Value added

As described in the “Performance measurement system” section of the “Corporate Profile” chapter in graphic B.03, the cost of capital is the result of net assets and cost of capital expressed as a percentage, which is subtracted from earnings in order to calculate value added. The tables B.21 and B.22 show value added and net assets for the Group and for the individual divisions. Table B.23 shows how net assets are derived from the consolidated statement of financial position.

Daimler AR2014 B.03 Calculation Value Added

B.21

Value added
  2014 2013 14/13
In millions of euros     % change
       
Daimler Group 4,416 5,921 -25
       
Mercedes-Benz Cars 3,799 2,007  +89
Daimler Trucks 761 369  +106
Mercedes-Benz Vans 473 445  +6
Daimler Buses 79 -4 .
Daimler Financial Services 457 409  +12

B.22

Net assets (average)
  2014 2013 14/13
In millions of euros     % change
       
Mercedes-Benz Cars 17,114 16,658  +3
Daimler Trucks 9,313 10,571 -12
Mercedes-Benz Vans 1,742 1,547  +13
Daimler Buses 982 1,068 -8
Daimler Financial Services1 7,154 6,607  +8
Net assets of the divisions 36,305 36,451 -0
Equity-method investments2 618 638 -3
Assets and liabilities from income taxes3 2,700 2,479  +9
Other reconciliation3 1,156 1,080  +7
       
Daimler Group 40,779 40,648  +0
1 Total equity
2 To the extent not allocated to the segments
3 Industrial business

B.23

Net assets of the Daimler Group at year-end
  2014 2013 14/13
In millions of euros     % change
       
Net assets of the industrial business      
Intangible assets 9,144 9,228 -1
Property, plant and equipment 23,125 21,732  +6
Leased assets 14,374 13,207  +9
Inventories 20,004 16,648  +20
Trade receivables 7,824 7,208  +9
Less provisions for other risks -13,420 -11,382  +18
Less trade payables -9,852 -8,778  +12
Less other assets and liabilities -22,438 -15,983  +40
Assets and liabilities from income taxes 3,981 1,878  +112
Total equity of Daimler Financial Services 7,617 6,596  +15
       
Net assets 40,359 40,354  +0

The Group’s value added amounted to €4.4 billion in 2014 (2013: €5.9 billion), representing a return on net assets of 18.8% (2013: 22.6%). This was once again substantially higher than the minimum required rate of return of 8%. Value added in the previous year was influenced in particular by the remeasurement and the sale of the remaining EADS shares. 2014 was also affected by special items from the sale of the 50% equity interest in RRPSH and from the remeasurement and sale of the Tesla shares. Adjusted for these one-time effects, the Group’s value added increased in 2014 primarily due to the favorable business development of all divisions.

The value added of Mercedes-Benz Cars increased by €1.8 billion to €3.8 billion. This was mainly the result of the positive development of earnings caused by the ongoing growth in unit sales, the expanded product range and the positive efficiency measures of the “Fit for Leadership” program. There were opposing, negative effects on value added from expenses relating to the enhancement of products’ attractiveness, capacity expansions and advance expenditure for new technologies and vehicles. The division’s average net assets increased only slightly by €0.5 billion.

Value added at Daimler Trucks more than doubled compared with the previous year and reached €0.8 billion. This was due not only to higher earnings resulting from significant growth in unit sales in the NAFTA region and Japan, lower warranty costs and the successful implementation of the “Daimler Trucks #1” growth and efficiency program, but also to the reduction in average net assets following the sale of the 50% equity interest in the associated company RRPSH.

Mercedes-Benz Vans’ value added of €0.5 billion was slightly higher than in 2013. Higher earnings were achieved due in particular to the very positive development of unit sales. On the other hand, average net assets increased by €0.2 billion to €1.7 billion, primarily as a result of increased fixed assets and the rise in the carrying value of Daimler’s interest in the Chinese joint venture FBAC following the reversal of a previous impairment.

The Daimler Buses division achieved positive value added of €79 million in 2014 (2013: negative €4 million). This was mainly the result of improved earnings due to increased unit sales of complete buses and the positive product mix, as well as ongoing efficiency progress. Average net assets slightly decreased by €86 million and made a minor contribution to the increase in value added.

Daimler Financial Services’ value added of €0.5 billion was higher than in 2013. The division’s return on equity amounted to 19.4% (2013: 19.2%). The development of value added primarily reflects the increase in EBIT due to the growth in contract volume and the ongoing positive development of risk costs. Average equity rose by €0.5 billion to €7.2 billion.