Profitability

Daimler AG posted profit from ordinary activities of €3.5 billion for 2013 (2012: €5.1 billion). While an operating profit of €0.8 billion was achieved (2012: €1.4 billion), the development of earnings was also influenced by a decrease in financial income of €1.0 billion.

Revenue increased, as forecast in the previous year, due to the higher unit sales of vehicles and components by €2.8 billion to €75.5 billion. In the car business, revenue therefore rose by 4% to €55.1 billion. Also with trucks and vans, revenue increased for this reason by 5% to €20.4 billion.

The earnings achieved by the car business in 2013 were lower than in the previous year. The development of earnings was influenced by ongoing growth in unit sales in Western Europe, the United States and Japan. Our expanded range of compact cars made a particularly strong contribution. There were opposing, negative effects from the changed model mix and expenditure to enhance the products’ attractiveness, as well as expenditure for new technologies and products, amongst other factors. Unit sales in the car business increased by 7% to 1,451,000 vehicles1 in the year under review. Of the various model series, compact cars were once again extremely successful in 2013: Their sales increased by 67% to 398,000 units1. The E-Class segment posted sales growth of 7% to 293,000 units1. Due to the model change and for lifecycle reasons, unit sales in the S-Class and C-Class segments were lower than in the previous year.

Earnings from trucks and vans were slightly lower than in 2012. Unit sales of trucks increased by 9% to 105,000 vehicles1. Sales of vans reached 253,000 units (2012: 249,000)1.

Cost of sales (excluding research and development expenses) increased by 5.4% to €63.0 billion. The increase in unit sales and expenses for the enhancement of product attractiveness and for new technologies and products led to a higher cost of sales.

Research and development expenses, which are included in cost of sales, were slightly lower than in the previous year at €4.6 billion (2012: €4.8 billion); as a proportion of revenue, they amounted to 6.1% (2012: 6.6%). Research and development expenses were primarily related to the renewal of the product portfolio, especially with regard to the model series of the C-, E- and S-Class as well as the compact class. In addition, we are continuously working on new generations of engines and alternative drive systems. At the end of the year, approximately 17,000 people were employed in the area of research and development.

Selling expenses increased by €0.1 billion to €6.0 billion, mainly due to higher expenses for personnel, outgoing shipping and marketing. In relation to revenue, selling expenses decreased from 8.1% to 8.0%.

General administrative expenses of €2.6 billion were at the prior-year level (2012: €2.6 billion).

Other operating income, net amounted to €1.5 billion (2012: €1.8 billion). The change compared with the prior year was mainly the result of reclassifying expenses of €0.2 billion for top-up amounts (“Aufstockungsbeträge”) for partial retirement obligations; in the previous year, those expenses were presented under functional costs.

Financial income decreased by €1.0 billion to €2.7 billion, mainly due to lower net income from investments in subsidiaries and associated companies and lower net interest income. The decrease primarily reflects the lower special items than in the previous year in connection with the sale of EADS shares. In addition, the financial result was influenced by lower income from the special purpose assets reserved for pensions and similar obligations and by a higher interest portion of retirement benefit obligations.

The income tax benefit for 2013 amounts to €0.2 billion (2012: €0.4 billion). This includes tax benefits relating to the tax assessment of previous years. Income taxes were additionally influenced by the amount and composition of profits before income taxes. No tax was payable on a large proportion of financial income in 2013 and 2012.

Net profit decreased, as forecast in the previous year, from €5.5 billion to €3.7 billion. This development is due partially to the lower operating profit, but in particular to the lower financial income.

The economic situation of Daimler AG primarily results from the business operations of Daimler AG and its subsidiaries. Daimler AG participates in the operating results of the subsidiaries through distributions. The economic situation of Daimler AG is therefore fundamentally the same as that of the Daimler Group, which is described in the chapter “Economic Situation”.

1 The unit sales of Daimler AG include vehicles invoiced to companies of the Group which have not yet been sold on to external customers by those companies. Vehicle sales by production companies of the Daimler Group are not counted in the unit sales of Daimler AG.