (Daimler India Commercial Vehicles/DICV) and Japan (Mitsubishi Fuso Truck and Bus Corp/MFTBC) in order to serve new growth markets in Southeast Asia and Africa.

Smart platforms: Daimler Trucks’ smart platforms enable the division to offer the right products in all markets — and also exploit economies of scale generated by its global positioning. The core markets of the triad benefit from this through innovative, top-class technologies that make trucks from Daimler to benchmarks for total cost of ownership. Tried-and-tested product and technology platforms are used in the follower markets, such as Brazil, Russia, and China. Similar technologies are then employed in a simplified and localized form in developer markets, which include India and several other markets in Asia and Africa.

Moderate growth expected for the global truck market
General economic conditions will have a slightly positive effect on global truck markets in 2014. As things stand now, the global market for medium-duty and heavy-duty trucks is expected to undergo moderate expansion, although developments will once again vary greatly among individual markets. Substantial growth of as much as 10% is expected in the NAFTA region. Developments in Europe will largely depend on the extent to which economic recovery can offset the prebuy effect due to the change to Euro VI. Daimler Trucks currently expects full-year market volume in Europe to be slightly below the level of 2013. Additional economic stimulus packages and an expansive monetary policy in Japan should lead to slight growth on the Japanese truck market in 2014. Volume on the Brazilian market will likely dip just below the prior year’s level.

Outlook for 2014: Daimler Trucks cautiously optimistic
Daimler Trucks expects to record a significant increase in sales in 2014. Mercedes-Benz Trucks plans to further consolidate its excellent position in Europe by offering a completely new range of products and exploiting the high level of acceptance it enjoys on the European market. The division will also further improve its market position in Brazil through investments in manufacturing facilities, products, and sales operations. Sales are expected to develop positively in the NAFTA region and increase significantly from the 2013 figure. Additional BharatBenz model series to be launched on the Indian market are expected to make a key contribution to sales growth in Asia. Daimler Trucks will also be able to benefit from the anticipated slight market growth in Japan.

With regard to earnings, Daimler Trucks plans to achieve a substantial increase in EBIT as compared to 2013. This will be accomplished through significantly higher sales and further gains in the Daimler Trucks #1 growth and efficiency program. The program’s impact is expected to accelerate this year, after roughly 30% of the planned target of €1.6 billion was achieved in 2013. DT#1 will achieve its full effect in 2015.
Medium-term goals remain unchanged. Plans still call for sales at Daimler Trucks to exceed 500,000 units in 2015 and reach 700,000 units in 2020. The division seeks to record return on sales of 8% across the business cycle.

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