Annual Report 1998 Daimlerchrysler 98 98 98 97 96 DM 1) US $ 2) € € € Amounts in Millions
Total Page:16
File Type:pdf, Size:1020Kb
Merger of Growth Annual Report 1998 DaimlerChrysler 98 98 98 97 96 DM 1) US $ 2) € € € Amounts in Millions Revenues 257,744 154,615 131,782 117, 572 101,415 Europe 94,794 56,868 48,468 42,115 37,270 United States 127,716 76,616 65,300 56,615 49,485 Other markets 35,234 21,136 18,014 18,842 14,660 Employees (at Year-End) 441,502 425,649 418,811 Research and Development Costs 13,090 7,853 6,693 6,501 5,751 Investments in Property, Plant and Equipment 15,950 9,568 8,155 8,051 6,721 Cash Provided by Operating Activities 32,625 19,571 16,681 12,337 9,956 Operating Profit 16,807 10,082 8,593 6,230 6,212 Net Operating Income 12,862 7,716 6,576 5.252 - Net Income 9,428 5,656 4,820 4,057 3) 4,022 Per Share 10.09 6.05 5.16 4.28 3) 4.24 Net Income Adjusted 4) 10,212 6,126 5,221 4,057 - Per Share Adjusted 4) 10.90 6.55 5.58 4.28 - Total dividend 4,608 2,764 2,356 - - Dividend per Share 4.60 2.76 2.35 - - 1) Conversion rate: € 1 = DM 1.95583 2) Rate of exchange: € 1 = US $ 1.1733 (based on the noon buying rate on Dec. 31, 1998 of US $1 = DM 1.6670 and the conversion rate of € 1 = DM 1.95583); the average US $/DM rate of exchange in 1998 was 1.7597. 3) Excluding one time positive tax effects, especially special pay-out of € 10.23 (DM 20) per share. 4) Excluding nonrecurring items: 1998 before merger costs; 1997 excluding one-time positive tax effects, especially special payout of € 10.23 (DM 20) per share. 98 98 97 Percentage of Sales Amounts in Millions US $ € € PASSENGER CARS Operating Profit 2,338 1,993 1,716 Mercedes-Benz Revenues *) 38,234 32,587 27,555 smart® Investments in Property, 2,341 1,995 1,885 Plant and Equipment R&D 2,264 1,930 1,583 Unit Sales 922,795 715,055 Employees (12/31) 95,158 91,753 98 98 97 Amounts in Millions US $ € € PASSENGER CARS & TRUCKS Operating Profit 4,942 4,212 3,368 Chrysler Revenues *) 66,101 56,340 51,942 Plymouth Jeep® Investments in Property, 4,599 3,920 4,501 Dodge Plant and Equipment R&D 1,989 1,695 1,512 Unit Sales 3,093,716 2,886,981 Employees (12/31) 123,180 118,639 98 98 97 Amounts in Millions US $ € € COMMERCIAL VEHICLES Operating Profit 1,110 946 342 Mercedes-Benz Revenues *) 27,175 23,162 20,012 Freightliner Sterling Investments in Property, 976 832 601 Setra Plant and Equipment R&D 837 714 602 Unit Sales 489,680 417,384 Employees (12/31) 89,711 85,071 * Unconsolidated figures of the business. 98 98 97 Amounts in Millions US $ € € CHRYSLER FINANCIAL A-Class 15 % SERVICES Operating Profit 765 652 586 C-Class, CLK, SLK 42% Revenues *) 3,376 2,877 2,407 E-Class 28% Employees (12/31) 3,513 3,405 S-Class/SL 6% M-Class/G-Class 7% smart 2% 98 98 97 Amounts in Millions US $ € € SERVICES Operating Profit 460 392 246 Financial Services IT Services Revenues *) 11,232 9,573 7,924 Telecom Services Investments in Property, 334 285 193 Plant and Equipment Employees (12/31) 20,221 14,898 Passenger Cars 31% Trucks 23% Minivans 22% Sport-Utility Vehicles 24% 98 98 97 Amounts in Millions US $ € € AEROSPACE Operating Profit 731 623 284 Commercial Aircraft Military Aircraft Revenues *) 10,290 8,770 7,816 Space Systems Infrastructure Investments in Property, 382 326 255 Satellites Plant and Equipment Defense and Civil Systems Aeroengines R&D 2,402 2,047 2,233 Employees (12/31) 45,858 43,521 Vans 44% Light and Medium Duty Trucks/Unimogs 20% 98 98 97 Heavy Duty Trucks 29% Amounts in Millions US $ € € Buses 7% OTHERS Operating Profit (171) (146) (225) Revenues *) 4,019 3,426 3,896 Investments in Property, 935 797 635 Plant and Equipment R&D 360 307 571 Employees (12/31) 32,581 37,844 OUR PURPOSE is to be a global provider of automotive and transportation products and services, generating superior value for our customers, our employees and our shareholders. OUR MISSION is to integrate two great companies to become a world enterprise that by 2001 is the most successful and respected automotive and CONTENTS transportation products and services provider. Chairmen's Letter 2 We will accomplish this by constantly delighting our customers with Board of Management 8 The Merger 10 the quality and innovation of our products and services, resulting from People of DaimlerChrysler 12 the exellence of our processes, our people and our unique portfolio Brands and Products 14 Business Review 18 of strong brands. The DaimlerChrysler Shares 22 Outlook 24 Operating Activities 26 DaimlerChrysler Worldwide 48 Research and Technology 50 DaimlerChrysler and the Environment 52 Human Resources 54 Analysis of the Financial Situation 56 Consolidated Revenues Operating Profit Earnings per Share*) in Billions of g in Billions of g in € Financial Statements 66 Supervisory Board 112 Report of the Supervisory Board 114 150 10 6 Major Subsidiaries 116 6 fds 125 8 5 Five-Year Summary 118 5 100 6 4 Addresses/Information 119 4 75 4 3 3 50 2 2 2 1 96 97 98 96 97 98 96 97 98 96 97 98 *) Adjusted for non-recurring items. Dear Shareholders and Employees: 1998 was a historic year. A year all of us will remember. It saw the creation of DaimlerChrysler – a new company formed from a merger which was completed in record time and with the overwhelming support of you, our shareholders and our employees. A new company with a proud combined heritage, with unparalleled products and brands, and with extraordinary opportunities that neither Daimler-Benz nor Chrysler alone could have dreamed of. A GREAT START. The people of DaimlerChrysler have made a great start in turning this potential into performance. CHAIRMEN’S LETTER In 1998: 2 ½ Revenues grew to € 131.8 billion (US $146.5 billion), up 12 % compared to combined 1997 results. ½ Operating profits increased to € 8.6 billion (US $9.6 billion), up 38 %. ½ Net income, excluding extraordinary one-time costs related to the merger, grew to € 5.2 billion (US $6.1 billion), up 29 %. ½ Earnings per share grew by 30 % to € 5.58 (US $6.55), again excluding extraordinary one- time costs related to the merger. ½ We sold more than 4.4 million cars, light trucks and commercial vehicles, and gained market share in virtually every market in which we operate – despite intense competition. ½ DaimlerChrysler Services (debis) achieved record results and further strengthened its competitive position. ½ DaimlerChrysler Aerospace (Dasa) had its best year ever. ½ As a result of our strong performance, DaimlerChrysler created 19,000 new jobs. These results are a tribute to the hard work and dedication of our people. They show that all of us kept our eye on the ball, despite the extra work involved in the merger. With what we have achieved so far, with the way in which we are bringing the two companies together, with our exciting plans for the future: DaimlerChrysler is in pole position to deliver extraordinary value to our customers, our shareholders and our employees in the years ahead. DELIVERING VALUE. Our proposal to declare a dividend of € 2.35 per share, reflects our commitment to shareholder value. For former Chrysler shareholders, this represents a continuation of the high dividend levels of recent years. For former Daimler-Benz shareholders, it is a significantly better return than in the past. Also, we are the first company in the world to introduce a “global share,” which is traded as a registered share – without the need for depository receipts – on 21 stock exchanges worldwide. We were one of the first companies to adopt the new European currency, the euro, as our corporate currency. By moving early, we already reap competitive benefits from this change. And this annual report is one of the first ever to report in euro. We initiated a public offering of more than 20 % of our mobile communication service provider, debitel; and we are taking full control of Adtranz, our rail systems business, in order to turn the company around. Most importantly, we are now adopting a tough new yardstick for evaluating the performance of each of our business units compared to our cost of capital – return on net assets, or “RONA”. We established a minimum target of 15.5 % RONA before tax. However, we push each business to do much better and achieve returns that match or exceed those of their best competitors’. At corporate level, taking into account items like financing and taxes, we earn our cost of capital when we achieve at least 9.2 % RONA after tax. In 1998, the stellar performance of our businesses returned 11.6 % RONA after tax at corporate level, compared to 10.2 % in 1997. Robert J. Eaton Jürgen E. Schrempp CHAIRMEN’S LETTER 3 CREATING THE NEW COMPANY. We aim to be truly one company – the world's leading automotive and transportation products and services company. Already, we are on our way. In just the first 100 days of your company, we made great strides in bringing together all key organizational functions so that our people can focus immediately on building the new company. We combined: ½ our procurement functions – the first step toward leveraging our combined annual purchasing power of € 80 billion (US $94 billion); ½ our sales and marketing organization – to maximize the strength and reach of our products; ½ almost all of our staff functions, including quality assurance, corporate finance, legal, communications, and our information technology departments, which have been combined under one Chief Information Officer; ½ our worldwide executive management development – to rapidly align performance evaluation and career planning; ½ our research and development activities for diesel engines, electric vehicles and fuel cell vehicles into single dedicated teams – combining expertise and eliminating overlap; ½ our financial services businesses – making DaimlerChrysler Services (debis) the world’s fourth largest non-bank financial services company with € 70 billion (US $82 billion) in assets.