Daimler AG CEO Dieter Zetsche said 2014 was a terrific year for the company despite the fact that profits dipped 16%.
Daimler AG, the parent company of Mercedes-Benz brand cars and trucks, saw earnings drop 16% in 2014 despite record sales and revenues.
Daimler Chief Executive Dieter Zetsche, however, said overall 2014 was a terrific year for the German automaker and proposed boosting the annual dividend to shareholder to 2.45 euros.
“We set new records once again in 2014 – for unit sales, revenue and earnings. This progress is the result of consistent hard work. And it is based on decisions we made several years ago and which we have successfully implemented since then,” said Zetsche, who is also head of Mercedes-Benz Cars.
“That is now paying off,” he said. “It is clearly tangible throughout the Group. Daimler is on an upward curve.”
Earnings before earnings and taxes or EBIT 2014 of 10.8 billion euros is at the level of the previous year, which was positively affected by the sale of the shares in EADS. Moreover, EBIT from Daimler’s ongoing business increased by 27% to 10.1 billion euros, the highest ever achieved by Daimler AG.
Net income totaled 7.3 billion euros for down 16% to 8.7 billion to billion in 2013 when Daimler bolstered its bottom line with sales of major assets such as its stake in EADS, the pan-European aerospace and defense company.
With more than 2.5 million vehicles sold unit sales were 8% higher than in 2013. The increase was primarily driven by Mercedes-Benz Cars, which increased 10% and Mercedes-Benz Vans, which increased 9%.
The 2% increase in unit sales at Daimler Trucks was lower than originally expected, mainly due to the weak state of markets in Western Europe and Latin America. Daimler Buses’ unit sales were slightly below the prior-year level. On the basis of the growth in unit sales, nevertheless, Daimler’s increased by 10% to 129.9 billion euros; adjusted for exchange rate effects, revenue grew by 12%.
“We are proud of our development in the past financial year. As the year progressed, we continuously improved our performance and surpassed the prior-year quarters. We are growing profitably,” said Bodo Uebber, Daimler’s chief financial officer.
Daimler’s Board of Management and the Supervisory Board will propose an increase in the dividend to 2.45 euros per share, compared to the 2.25 euros paid the previous year.
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“With the once more increased dividend and thus the highest profit distribution by Daimler AG so far, we are letting our shareholders participate in the company’s success and at the same time expressing our confidence about the ongoing course of business,” Uebber said.
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The dividend distribution will amount to 2.621 billion euros and the distribution ratio will be 37.6% of the net profit attributable to the Daimler shareholders. In the coming years, Daimler aims for a distribution ratio in the magnitude of 40%, Uebber said.
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Daimler’s also improved its cash reserves, which grew to 17 billion at the end of December 2014 euros from 13.8 billion on Dec. 31, 2013. Uebber said the increase primarily reflects the positive cash flow of the company’s industrial business, which amounted to 5.5 billion in 2014 The sale of Daimler’s equity interests in Rolls-Royce Power Systems Holding GmbH and Tesla Motors, Inc. resulted in a net gain of 3 billion euros.
The positive cash flow from the industrial business was reduced, however, by contributions to the German pension plan assets of 2.5 billion euros and for the settlement of a healthcare plan in the United States.