DaimlerChrysler: Other Business
2006: The Financial Services division once again developed positively and further improved its market position in 2006. Financial Services significantly improved its operating profit from $1,937 million in 2005 to $2,262 million in 2006, thus achieving record earnings for the fifth consecutive year. The increase in operating profit was the result of higher new business and ongoing efficiency improvements. These factors more than offset higher expenses resulting from higher interest rates and increased cost of risk. In addition, the business development at Toll Collect also contributed to the positive earnings trend.
New business increased by 10 percent to $69.9 billion, while contract volume of $149.5 billion was 4 percent lower than in the prior year. Adjusted for exchange-rate effects, contract volume rose by 5 percent. At the end of 2006, Financial Services’ portfolio comprised 6.5 million leased and financed vehicles.
The Americas region (North and South America) managed a total contract volume of $106.1 billion at the end of 2006 (end of 2005: $113.4 billion). This was once again the highest volume recorded by any Financial Services region, accounting for 71 percent of the total portfolio. Adjusted for exchange-rate effects, the portfolio in the region expanded by 4 percent. The Europe, Africa & Asia/Pacific region also developed positively in 2006. Contract volume of $43.4 billion was 3 percent higher than the prior year’s level.
In Germany, DaimlerChrysler Bank further improved its market position: contract volume at the biggest European national company rose by 5 percent to $21.1 billion. DaimlerChrysler Bank welcomed its one-millionth customer in May 2006.
The Van, Bus, Other segment recorded an operating profit of $1,205 million in 2006 (2005: $1,440 million). Operating profit in 2006 includes charges of $519 million for the implementation of the new management model. These charges were mainly incurred for workforce reductions in the DaimlerChrysler Group’s administrative areas. Exceptional income was achieved in 2006 from the sale of real estate not required for operating purposes $176 million) and the consummation of the sale of the off-highway business ($327 million). Operating profit for 2005 included a positive contribution from the off-highway business of ($190 million). The Van and Bus operating units again achieved positive results. The impact of special items on the earnings of both years is shown in the table at the end of this release.
Unit sales at the Vans unit totaled 256,900 vehicles worldwide in the year under review (2005: 267,200). This slight decrease in sales was due to the Sprinter model changeover and associated production bottlenecks at the Düsseldorf plant. DaimlerChrysler Buses comprises the bus operations of the Mercedes-Benz, Setra and Orion brands. The unit sold 36,200 buses and chassis worldwide in 2006 (2005: 36,200). The Buses unit thus repeated the high level of unit sales it achieved in the prior year and maintained its position as the global market leader.
EADS contributed $856 million to the segment’s operating profit, which was below the prior-year result of $999 million. The reduction is primarily related to delays with the delivery of the Airbus A380. EADS will publish its results for the 2006 financial year on March 9, 2007.
February 14, 2007
2005: Financial Services
The Financial Services division once again developed very positively in all regions in 2005. In the past financial year, the operating profit posted by Financial Services improved by 17% to €1.5 billion. The earnings development in 2005 was mainly a result of significantly lower charges from the involvement in Toll Collect, increased revenues generated by attractive financial services products, the positive development of risk costs and improved efficiency. There was a negative impact from higher interest rates, particularly in the United States.
Contract volume rose by 15% to €117.7 billion; when adjusted for exchange-rate effects, contract volume increased by 3%. At the end of the year, Financial Services’ global portfolio comprised 6.4 million leased and financed vehicles. New business totaled €48.2 billion (2004: €50.9 billion) in an extremely competitive market environment in 2005.
As part of an organizational restructuring program, Financial Services combined all of its financial services activities in North and South America into the “Americas” region. Contract volume in this region increased by 18% to €85.9 billion, accounting for 73% of the total portfolio; when adjusted for exchange-rate effects, the increase was 1%. The Europe, Africa, Asia/Pacific region also developed positively in 2005. At €31.8 billion, contract volume was up 8% from the prior year.
In Germany, DaimlerChrysler Bank provided attractive products that once again led to an increase in leased and financed vehicles’ share of the total number of Group-brand vehicles sold. The bank managed a contract volume of €15.2 billion at the end of the year under review (2004: €14.5 billion), serving some 987,000 customers, or 7% more than in 2004.
In November 2005, the division became the first financial services company to offer passenger-car and truck financing, as well as insurance, in China.
The toll collect system for trucks above twelve metric tons gross vehicle weight works reliably.
On November 17, 2005, DaimlerChrysler sold its entire stake in Mitsubishi Motors Corporation (MMC).
As part of the strategy of focusing even more closely on core business operations, DaimlerChrysler reached an agreement in December 2005 with EQT, a Swedish financial investor, on the sale of both MTU Friedrichshafen GmbH and the off-highway activities of Detroit Diesel Corporation (DDC). The transfer of ownership is likely to take place in the first quarter of 2006.
European Aeronautic Defence and Space Company (EADS) continued growing in 2005, and expects both revenues and earnings to surpass its prior-year figures once again. The company will publish its results for the 2005 financial year on March 8, 2006.
The Other Activities segment increased its operating profit by €135 million to €591 million in 2005.