Fixed Income Presentation - Q3 2019 October 24, 2019 - Daimler
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Fixed Income Presentation Q3 2019 October 24, 2019
Highlights of Q3 2019
• Strong Q3 sales for Mercedes-Benz Cars and Vans
• Acquisition of a majority interest in Torc Robotics completed
• BAIC investment in Daimler supports long-term partnership
• Administrative offense proceedings of the Stuttgart district attorney’s office
against Daimler AG fully concluded
• Q3 financial performance on track; net industrial liquidity at €9.6 billion
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 2
Financial performance in Q3 2019
Unit sales Revenue Free cash flow (ind. business)
in thousands of units in billions of euros in billions of euros
839 43.3
795 40.2
-0.1
+6% +8%
-0.5
Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q1-Q3 2018 Q1-Q3 2019
EBIT Net profit Earnings per share
in billions of euros in billions of euros in euros
2.5 2.7 1.8 1.8 1.58 1.61
+8% +3% +2%
Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 3Group EBIT in Q3 2019
in millions of euros
+1,167 -163
-628
• Cars -184
• Vans -52
• Trucks +48
• Buses +25 +21 -45 -185
• Cars -585
+39 2,694 2,655
2,488 • Vans +114
• Cars: • Trucks:
• Trucks -139
• Buses Investment Takata
• Cars +1,004 -18
in Aston airbags +39
• Vans +145 Martin -185
• Trucks -23
• Buses +41
Actual Volume/ Foreign Other cost Daimler Reconciliation Disclosed Disclosed Actual EBIT Q3 2019
Q3 2018 Structure/ exchange changes Mobility item in items in Q3 2019 before disclosed
Net pricing rates except Q3 2018 Q3 2019 items
disclosed items
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 4Net industrial liquidity
in billions of euros
Free cash flow industrial business
January-September 2019: minus €0.5 billion
+5.4 -7.6
+5.4 -3.5
16.3 -3.2
13.1 -0.2 -3.5
+0.5 9.6
Net industrial Effects from Net industrial Earnings and Working Depreciation and Additions to Investments in Dividend Other Net industrial
liquidity initial application liquidity other cash capital impact amortization/ property, plant, and disposals of payment liquidity
12/31/2018 of IFRS 16 1/1/2019 flow impact impairments equipment and shareholdings Daimler AG 9/30/2019
intangible assets
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 52019 sales outlook Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 6
2019 outlook for Group EBIT and divisional RoS/RoE
We expect Group EBIT for FY 2019 to be significantly below
the prior-year level
Return on sales in the range of 3 to 5%
Mercedes-Benz Cars
Return on sales in the range of minus 15 to minus 17%
Mercedes-Benz Vans
Return on sales in the range of 6 to 8%
Daimler Trucks
Return on sales in the range of 5 to 7%
Daimler Buses
Return on equity in the range of 17 to 19%*
Daimler Mobility
As reported, Daimler is subject to legal proceedings in connection with diesel exhaust emissions. In the context of their final
resolution, additional expenditures may arise, which may – subject to the further development of the proceedings – negatively
affect the above mentioned profitability expectations in particular of the Mercedes-Benz Cars and Mercedes-Benz Vans divisions.
* Including significant one-time valuation and earnings effects from the merger of the mobility services of Daimler and BMW.
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 7Daimler follows a prudent Financial Policy
Financial Stability
Balanced Dividend policy:
Pensions:
approach 40% pay-out
Clear No share keeping funded
between ratio*
commitment to buybacks ratio at high
shareholder depending on
a single A rating planned level (currently
interest and supporting cash
72%)
credit providers flows
* Based on net profit attributable to shareholders of Daimler AG
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 8Our funding strategy is built on strict principles
No dependence from single markets, instruments, banks or investors
Targeting
Diversification of funding sources and instruments:
Financial
Bank Loans, Bonds, ABS, CP, Deposits
Independence
No Covenants, no MAC, no asset pledges, no CSAs
Keeping prudent amount of Cash and Committed Credit Facility
Maximizing
Financial New markets funded via global and local banks first
Flexibility Early capital market funding to save credit capacity in growth regions
Liquidity matched funding
Stringent Global Interest rate matched funding
Funding Policy Currency matched funding
Country matched funding
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 9Project Future – Continuation of the “One Credit” approach
DPLTAs between Daimler AG and MB AG, DT AG and DMO AG as centerpiece of the new structure from a financing
DPLTA* perspective
Maintains access to all operating cash flows (up-streaming dividend payments to Parent Co’s)
Centralized steering of group funding supported by written guarantees will remain in place
Group Funding
Operational and Financial Guarantees to be provided by Daimler AG (vs. contractual guarantees, i.e. buyback)
Liquidity
Direct and unrestricted access to group liquidity by Daimler AG
Management
Management of
Continued centralized management of the impact of market fluctuations (FX, interest rates, commodities) of the
Market Price
divisions and the Group
Risks
Rating Strong commitment to maintain Daimler’s strong credit profile
* DPLTA: Domination and Profit & Loss Transfer Agreement
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 10Daimler’s business model is based on a central liquidity and
risk management
Funding Support
by Daimler AG
Guarantor for all debt
Credit Support via DPLTA* from
Mercedes-Benz AG and Daimler Truck AG Daimler
Mobility AG
Daimler Iambition
Mercedes Daimler Truck (Subgroup)
Benz AG AG
(Subgroup) (Subgroup)
II
Contract Volume:
~EUR 160bn (Q3 2019)
Business Support by FS
* DPLTA: Domination and Profit & Loss Transfer Agreement
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 11Funding is the base to ensure sustainable portfolio growth at
Daimler Mobility
11.7 % CAGR Wholesale
160
154
140 Loan
133
117 Lease
99
Others
80 84
72 Trucks
72 62 71
Portfolio
(in bn €) 64 58 Buses
48
38 41 Vans
Acquisitions 34
(in bn €)
29
Passengers Cars
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
YTD 09
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 12Financial Services business model based on stringent credit
management and solid refinancing
Net credit losses as a percentage of portfolio, subject to credit risk
Portfolio performs on an excellent level, based
on an outstanding acquisition quality
The matched-funded approach ensures that
liquidity risks are managed properly
External Liabilities IB (Target duration 5y) Internal IC-loans to FS (Duration ~2y)
External liabilities of Daimler Group have a 2.5x
longer duration due to capital market refinancing
than internal allocation to FS via IC-loans
Self-liquidating FS portfolio insures
a liquidity match for the group
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 13Financing liabilities show a diversified funding mix
in billions of EUR
Fin. Lease (IFRS 16) Acc. Deposits
Other (ex Fin. Lease) Bank Loans
Com. Paper Bonds
ABS
159.7
145.0 0.0 4.1
2.0 14.2 1.7
127.4 0.0 12.5 2.8 3.0
12.5
117.6 0.0 2.0
11.0 11.8
1.0 1.0
100.6 0.0 10.6 1.7 11.5 39.6
1.5 11.6 39.4
7.4 3.0
10.5 34.6
29.7
27.3
84.6
76.6
63.0 67.3
50.8
2015 2016 2017 2018 Q3 2019
Note: Figures may not be additive due to rounding.
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 14To ensure sustainable portfolio growth, we mitigate risk and
volatility through a balanced mix of funding instruments
Capital Markets Strengthen our global footprint
and use market opportunities
Other Fin. Lease (IFRS 16)
1% 3% Deepen our excellent
Bank Loans bank relationships
Bank loans
20%
Bank loans Globally expand our highly
25% ABS competitive ABS issuances
Q3
2019 55% Cap Market Deposit Maintain well controllable
liquidity reserve
Deposits 10% Target 50% Cap Market
Deposits 8%
9% 20%
ABS
ABS
RATING
INDEPENDENT
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 15Daimler committed to keep a prudent level of Gross Liquidity
Gross Group Liquidity (in bn EUR) Net Industrial Liquidity (in bn EUR)
DMO
Industrial Business
25.4 26.0
3.0 19.7
21.7 22.1 4.3 18.6
3.5 3.7 16.6 16.3
18.2
2.8
9.6
23.0
21.2
18.2 18.4
15.4
2015 2016 2017 2018 Q3 2019 2015 2016 2017 2018 Q3 2019
Note: Figures may not be additive due to rounding
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 16Consequent development to global capital market funding
Diversification will continue
Canada
EMTN
Domestic Bonds Euro Market
ABS Korea
CP EMTN Program
Italian domestic Domestic Bond Prog.
EUR CP Program
ABS China
USA Japan
Turkey Domestic Bonds
144a / RegS PP Domestic Bonds
ABS
CP Domestic Bonds EMTN
ABS EMTN
Thailand
Mexico India Domestic Bond Prog.
Domestic Issuance Prog. Domestic Bonds
Domestic CP
Malaysia
Domestic Bond Prog.
Brazil
Letras
Financeiras
Australia
South Africa
Domestic Debt EMTN
Argentina Issuance Prog. Domestic CP Prog.
ABS
Domestic Debt
Issuance Prog.
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 17Funding base further diversified to a true global set-up
in billions of EUR
159,7
3%
1%
9%
2% Currency Volume %
8% EUR 36,0 43%
USD 31,4 38%
CNY 3,9 5%
GBP 3,4 4%
25%
CAD 3,0 4%
Currency Volume % ZAR 1,7 2%
EUR 19,5 66% KRW 0,9 1%
USD 7,8 27% AUD 0,7 1%
Fin. Lease (IFRS 16) 0% ZAR 0,8 3% MXN 0,6 1%
Other 57,3 2% JPY 0,6 2% JPY 0,5 1%
GBP 0,3 1% NOK 0,4 0%
Com. Paper 0%
22% CHF 0,2 1% Other (CHF, THB 1,2 1%
ABS 2% 53%
Other (AUD, 0,2 1% INR, BRL, MYR,
Acc. Deposits 23% HKD)
Bank Loans MXN, ARS)
Total 29 Total 85
Bonds 51% Currencies 9 Currencies 19
Q4 2009 Q3 2019
Note: Figures may not be additive due to rounding
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 18Maturity profile further lengthened
in billions of EUR as of 30 September 2019
17.9 18.1
0.8 1.6 Bonds Issued in 2019
Bond Maturities
12.6
6.6
17.2
16.5
6.3 6.6
2.0 2.3
3.7 3.7
3.0
6.0 2.2 2.1 2.4 2.1
4.3 4.2 2.0 0.9 1.3
0.8
1.5 0.2 0.5
1.0 1.3
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2034 2037
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 19Syndicated Credit Facility extended
In July 2019 Daimler extended its EUR 11bn Syndicated Credit Facility until 2024
Syndicate of 44 international banks
No covenants, rating triggers etc.
Securing significant long-term liquidity at favorable cost
No intention to draw the credit facility
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 20Solid rating supports Daimler‘s funding
Agency Long-term Outlook Short-term
Current ratings: S&P: A Negative A-1
Moody’s: A2 Negative P-1
Fitch: A- Stable F2
DBRS: A Stable R-1 (low)
Scope: A Stable S-1
Daimler target: Sustaining the A rating with all rating agencies
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 21In low interest rate environment high contributions stabilized
Funded Ratio
14
11.5
12 10.5
9.8
10 8.6
7.8
in EUR bn
8 7.4
6.2
6 4.5
4
3.4
2.2
3.1 2.4
3.7 Significant contributions of EUR
2.0 1.9
2 0.3
1.1 0.5 0.7
0.1 15.9bn since 2010 support the solid
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019
capital structure
Pension Provision Daimler Group Contributions
+9%
90 86% 8
80%
80 73% 75% 7
72%
70 66%
60
63%
59%
63% 62% 6
Even though German Discount Rate
5
50 5.00%
4.70%
decreased significantly since 2010,
3.40% 4
40 3.10%
2.60% 3
Funded Ratio is at a solid level of 72%
30 1.90% 1.90% 1.80%
1.80%
20 2
0.68% 1
10
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019
Discount Rate Daimler AG (in %) Funded Ratio Daimler Group (in %)
Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 22Disclaimer This document contains forward-looking statements that reflect our current views about future events. The words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “may,” ”can,” “could,” “plan,” “project,” “should” and similar expressions are used to identify forward-looking statements. These statements are subject to many risks and uncertainties, including an adverse development of global economic conditions, in particular a decline of demand in our most important markets; a deterioration of our refinancing possibilities on the credit and financial markets; events of force majeure including natural disasters, acts of terrorism, political unrest, armed conflicts, industrial accidents and their effects on our sales, purchasing, production or financial services activities; changes in currency exchange rates and tariff regulations; a shift in consumer preferences towards smaller, lower-margin vehicles; a possible lack of acceptance of our products or services which limits our ability to achieve prices and adequately utilize our production capacities; price increases for fuel or raw materials; disruption of production due to shortages of materials, labor strikes or supplier insolvencies; a decline in resale prices of used vehicles; the effective implementation of cost-reduction and efficiency-optimization measures; the business outlook for companies in which we hold a significant equity interest; the successful implementation of strategic cooperations and joint ventures; changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety; the resolution of pending government investigations or of investigations requested by governments and the conclusion of pending or threatened future legal proceedings; and other risks and uncertainties, some of which we describe under the heading “Risk and Opportunity Report” in the current Annual Report. If any of these risks and uncertainties materializes or if the assumptions underlying any of our forward-looking statements prove to be incorrect, the actual results may be materially different from those we express or imply by such statements. We do not intend or assume any obligation to update these forward-looking statements since they are based solely on the circumstances at the date of publication. Daimler AG Daimler Fixed Income Presentation / Q3 2019 / Page 23
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