Review of Daimler AG
Financial Accounting Project
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TABLE OF CONTENTS
Introduction ................................................................................................................................ 3
Financial Information ................................................................................................................. 4
Share Performance ..................................................................................................................... 5
Ratio Analysis ............................................................................................................................ 8
Quick Ratio ......................................................................................................................................................... 8
EBITDA Margin ................................................................................................................................................. 9
Earnings per Share (EPS) .................................................................................................................................. 10
Dividends per Share (DPS) ............................................................................................................................... 11
Conclusion ................................................................................................................................ 11
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INTRODUCTION
Daimler AG, also referred as Daimler or Mercedes-Benz, is a German automotive
company that is most known for manufacturing cars and trucks. Daimler owns or has shares
in other vehicle brands, such as Smart Automobile, Western Star, Setra, Denza, Kamaz, and
more.(“Daimler AG,” 2021)
The company was formed in 1926 when two people decided to merge their ideas,
knowledge, and experience, as well as their automobile companies.(Daimler AG |
International Automotive Company, n.d.). Karl Benz and Gottlieb Daimler established
Daimler-Benz, which over the years turned into many people’s favorite vehicle manufacturer.
Daimler AG is an example of a company that uses the so-called Manufacturer
Business Model, which means that raw materials are converted into a final product and then
sold to customers. As of the start of 2020, Daimler Group, a child company of Daimler AG,
has split up its business activities in the following fields: Mercedes Benz Cars & Vans,
Daimler Trucks & Busses and Daimler Mobility. All three of these business divisions work
towards one business goal of Daimler, which is “to continue playing a leading role in the
development of products and services for the future of mobility”(Business Model › Daimler
Annual Report 2020, 2021).
Daimler AG considers the climate change and the pollution in the environment and
that is why one of its strategies is to work towards making mobility sustainable and reducing
CO2 emissions. Furthermore, the company desires to expand in the electric and autonomous
driving markets, as well as to seek for feedback of its customers even more(Daimler, n.d.-b).
When it comes to Daimler’s main competitors, these are Volkswagen, BMW Group
and Audi AG.
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FINANCIAL INFORMATION
When observing the total equity of
Total equity in millions of EUR
(2018 - 2020)
Daimler AG over the last 3 years, we see
the pattern of it slowly but steadily decreasing.
€ 68 000
€ 66 000
As a matter of fact, total equity is formed by
summing equity attributable to shareholders
€ 64 000
€ 62 000
€ 60 000
2018
and non-controlling interests. In 2018, equity
2019
2020
totals at €66,053 million (€64,667 – attributable to shareholders and €1,386 non-controlling
interests)(Daimler, 2019), while in 2019 it is €62,841 million (€61,344 – attributable to
shareholders and €1,497 non-controlling interests)(Annual Report and Full Year Results 2019
| Daimler > Investors > Reports & News > Annual Reports > 2019, n.d.). In 2020 we see the
lowest total equity from the three, which is €62,248 million (€60,691 – attributable to
shareholders and €1,557 non-controlling interests)(Daimler, 2021).
If the debt of Daimler is compared over
Debt in millions of EUR (2018
- 2020)
the 3 years, quite surprisingly, the lowest one is
for 2020 and it is €154,440 million, with €65,930
million being short-term debt and €88,510 million
long-term(Daimler, 2021). Then in 2018, the debt
estimates at €154,934 million, €63,897 million
€-
€ 50 000
total debt
€ 100 000 € 150 000 € 200 000
long-term debt
short-term debt
short-term and €91,037 million long-term(Daimler, 2019). Finally, the highest debt is for
2019 and it is €171,644 million. It is the sum of €70,353 million short-term debt and €101,291
million long-term debt(Annual Report and Full Year Results 2019 | Daimler > Investors >
Reports & News > Annual Reports > 2019, n.d.).
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The shareholder structure at Daimler AG is quite heavily and disproportionately
distributed. Institutional investors posses around 54% of the stocks, while retail investors
make around 21% of the pie chart. Other shareholders are Tenaciou3 Prospect Investment
Limited, Kuwait Investment Authority, BAIC Group and Renault-Nissan(Daimler, n.d.-c).
Exact percentages can be observed on the pie chart. Please note that the data is valid for 31st
of December 2020 and changes might have occurred after that.
Shareholders
Institutional Investors
5%
9.7%
6.8%
3.1%
Retail Investors
54.1%
21.3%
Tenaciou3 Prospect
Investment Limited
Kuwait Investment Authority
BAIC Group
Renault-Nissan
SHARE PERFORMANCE
Daimler AG shares are listed both on the Frankfurt Stock Exchange and on the
Stuttgart Stock Exchange. From April 2016 to April 2021 the share price went from €59.62 to
€74.21 for a total increase of 24.5% (Daimler, n.d.-a). While the current share price is close to
the all-time high of €76.85 registered in February 2018, the lowest point it has ever reached is
€21.02 in March 2020.
In 2016 Daimler AG managed to surpass BMW and go on top as the highest-selling
premium automaker in the world. However, for the period 31st May – 6th July 2016 Daimler’s
share price fell by approximately €10. This was mainly due to the uncertain macroeconomic
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situation in Europe and more specifically, UK’s vote to exit the EU (Team, n.d.-a).
Furthermore, world’s truck market was struggling, which logically resulted in less Daimler
trucks being sold.
Daimler AG’s share price jumped from €62.39 to €72.83 for a period of a month and a
half, starting on 1st of December 2016. The prime reason for this is the growth in the Chinese
market (Team, n.d.-b). Moreover, Daimler managed to sustain its lead over BMW and Audi in
the US market. The demand for Mercedes Benz’s vehicles increased, since the company
invested a lot of money into manufacturing new models. The greatest success marked
Daimler’s SUVs with a 34.3% increase in sales compared to 2015.
From 12 July 2017 to 28 July 2017 Daimler AG share price fell from €65.46 to €59.86
(Skinner, n.d.). This rapid decrease was mainly a result of a report, which claimed that the
German automotive company used so-called defeat devices in order to beat emission tests in
Europe and in USA. The German daily newspaper Sueddeutsche Zeitung cited a warrant,
which claimed that Daimler cheated on emissions tests in the period 2008 – 2016, with over a
million vehicles using the defeat device.
Then, from August 2017 to February 2018 Daimler’s shares jumped from €59.29 to an
all-time high of €76.25 one the 1st of February. The main reason for this is the record sales for
2017, as well as a peak in revenue and earnings (Daimler AG Reports Record Sales in 2017,
2018). Also, Daimler increased its truck sales, as well as global influence as it comes to
electric vehicles. Not only that, but the company manufactured the first electric truck in
Europe (Welle (www.dw.com), n.d.).
Daimler AG shares slipped from €68.38 to €44.78 from May 2018 to January 2019.
“The carmaker blamed mounting expenses to upgrade diesel emissions systems in Europe”
(“Daimler Drops to Five-Year Low After Second 2018 Profit Warning,” 2018). Moreover, the
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company was loaned 11 billion euros to invest into electric and self-driving cars (Banks Loan
Carmaker Daimler €11bn to Develop Electric and Self Driving Cars, 2018).
From the start of 2020 until March 2020 Daimler’s share price was plummeting until it
hit its all-time lowest - €21.02. This was solely due to the Covid-19 pandemic, which made
the whole automotive market mark a downfall (Taylor, 2020). The lockdown forced a halt to
manufacture and showrooms and resulted in a decrease in sales.
Since April 2020, the share price of Daimler has been increasing. It started at €27.52
and is now, as of 8th of April 2021 valued at €74.21. Apart from the better-off situation with
the pandemic, the spinoff of Daimler Truck, as well as upcoming S-Class, C-Class, electric
and self-driving models with “sophisticated gadgetry” are the reasons for such an increase
(Daimler Steps up Profit Push on Share Price Boost | The Star, n.d.).
The main Daimler AG’s competitor is BMW AG, whose stocks are listed on the
Frankfurt Stock Exchange. In the period April 2016 – April 2021 the share price went from
€74.30 to €88.17 for a total increase of 18.7% (BMW Shares, n.d.). The all-time high for this
period is €96.26, while the lowest point is €37.66.
Daimler AG Share Price
(2016-04-08 - 2021-04-08)
Covid-19 Pandemic,
lockdown resulting in
automotive market crash.
80,00
70,00
60,00
50,00
40,00
30,00
20,00
10,00
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08.04.2021
08.02.2021
08.12.2020
08.10.2020
08.08.2020
08.06.2020
08.04.2020
08.02.2020
08.12.2019
08.10.2019
08.08.2019
08.06.2019
08.04.2019
08.02.2019
08.12.2018
08.10.2018
08.08.2018
08.06.2018
08.04.2018
08.02.2018
08.12.2017
08.10.2017
08.08.2017
08.06.2017
08.04.2017
08.02.2017
08.12.2016
08.10.2016
08.08.2016
08.06.2016
08.04.2016
0,00
RATIO ANALYSIS
QUICK RATIO
Quick Ratio
Quick Ratio
0,95
0,94
0,93
0,92
0,91
0,9
0,89
0,88
2016
2017
2018
2019
2020
Quick ratio refers to the ability of a company to convert its near-cash assets and pay its
current liabilities (writer et al., n.d.). For instance, if a company has a quick ratio of 1 that
means that it has €1 of liquid assets to cover each of its €1 current liabilities. In the case of
Daimler AG, the quick ratio for the past 5 years is quite steady, varying from 0.90 to 0.94
(Daimler AG Quick Ratio 2006-2020 | DDAIF, n.d.). The reason for this pattern is that the
company has neither experienced any severe fluctuations in its cash and cash equivalents, nor
the current liabilities have changed dramatically. Still, 0,90 is a decent quick ratio that enables
the company to cover its short-term obligations.
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EBITDA MARGIN
EBIDTA MARGIN (%)
11,39
2016
2017
2018
2019
7,55
6,89
9,95
11,59
EBIDTA Margin (%)
2020
EBITDA stands for “earnings before interests, taxes, depreciation and amortization”,
while the EBITDA margin is calculated by dividing EBITDA by the revenue of the company
(Chen, n.d.-b). EBITDA is the earnings that a company makes purely on its operations,
without regarding the costs of financing and taxes. The EBITDA margin for Daimler AG has
been decreasing from 2016 to 2019, while in 2020 it managed gain an almost 1% increase
(Daimler AG EBITDA Margin 2006-2020 | DDAIF, n.d.). This suggests that Daimler has not
managed to adequately pass along rising costs by raising prices. However, the EBITDA
margin of the company is still good enough and indicates that its performance is stable. On
the other hand, EBITDA margin should be used cautiously, because Daimler has a high debtto-equity ratio, as seen in the financial information.
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EARNINGS PER SHARE (EPS)
EPS
12
10
8
6
4
2
0
2016
2017
2018
2019
2020
EPS
EPS is an acronym for Earnings per Share and it “indicates how much money a
company makes for each share of its stock” (Fern & o, n.d.). Based on the annual reports of
Daimler AG, it can be illustrated on the graph above that the EPS of the company has been
going up and down for the recent five years. The EPS rise for 2017 is mainly because of the
record sales and the peak in revenue and earnings that year. Then in 2018 the company had to
spend much money on attempts to reduce CO2 emissions. In 2019 the company had a very
low net profit, which reflected on the EPS, while in 2020 new models were introduced and
Earnings per Share increased.
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DIVIDENDS PER SHARE (DPS)
Dividents per share (€)
Dividents per share (€)
4
3,5
3
2,5
2
1,5
1
0,5
0
2016
2017
2018
2019
2020
“Dividends per share (DPS) is the sum of declared dividends issued by a company for
every ordinary share outstanding”(Chen, n.d.-a). Daimler AG has been doing relatively well
in 2016, 2017 and 2018 as far as DPS is concerned. However, in 2019 DPS significantly
dropped and estimated at €0.90 million. The main reason for this is that the company had poor
earnings performance. More specifically, the net profit was €2,7 billion, which was roughly 3
times lower than the net profit for 2018 (Annual Report and Full Year Results 2019 | Daimler
> Investors > Reports & News > Annual Reports > 2019, n.d.). For 2020 the DPS increased,
which is logical, considering that the net profit jumped to €4.0 billion and the cash flow
increased significantly as well.
CONCLUSION
Daimler AG is one of the most popular automotive companies on the world. The share
price of the company has been increasing since April 2020 and is very close to its highest for
the last 5 years. Furthermore, its EDITDA margin and quick ratio for 2020 have a decent
value. However, compared to the years 2016 – 2018, both the Dividends per Share and
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Earnings per Share for 2020 are relatively low. Given all this, investing in Daimler AG is
quite risky. On the other hand, high risk can bring high reward and in the case of Daimler,
there are arguments to back up such a claim. Thus, I suggest that Daimler AG is worthy for a
small investment.
References:
Annual report and full year results 2019 | Daimler > Investors > Reports & News > Annual
Reports > 2019. (n.d.). Retrieved March 26, 2021, from
https://www.daimler.com/investors/reports-news/annual-reports/2019/
Banks loan carmaker Daimler €11bn to develop electric and self driving cars. (2018, July
24). https://www.ft.com/content/bb2152b6-8f1e-11e8-bb8f-a6a2f7bca546
BMW Shares. (n.d.). Retrieved April 11, 2021, from
/content/grpw/websites/bmwgroup_com/en/investor-relations/bmw-shares.html
Business model › Daimler Annual Report 2020. (2021, February 8).
https://annualreport.daimler.com/2020/combined-management-report-with-nonfinancial-statement/corporate-profile/business-model/
Chen, J. (n.d.-a). Dividend Per Share (DPS). Investopedia. Retrieved April 16, 2021, from
https://www.investopedia.com/terms/d/dividend-per-share.asp
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https://www.investopedia.com/terms/e/ebitda-margin.asp
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Daimler. (n.d.-a). Daimler Share—Share Price—Performance Calculator. Daimler. Retrieved
April 11, 2021, from https://www.daimler.com/investors/share/
Daimler. (n.d.-b). Our strategy. Daimler. Retrieved March 25, 2021, from
https://www.daimler.com/company/strategy/
Daimler. (n.d.-c). Shareholder Structure. Daimler. Retrieved March 26, 2021, from
https://www.daimler.com/investors/share/shareholder-structure/
Daimler. (2019, February 15). Annual report and full year results 2018. Daimler.
https://www.daimler.com/investors/reports-news/annual-reports/2018/
Daimler. (2021, February 18). Annual report & full year results 2020. Daimler.
https://www.daimler.com/investors/reports-news/annual-reports/2020/
Daimler AG. (2021). In Wikipedia.
https://en.wikipedia.org/w/index.php?title=Daimler_AG&oldid=1013998659
Daimler AG | international automotive company. (n.d.). Encyclopedia Britannica. Retrieved
March 25, 2021, from https://www.britannica.com/topic/Daimler-AG
Daimler AG EBITDA Margin 2006-2020 | DDAIF. (n.d.). Retrieved April 16, 2021, from
https://www.macrotrends.net/stocks/charts/DDAIF/daimler-ag/ebitda-margin
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https://www.macrotrends.net/stocks/charts/DDAIF/daimler-ag/quick-ratio
Daimler AG Reports Record Sales in 2017. (2018, February 1). Transport Topics.
https://www.ttnews.com/articles/daimler-ag-reports-record-sales-2017
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Daimler Drops to Five-Year Low After Second 2018 Profit Warning. (2018, October 19).
Bloomberg.Com. https://www.bloomberg.com/news/articles/2018-10-19/daimlerissues-fresh-profit-warning-shares-fall-most-in-2-years
Daimler steps up profit push on share price boost | The Star. (n.d.). Retrieved April 11, 2021,
from https://www.thestar.com.my/business/business-news/2021/02/16/daimler-stepsup-profit-push-on-share-price-boost
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Taylor, E. (2020, April 23). Daimler’s earnings plunge as coronavirus hammers sales.
Reuters. https://www.reuters.com/article/us-daimler-results-idUSKCN2243IH
Team, T. (n.d.-a). Mercedes’ Strong Growth Could Give Impetus To Daimler’s Stock. Forbes.
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Happened. Forbes. Retrieved April 11, 2021, from
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Welle (www.dw.com), D. (n.d.). Daimler delivers first all-electric trucks in Europe | DW |
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writer, F. B. F. T. S. S. is a freelance, Commodities, A. E. on, stocks, Investments, A.,
cryptocurrency, Market, A. W. as, trader, company news I. addition to being a
derivatives, consultant, manager, S. has over 17 years of experience as a product,
Netherl, is the owner of F. com H. received his master’s degree in financial
management from the, s, & Seth, his B. of T. degree from I. L. about our editorial
policies S. (n.d.). Quick Ratio. Investopedia. Retrieved April 16, 2021, from
https://www.investopedia.com/terms/q/quickratio.asp
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