STUTTGART, Germany -

Anticipating that this year will be even better, Daimler AG shared Wednesday the significant net profit turnaround the company witnessed from 2009 to 2010.

The company said it generated a net profit of 4.7 billion euro last year. To show the depth of the turnaround, Daimler suffered a net loss in 2009 of 2.6 billion euro.

And based on current estimates, Daimler is projecting that EBIT from the ongoing business in 2011 to surpass the level of 2010 significantly.

“Daimler managed an excellent comeback last year,” stated Dieter Zetsche, chairman of the board of management of Daimler AG and head of Mercedes-Benz cars.

“Our goal now is to maintain the level we have reached over the long term and to further improve it wherever possible,” Zetsche continued. “We have the right products, technologies and strategies to do so.”

Overview of 2010 Financial Performance & Standing

After the prior year had been severely impacted by the financial and economic crisis, Daimler indicated earnings in all divisions developed much more positively than had been anticipated at the beginning of 2010. Management indicated this growth was due not only to the general market recovery, but in particular to the attractive product range as well as efficiency gains that were implemented.

Executives conceded, however, there was an opposing effect on EBIT from increased research and development expenditure.

Nonetheless, Daimler determined the positive development of EBIT led to a significant improvement in net profit — a net loss of 2.644 billion euro in 2009 to a gain of 4.674 billion euro in 2010.

After Daimler decided not to pay a dividend last year, officials noted more than 40 percent of the group’s net profit attributable to Daimler shareholders is now to be distributed.

On this basis, the board of management and the supervisory board decided to recommend to the shareholders for their approval at the annual meeting to be held on April 13 that a dividend of 1.85 euro per share be paid out. Daimler projects that the total dividend payout will then amount to 1.971 billion euro.

Daimler computed that it sold a total of 1.9 million vehicles in 2010. The company noted that figure surpassed the 2009 performance by 22 percent.

“The level of the prior year had been very low due to the global economic and financial crisis,” Daimler stressed.

As a result, Daimler indicated group revenue increased by 24 percent to 97.8 billion euro. Adjusted for exchange-rate effects, it meant there was an increase of 19 percent.

The company’s free cash flow of the industrial business increased from 2.7 billion to 5.4 billion euro. Its net liquidity of the industrial business also rose significantly, too, climbing from 4.7 billion to 11.9 billion euro.

In terms of the workforce size, Daimler finished 2010 with a slightly larger pool due to stronger demand. As of Dec. 31, the company employed 260,100 people worldwide, up from the 2009 amount which was 256,407. Of that 2010 total, 164,026 were employed in Germany, up from 162,565 at the close of the previous year.

Because of its improved performance, Daimler’s board of management and general employee council have agreed that the special efforts made by the work force in 2010 will be rewarded with a high performance participation bonus of 3,150 euro per entitled employee.

Furthermore stemming from the anniversary year of the invention of the automobile, Daimler plans to award each employee worldwide a special bonus of up to 1,000 euro, depending on length of time at the group.

Various Divisions

Daimler executives said Mercedes-Benz Cars — comprising the brands Mercedes-Benz, Maybach and smart — increased its unit sales by 17 percent to 1,276,800 vehicles last year. In 2009, the sales figures settled at 1,093,900.

As the structure of unit sales shifted toward higher-value models, the company indicated revenue increased at the significantly higher rate — 29 percent to 53.4 billion euro.

Furthermore, the company indicated this division achieved EBIT of 4.656 billion euro — coming off a 2009 performance where the division sustained a 500 million euro loss. Return on sales came in at 8.7 percent in 2010 versus a decline of 1.2 percent during the previous year.

“This excellent result is mainly a reflection of the high volume of unit sales following the decline in demand for cars in the previous year,” Daimler executives explained.

“Above all in the United States and China, the Mercedes-Benz Cars division was able to increase its unit sales significantly because of its attractive product range,” they continued.

“Other factors with a positive impact on earnings were an advantageous product mix, improved pricing and increased efficiency,” these executives added.

Meanwhile, Daimler Trucks also increased its unit sales last year. The division moved 355,300 vehicles a 37-percent rise over the 2009 amount, which was 259,300. Consequently, revenue increased by 31 percent to 24 billion euro.

Daimler Trucks’ 2010 EBIT amounted to 1.323 billion euro as its return on sales was 5.5 percent. In the previous year, the division suffered a 1.001 billion euro loss.

“This earnings improvement is primarily due to the good development of unit sales with contributions from all major markets — Europe, United States, Latin America and Japan,” company officials stressed.

“Earnings were boosted in 2010 also by cost-reducing actions, in particular from the repositioning of Daimler Trucks North America and Mitsubishi Fuso Truck and Bus Corporation, although the implementation of those programs still had a negative impact on earnings of 40 million euro in 2010,” they added, also noted the negative impact in 2009 was 340 million euro.

In addition, Daimler Truck EBIT for 2010 included expenses relating to the reassessment of long-term warranty and service obligations as well as higher expenditure for research and development. The company said there was an opposing, positive effect from income of 160 million euro recognized at Daimler Trucks North America in connection with the adjustment of health care and pension plans.

Turning over to Mercedes-Benz Vans, this division moved 224,200 units last year, up from the 2009 mark of 165,600 units. As a result, revenue moved up to 7.8 billion euro. In 2009, the amount was 6.2 billion euro.

“The positive earnings trend resulted primarily from increased unit sales, especially in eastern Europe, the United States and China, and also from better pricing,” officials noted. “Charges from exchange-rate effects were more than offset by sustained efficiency improvements.”

And with regard to Daimler Financial Services, the company discovered 2010 worldwide contract volume settled at 63.7 billion euro — 9 percent above the prior-year level. Adjusted for exchange-rate effects, management determined the division’s growth was 3 percent.

Furthermore, Daimler Financial Services’ new business increased compared with the prior year by 17 to 29.3 billion euro. Adjusted for exchange-rate effects, the increase was 11 percent.

All of those improvements pushed the financial arm’s 2010 earnings to 831 million euro. In 2009, the amount was just 9 million euro. The 2010 return on equity was 16.1 percent compared with only 0.2 percent during the previous year.

“The increase in earnings after crisis year 2009 was mainly caused by lower expenses for risk provisions and higher interest margins,” officials emphasized.

“There were opposing, negative effects in 2010 from expenses of 82 million euro related to the restructuring of business operations in Germany,” they further explained. “An additional factor was that the division disposed of non-automotive assets that were subject to leasing agreements, resulting in an expense of 9 million euro.

2010 Investment Activity

Daimler indicated that the company increased its research and development expenditure last year to 4.8 billion euro. In 2009 the company said the amount was 4.2 billion euro.

Breaking down that 2010 total, the company noted research and development spending totaled 3.1 billion euro at Mercedes-Benz Cars and 1.3 billion euro at Daimler Trucks.

“The main areas of research and development work were new, extremely fuel-efficient and environmentally friendly drive technologies,” Daimler explained.

“This included working on the optimization of conventional drive technologies and enhancing their efficiency through hybridization, as well as on electric vehicles with fuel-cell drive and battery power. Another focus was on new safety technologies.”

Also of note, Daimler’s 2010 capital expenditure on property, plant and equipment amounted to 3.7 billion euro, up from 2.4 billion euro in 2009. Management indicated the focus was on investments in new vehicle models and new drive systems.

Daimler Offers Worldwide Market Outlook

According to current estimates, Daimler believes worldwide demand for vehicles will continue to grow this year, but no longer as dynamically as in 2010. The company thinks the global car market could expand by 5 to 7 percent, thus reaching a new record volume.

“The Asian emerging markets and in particular the Chinese market will continue to play a major role,” Daimler insisted. “But the outlook remains mixed for the triad markets of western Europe, the United States and Japan.

“The U.S. market should continue its recovery, while the best that can be expected for car sales in western Europe is that they remain at the prior-year level,” officials went on to say. “In Germany, however, significant growth is now to be expected following the double-digit market decline in 2010.

“On the other hand, the Japanese car market is unlikely to equal its artificially high level of 2010, which was boosted by state incentives for car buyers,” Daimler added.

Elsewhere, Daimler believes worldwide demand for commercial vehicles this year will probably feature sharply differing market developments in the triad markets and in the other regions.

Officials think market recovery is expected to accelerate in the triad of western Europe, the United States and Japan, especially in the segment of medium-duty and heavy-duty trucks. They project market growth of 20 to 25 percent is anticipated for the NAFTA region, while demand for trucks in Europe should increase by 15 to 20 percent.

Following the expiration of state incentive schemes in autumn 2010, Daimler contends moderate volume growth is expected for the Japanese market for medium and heavy-duty trucks.

“Demand for trucks outside the triad will be primarily determined by the Chinese market,” Daimler stated. “Since the state incentive program expired in China at the end of 2010, demand is expected to decline this year. “

In view of the continuation of generally good market prospects as well as numerous model changes and new products, the company reported that Mercedes-Benz Cars anticipates further growth in unit sales by the Mercedes-Benz brand.

“Thanks to its up-to-date and competitive model range, the division will profit also in the year 2011 from the strong demand for the E-Class models and from the market success of the S-Class,” officials surmised.

“Another factor is that the new version of the CLS coupe has been delivered to customers since late January,” they continued. “As of March, the new generation of the C-Class sedan and station wagon and the new SLK roadster will provide additional sales impetus. The C-Class coupe will follow in June, the new version of the M-Class will be launched in September, and the roadster version of the Mercedes-Benz SLS AMG will follow in the fourth quarter. In November, the new B-Class will be launched — the first model of four new vehicles in the compact-car segment.”

Furthermore, Daimler pointed out highly efficient four, six and eight-cylinder engines and the eco-start-stop technology are be introduced in additional models.

Finally for the smart brand, due to the full availability of the new-generation smart fortwo, the company believes unit sales are anticipated in the magnitude of last year.