Revenue and earnings
We assume that the Daimler Group’s revenue will grow slightly in 2016. Daimler will therefore continue along its growth path. The most positive aspect is the ongoing growth in unit sales by the automotive divisions.
Without exception, our divisions currently have a very attractive and particularly competitive product range, which has been expanded and consistently renewed in recent years. We therefore assume that Daimler will profit to an above-average extent from the slight growth in global demand for automobiles that we expect for 2016, and will be able to strengthen its position in important markets. At Mercedes-Benz Cars, additional growth this year will be driven above all by the new SUVs and the new E-Class models. The other automotive divisions are also extremely well positioned with their products, and Daimler Financial Services’ new business will profit from further growth in unit sales. We anticipate significant revenue growth at Mercedes-Benz Cars and Mercedes-Benz Vans and expect Daimler Trucks and Daimler Buses to post revenue in the magnitude of the previous year. We assume that the Daimler Financial Services division will slightly increase its revenue.
In regional terms, we expect the highest growth rates in Asia and Western Europe, but our business volumes should expand also in the other regions. In particular in China, we have created the right conditions for further growth with new sales outlets and additional production capacities. But the continuing growth in unit sales in China will have a disproportionately low impact on revenue growth, as the share of local production will increase. Our Chinese associated company Beijing Benz Automotive China (BBAC) is included in our consolidated financial statements using the equity method of accounting.
The growth in unit sales and revenue that we anticipate will have a positive impact on earnings in 2016.
We have laid the foundations for a lasting high level of earnings with the programs “Fit for Leadership” at Mercedes-Benz Cars, “Daimler Trucks #1” at Daimler Trucks, “Performance Vans” at Mercedes-Benz Vans and “GLOBE 2013” at Daimler Buses. With these programs, we achieved total profit contributions of approximately €4 billion by the end of 2014, by taking measures for sustained improvements in cost structures as well as through additional business activities. The full effect of these programs was already reflected in 2015. In addition to these measures for improved cost structures with short-term effects, we are taking measures in all divisions for the long-term structural optimization of our business system. In all divisions, we are standardizing and modularizing our production processes, for example with the intelligent use of vehicle platforms to achieve further cost advantages. In parallel, we are pushing forward with digital connectivity: in all divisions and along the entire value chain — from development to production to sales and service. This gives us additional scope to become faster, more flexible and more efficient - for the benefit of our customers. These long-term structural measures already had a positive impact on earnings in 2015, and will facilitate further efficiency gains in the coming years.
There will be opposing effects, however, from the ongoing high expenditure for our model offensive, for innovative technologies for the digitization of our products and processes, and for the expansion and modernization of our worldwide production facilities. As a result, our expenditure aimed at securing our successful future will once again be higher in 2016 than in the previous year. (See Objectives and Strategy)
After the development of currency exchange rates had an overall very positive impact on revenue and earnings in the year 2015, this effect is likely to be significantly less pronounced in 2016. Last year, the appreciation of the US dollar and some other currencies such as the Chinese renminbi led to positive exchange-rate effects. There were also some significant negative effects, in particular from the depreciation of the Russian ruble.
On the basis of the anticipated market development, the aforementioned factors and the planning of our divisions, we assume that Group EBIT from the ongoing business will increase slightly in 2016.
For the individual divisions, we have set ourselves the following targets for EBIT from the ongoing business in the year 2016:
- Mercedes-Benz Cars: slightly above the prior-year level,
- Daimler Trucks: at the prior-year level,
- Mercedes-Benz Vans: slightly above the prior-year level,
- Daimler Buses: slightly above the prior-year level, and
- Daimler Financial Services: slightly above the prior-year level.