Considering the difficult situation of the global economy and major markets, the Daimler Group’s business generally developed satisfactorily in 2012. We largely achieved the targets we had set ourselves, but we had to accept a certain shortfall with regard to earnings, due to the increasingly difficult environment as the year progressed.
We once again increased our unit sales and revenue in the year under review, thus continuing along our growth path. Mercedes-Benz Cars achieved a new record for unit sales and Daimler Trucks also significantly surpassed its prior-year level. Unit sales by Mercedes-Benz Vans and Daimler Buses decreased, but the Daimler Financial Services division achieved significant growth.
Our EBIT of €8.6 billion did not equal the high earnings of the prior year (€8.8 billion). The return on sales of our automotive business therefore decreased from 8.1% to 6.0%. This was primarily due to the difficult market situation in Western Europe for both cars and commercial vehicles, and the weak business with commercial vehicles in Latin America. Nonetheless, we achieved a good return on capital employed also in 2012, earning significantly more than our cost of capital with a return on net assets of 19.5% (2011: 19.9%). This is reflected also by value added, which increased by 12% to €4.2 billion in 2012.
Thanks to the ongoing high level of earnings, we continue to have sound key financial metrics. At year-end, the Group’s overall equity ratio was 26.5% (2011: 26.3%) and the equity ratio of the industrial business was 47.8% (2011: 46.4%). The net liquidity of our industrial business also remained at a comfortably high level of €11.5 billion at the end of the year. The free cash flow from the industrial business was €1.5 billion in 2012 (2011: €1.0 billion). The cash inflow from the reduction of our shareholding in EADS was offset by investments in joint ventures, high advance expenditure for new products and a growth-related increase in inventories.
All in all, the year 2012 was a transitional year for us with mixed results: On the one hand, we were not quite able to achieve the targets we had set ourselves at the beginning of the year; but on the other hand, we took some very important steps with regard to the Group’s future success.
For example, we consistently pursued our growth strategy and invested a total of approximately €11 billion in property, plant and equipment and research and development. The focus of this investment was on new products, new technologies and additional production and sales facilities in new locations. On the product side, we launched some ground-breaking and above all exciting new vehicles such as the new A-Class, the CLS Shooting Brake, the new Antos heavy-duty distribution truck, the new Citan city van and the new Setra ComfortClass 500 coach.
Our new A-Class is specifically aimed at new and younger customer groups: It is highly emotive in design, dynamic with new engines, and highly efficient with CO2 emissions starting at 92 grams per kilometer.
But we achieved considerable progress in reducing emissions and fuel consumption not only with the A-Class. We reduced the CO2 emissions of our entire fleet of new cars in the European Union by another 10 g/km to an average of 140 g/km in 2012. The new models launched in 2011 und 2012, whose fuel consumption was reduced by up to 30% compared with the predecessor models, demonstrate that we are consistently applying fuel-saving technologies in all vehicle segments.
We established an excellent position last year in the market of the future for mobility services with innovative business concepts such as car2go or the new “moovel” mobility platform. We will significantly expand the car2go business in the coming years. By the end of 2012, approximately 270,000 customers had already registered for car2go in 16 cities of Europe and North America.
We also made very good progress with the development of our worldwide production network. In India, we have been producing trucks under the BharatBenz brand since June 2012, and our new car plant in Kecskemét, Hungary, started production in April 2012. In China, trucks of the Auman brand have been rolling off the assembly line in a joint venture with our partner Foton since July 2012. In addition, we have intensified the cooperation with our partners Renault/Nissan, Kamaz and GAZ in Russia, and BAIC in China. In order to utilize our potential in China better in the future than we did in 2012, we will optimize our business model and recently created a Board of Management position specifically for this key market.
With the goal of placing our growth strategy on a sound financial foundation, we have initiated far-reaching programs to improve our efficiency and competitiveness in all divisions. Those programs include “Fit for Leadership” at Mercedes-Benz Cars, “Trucks#1” at Daimler Trucks, “Performance Vans 2013” at Mercedes-Benz Vans and “GLOBE 2013” at Daimler Buses. In total, we intend to achieve a sustained earnings improvement with these programs of approximately €4 billion by the end of 2014. That total breaks down as Mercedes-Benz Cars €2 billion, Daimler Trucks €1.6 billion, Mercedes-Benz Vans €0.1 billion and Daimler Buses €0.2 billion.
As market conditions have significantly worsened, achieving the profit margins we defined for our divisions as of the year 2013 over the respective cycles has become much more challenging. We therefore assume that we will not achieve those targets until a later date, but we continue to pursue them consistently – supported by the measures we have taken and the programs initiated in all divisions.
Although the outlook for the development of our markets is still very uncertain, we look forward to the challenges ahead with great confidence. With the actions that have been initiated, Daimler is very well prepared for those challenges, and the global automobile market continues to offer excellent prospects in the medium term.