Daimler AG Q4 Earnings Call Transcript

123jump.com Staff
24 Feb, 2010
New York City

Daimler fourth quarter revenue dropped 8.2% to 21.32 billion euros with a net loss of 352 million euros in the fourth quarter as against loss of 1.52 billion euros a year ago. Share prices dropped 6% and the company said it will not pay dividend this year.

Daimler AG ((DAI))
Q4 2009 Earnings Call Transcript
February 18, 2010 9:00 a.m. ET

Executives

Michael Muhlbayer – Head of Daimler Investor Relations and Treasury
Dieter Zetsche – Chairman and Head of Mercedes-Benz Cars
Bodo Uebber – Chief Financial Officer
Andreas Renschler – Head of Daimler Trucks

Analysts

Arndt Ellinghorst – Credit Suisse
John Lawson – Citigroup
Horst Schneider – HSBC
Jochen Gehrke – Deutsche Bank
Christian Breitsprecher – Oppenheimer Research
John Buckland – MF Global Securities
Christina Church – Barclays Capital
Adam Jonas – Morgan Stanley
Adam Hull – WestLB
Daniel Schwarz – Commerzbank
Thierry Huon – Exane BNP Paribas
Aleksej Wunrau – BHF-Bank
Ranjit Unnithan – J.P. Morgan
Jose Asumendi – RBS Group
Max Warburton – Sanford Bernstein

Presentation

Operator

Welcome to the Global Conference Call of Daimler. At our customer''s request, this conference will be recorded. A replay of the conference call along with presentation slides will be available as an on-demand audio webcast in the Investor Relations section of the Daimler Website. A short introduction will be directly followed by a Q&A session.

(Operator instructions) May I now hand over to Dr. Michael Muhlbayer, Head of Daimler Investor Relations and Treasury. Thank you very much.

Michael Muhlbayer – Head of Daimler Investor Relations

Good afternoon. This is Michael Muhlbayer speaking. On behalf of Daimler, I would like to welcome you to our full-year presentation. We are very happy to have with us today, the Chairman of the Board of Management and Head of Mercedes-Benz Cars, Dr. Dieter Zetsche; the CFO, Bodo Uebber; and the Head of Daimler Trucks, Andreas Renschler.

In order to give you maximum time for your questions, Dr. Zetsche will begin with his short introduction directly followed by Q&A. Before we start, I have a couple of admin details. I would like to remind you that this call is governed by the Safe Harbor wording that you will find in our published documents. Please note that our presentations contain forward-looking statements reflecting management''s current views with respect to future events. These forward-looking statements can be identified by expressions like assume, anticipate, believe, estimate, expect, intend, may, plan, project and should. These statements are subject to many risks and uncertainties, examples of which are set out in the Safe Harbor wording in our documents and are also described in our most recent Form 20-F, under the heading ''Risk Factors''. If the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by these statements. Forward-looking statements speak only to the date they are made.

Now, I would like to hand over to Dr. Zetsche.

Dieter Zetsche – Chairman

Gentlemen, good afternoon and welcome to our analysts and investors call. We would like to start with a very brief summary of our results. Economic terms, 2009 was the most challenging year of the recent decades. This is also reflected in our results. Although, we improved from quarter-to-quarter, our EBIT was minus 1.5 billion for 2009 and our net profit was even lower at minus 2.6 billion. Given this unusual situation, the Board of Management has proposed to the Supervisory Board, by way of exception, that Daimler refrain from paying any dividends for the past business year. This proposal reflects only the business developments and the earnings situation in 2009. It does not have any implications for our business expectations for the current year. You can assume that we will once again pay a dividend for the business year 2010.

Although our figures for 2009 were disappointing, it’s clear that 2009 was not a lost year for Daimler. In the course of the past year, we became significantly more efficient. Even though the markets remained weak, we increased our sales as the year progressed, particularly in the fourth quarter. Above all, we''ve introduced measures that will enable us not only to successfully cope with the long-term transformation of our sector, but also to shape it from a leading position. Last year, at our annual press conference, I said that we wanted to improve our performance quarter-by-quarter. We''ve kept this promise. In the third quarter, we returned to profitability and in the fourth quarter, we further improved our ongoing business operations.

At Mercedes-Benz Cars, full-year EBIT decreased from positive 2.1 billion to minus 0.5 billion. Our car division continuously improved its earnings during the year and returned to profitability in the second half of 2009. This positive development was primarily based on the market success of the E-Class and S-Class. Our new E-Class in particular is a big success. In fact in 2009, the sedan was the world market leader by far. In Germany, our market share was 56%. In Western Europe, it was 31%, and in the US, it was 26%.

EBIT at Daimler Trucks declined from the prior year''s positive 1.6 billion to minus 1 billion, due to the sharp drop in unit sales. In view of the prevailing environment, we believe that this was a very respectable result, with our efficiency enhancing measures at increasing effects at Daimler Trucks as well in the course of the year. Operating profitability stabilized in the second half of the year, although it was still slightly negative. Still, there''s been a noticeable upswing here as well. Compared to the first half of the year, incoming orders increased by 59% in the second half.

Let''s now turn to Mercedes-Benz Vans. Here too, our relevant markets experienced a massive decline in our Vans division, even though gaining market share couldn''t impact the general market trend. Nevertheless, Mercedes-Benz Vans were in the black in 2009; EBIT totaled 26 million Euros for the full year. Thanks to cost adjustment and a slight pickup in demand, Mercedes-Benz Vans reached breakeven in the third quarter. In the fourth quarter, we earned 126 million Euros, more than compensating for the losses we sustained in the first half of the year. Our buses were somewhat less affected by the economic crisis. Daimler Buses was in the black in each quarter of the year. The Daimler Buses division posted EBIT of 183 million Euros for the full year. No other bus manufacturer in the world was more profitable than Daimler in 2009.

Daimler Financial Services achieved the breakeven point with EBIT of 9 million in 2009. Higher cost of risk was the main reason for the decrease compared to 2008. Although the number of credit default increased, the total number remained within the anticipated range. Our risk management policies are working. These upward trends are confirmed by the development of the free cash flow from our industrial business operations, which benefited from our successful management of working capital and strict cost discipline. Free cash flow from industrial business increased from minus 3.9 billion in 2008 to plus 2.7 billion last year. In total, the net liquidity of our industrial business operations increased from 3.1 billion at the end of 2008 to 7.3 billion at the end of 2009.

To sum up, as unsatisfactory as our figures for the year as a whole are, we definitely picked up momentum in the course of 2009. At the same time, we never lost sight of our long-term strategic targets. As the basis of our strategy for profitable growth we have defined four levers for 2010, first, leading products and brands; second, pioneering technologies and business models; third, new markets and networks; and fourth, continuing efficiency gains. All of these are based on a common foundation of highly-performing and highly motivated employees. What does this mean in concrete terms? Leading products and brands are essential components of an explicit premium strategy, which is exactly the strategy we are pursuing at Mercedes-Benz Cars, the automobile commodities and the new Mercedes. One of our new models illustrates that in a very special way; the SLS AMG, which for many people is the ultimate dream car. It''s certainly one of the automotive highlights of the year.

The SLS is by no means the only example of leading products that bear the Mercedes star. In the next 24 months, we will launch a total of 16 new Mercedes-Benz models. They include the new CLS, the new S-Class coupe, and the most fuel-efficient and cleanest S-Class of all time; a luxury sedan with a four-cylinder engine. As a result, we expect to further boost our prospects for sales growth. In fact, at Mercedes-Benz Cars, we aim to sell around 1.5 million vehicles worldwide annually by 2015.

Top performance is also the ultimate goal at Trucks, Vans, and Buses. However, the attributes that ensure top performance here are somewhat different from those in the passenger car segment. Whether or not a truck is regarded by customers as fascinating is mainly decided by its total cost of ownership and its reliability. Accordingly, Daimler Trucks can be relied on to be the top performers in these categories for freight transporters. Our second strategic lever is pioneering technologies and business models. For decades, we have been leading the way forward in safety technology. We aim to play the same role in the area of sustainable mobility, and we have a clear strategy for achieving our goal.

We’re optimizing combustion engines. We’re supplementing them with hybrid drives. And we’re developing and producing fully electric vehicles that are locally emission free, be it with battery-powered electric drive or with fuel cells. In all of these areas, we are making very good progress. In 2009, we reduced our Mercedes-Benz Cars fleet emissions by 13 grams to 160 grams. And we continue to forge ahead here. For example, the new six and eight-cylinder engines scheduled for launch in 2010 will consume up to 25% less fuel than their respective predecessors. We aim to reduce our average fleet CO2 emissions to less than 140 grams by 2012, which will not only meet legislative requirements, but actually exceed them.

Naturally, our long-term goal remains zero-emission driving, and we''re making progress here as well. Since the end of 2009, smart brand electric vehicles have been proving themselves on a daily use basis in Berlin. Still, there are two major hurdles to electric mobility based on fuel cells and batteries. For drive systems powered exclusively by batteries, it’s the performance of the energy storage unit as well as its price. And for both battery-powered vehicles and fuel-cell drives, it’s the establishment of an appropriate infrastructure.

We are addressing both issues, and we are doing so in collaboration with strong partners. Let me give you just a few examples. Together with Evonik, we are now building Europe''s biggest factory for lithium-ion batteries in the city of Kamenz in the German state of Saxony. We are also working with Linde and other partners to set up a hydrogen filling station network in Germany. Together with energy suppliers such as RWE and Enel, we are working hard to establish charging stations for battery-powered vehicles. In addition, partnerships like these make it possible to increase the expertise at our disposal while sharing the huge costs associated with the development of green technology.

Daimler alone invests well over 4 billion Euros in research and development every year. It therefore goes without saying that we are determined to ensure that every cent is spent will be spent wisely. That''s why we don''t just develop green technology. We also make it profitable, for example, through large-scale modularization. Our commitment here will pay off in the end. No other automaker is as well positioned across the entire range of sustainable drive systems as Daimler.

I would now like to turn to our third strategic lever, new markets and networks. As you know, the automotive sector’s growth is shifting from the tried to the emerging markets. The economic crisis has actually reinforced this trend. The Chinese market in particular continued to grow in 2009. At 65%, retail sales growth of the Mercedes-Benz brand outpaced that of all other premium manufacturers for the third year in a row. To ensure that this trend continues, we will launch the extended-wheelbase version of the E-Class in the Chinese market in July. We also plan to gain additional market share in the US, whereas in China, we are expanding our sales network.

And we realigned our global production network for passenger cars in 2009. Our plant in Tuscaloosa, Alabama, will begin manufacturing the C-Class in 2014. We will build more C-Class and E-Class models in China in the future. We laid the cornerstone for our plant in Kecskemet, Hungary, where we will build the successor models of the A-Class and the B-Class in a production network with Rastatt, Germany.

Daimler Trucks opened a new plant in Saltillo, Mexico last year. We have intensified our cooperation in Russia with the truck manufacturer Kamaz, in which we increased our financial stake a week ago today. We’re making progress in India as well, where we are building a new truck plant in Chennai. All of this shows that we’re not cutting back when it comes to safeguarding the future. In fact, even at the height of the financial and economic crisis, we didn’t cut back. That’s why it’s all the more important that we control our current costs.

For this reason, our fourth strategic lever focuses on continuing efficiency gains. Several of the measures that enabled us to cut costs in 2009 will be phased out in 2010. One example is the reduction in working hours, which will be discontinued on June 30, 2010. We also plan to significantly scale back short-time work schemes in passenger car units, and completely eliminate them wherever market conditions allow it. As the impact of such short-term measures becomes weaker, other measures aimed at achieving permanent savings will first take full effect in 2010. Our goal remains to continue moving forward in this area. The responsibility to do so remains squarely in our individual business areas, which continue to vigorously pursue improvements through existing strategies such as GoFor10 at Mercedes-Benz Cars and Global Excellence at Daimler Trucks.

The question now is exactly what type of business developments do we expect to see in 2010? According to the latest forecasts of leading institutes, the global economy could grow by nearly 3% this year. It also appears possible that global passenger car markets will expand by 3% to 4%. The premium segment is expected to grow faster than the overall market. Because we didn''t have the scrappage-program high in 2009, we don''t have to worry about a hangover in 2010.

What do we expect for Daimler? At Mercedes-Benz Cars, we expect to see both a slight increase in sales and a higher profit margin. EBIT will probably total more than 1.5 billion. At Daimler Trucks, we also expect a slight increase in sales, even though the underlying level will be low in absolute terms. Together with decreasing costs and the initial positive effects of the realignment of our business activities in North America and Asia, we expect this to yield EBIT of approximately 200 million Euros. The positive sales trend that began at Mercedes-Benz Vans in mid-2009 will continue. From today’s perspective, EBIT should total around 250 million. The expected sales growth at Buses will probably be driven primarily by markets in Latin America. In 2010, we therefore expect EBIT that is again about 180 million.

Finally, at Daimler Financial Services, we anticipate stable development of the division’s global contract volume and EBIT of at least 350 million Euros. We expect the Group as a whole to record EBIT of more than 2.3 billion Euros from our ongoing business operations.

Now, Bodo Uebber, Andreas Renschler, and I will be happy to answer your questions. Thank you for your attention.

Michael Muhlbayer

Thank you Dr. Zetsche. Ladies and gentlemen, you may ask your questions now. I will identify up the questioner by name, but please all introduce yourself with your name and the name of the organization before asking your question. Two practical points, firstly, please avoid using mobile phones, and secondly please ask your question in English. Before we start the session, the operator will explain the procedure.

Question-and-Answer Session

Operator

(Operator instructions) Thank you. If you want to ask a question you can press “*1” on your telephone keypad. To remove the question please press # on your telephone keypad. Again for a question please press “*1” on your telephone keypad and # to withdraw.

Michael Muhlbayer

Thank you. First in line, we have Arndt Ellinghorst, please Arndt?

Arndt Ellinghorst – Credit Suisse

Yes, thanks a lot. Well, I mean, some things obviously gone wrong today with your market cap dropping by 2 billion and because of the day, despite I think a relatively good final quarter of the year. So, I wonder if you could share your thoughts what that is, what could have gone wrong. I think we all would like to hear some more details on your guidance after you have been reporting an adjusted EBIT margin at Mercedes in particular, around about 6% in the second half last year, and if we assume your revenues increase by 10% let say for 2010, your guidance appears to go from a margin of only 3% to 3.5% or something for Mercedes. Are we getting something completely wrong here in the market, is there something on pricing, on mix or other external factors, maybe that we are getting wrong, is the first question? And then also secondly, what is your guidance implied for free cash flow for the full year? You haven’t mentioned that. You have generated quite some cash, so could you please talk a bit about working capital trends and cash flow for the full year? And then also finally, Mr. Renschler, maybe could you talk a bit about trucks and your guidance for roughly 200 million of profit, what volume assumptions are you using really? Thank you.

Dieter Zetsche

Well, thank you very much for the questions. The first question I actually would like to return back to you, because I would kind of agree with you that operationally, our fourth quarter was not bad given the environment we are working in, and certainly, the market did not expect, or I guess the market did not expect the announcement of no dividend for 2009, even though you could say technically certainly consistent with our long-lasting policy of paying 40% of our profits as dividends, and with no profits, this leads to no dividend, including confirming the clear intention of paying dividend for 2010 and 2011. But anyway, that’s certainly an issue we probably will discuss further during the conference today, the reaction of the market today.

The guidance for next year, first of all, at least to my best knowledge, the market consensus for 2010 is above, only slightly above the guidance we gave for Mercedes-Benz Cars, give and take 200 million or something like that. Secondly, I have not recorded 6% operating margins in the second half of 2009. My recollection is roughly 3% and 5.3% in the third and the fourth quarter, 3.5 and 5.3. So, when we are talking about depending on the revenue assumption you are making, 1.5 billion EBIT as a guidance to be passed with that more than 1.5 billion, this is obviously again it’s depending on the assumption on revenues, something at the high end of 3% to little less than 4% margin, and not totally out of line of the average of the last two quarters.

There are some negative effects which we can see going forward. That certainly changed rate as a relevant element. That is certainly the development of our labor costs, clearly not in the first half, but in the second half of the year, and quite frankly, we have a growing content of CO2 reducing technology in our vehicles as well as we were discussing all the time. I think at least it was not our habit in the past and not too many competitors were confident enough to give guidance for 2010 in specific numbers. We did that, and without just moving the guidance further out, I would at least say that it could not have been our intention to stretch to the maximum by giving this guidance.

Andreas Renschler

Arndt, of course I can talk a little bit about trucks. We can also talk two hours about trucks, but I will make it shorter. As you know, we gave some guidance when you look to the overall market situation. In Europe, we see a slightly higher market than 2009. Basically, we will see this from my point of view in the second half, more in the second half, even in the first. And that’s the reason we see between 10% and 15%. In Japan, we see it more or less than the level of 2009. In Brazilian market, we see also some growth in the dimension of 10% to 15%, and also in Southeast Asia, driven by Indonesia and some other countries, there will be also some potential for an upswing in the market. And as you know, if you calculate our, let’s say market shares given, of course, there will be some small increase, but with basically very good market share in the different markets, we can count the volume out of this forecast from the market. So, the major effect on our guidance for the EBIT is more or less coming out of the restructuring program and a slight improvement also in the volume.

Arndt Ellinghorst – Credit Suisse

And could you, could Mr. Uebber maybe make some statements on cash flow? Thank you.

Bodo Uebber

I will, Arndt. On the cash flow side, of course, we are running, you think, now looking back in 2009, we had, the cash flow was pretty good developing. We worked on the inventories, we worked on the working capital and even in the first quarter, we could achieve a positive free cash flow, which was good and that activity went up end of ’09. We all know that we have worked a lot on inventories and we are all down with inventories, so that in 2010, the subject of inventories is, again we are looking at everything and there might be an opportunity for work in progress inventories for example. That of course is not the amount we have taken out in 2009. We will invest into technology, product technologies and also growth in future markets, for example in China for trucks. India, we have started our operations there. So, that is of course something, which we will further invest in 2010, of course but with the understanding we do that very disciplined and very focused, as Dieter Zetsche also mentioned in the calls and we have stated something also in 2009, from an efficiency point of view. So, how much do we get out from one Euro of investment. On top, we have new receipts to fulfill. We have addressed this also in 2009 in the truck business.

Of course against this, we will hold on with our increase in units sales, increase in revenues and to offset it as much as possible. We do know how important cash flow is. We have seen that also in 2009, and in that basis of course, we go in 2010, let’s say to focus on the cash flow management, you can be rest assured that we will do so also in 2010, but I would like to leave it open right now where we end up with that management. The second, of course the first question I do think which you have not raised, Arndt, but that will immediately tell that the markets, the dividends of course, you have not mentioned it. We have discussed our operational performance of course also with regard to net profit in 2009 and we know the number is negative with 2.6 billion, and of course, we discussed this. We know that our payout ratio is, you know it, it’s 40%. We have addressed it last 2008 with 40%. And we have decided to pay no dividend, which is not our expectation for 2010. For 2010, we expect definitely with our guidance of 2.3 billion in EBIT that we pay again a dividend also for the upcoming years.

The second subject with the dividend, and that refers to the local GAAP of Daimler AG. The number you do not know yet, we will disclose it at the 1st of March. The number will be not better than the 2.6 billion that I can tell you, and the issues following that, you can only distribute dividends on retained earnings. The retained earnings in our local balance sheet is 5 billion, and with the dividend of paying no dividend, we can book the loss in the local German balance sheet against the capital reserves, so not against the retained earnings. That means, we can keep our retained earnings level of 5 billion for the future, and of course, but that is only possible, if we have no dividend payout. So, you can only do this legally according to the law when we pay out no dividend that we booked the local loss against the capital reserves. So, you can now imagine with 5 billion of retained earnings having in mind for the future, that we have high flexibility in this regard, and I do think that’s very important to know for you that for the future, and we assure that we are delivering earnings that we are in the possibility, let’s say to go on with our dividends philosophy and even have a flexibility to do even a bit more.

Arndt Ellinghorst – Credit Suisse

Yes. I think we understand that. It would just have been helpful maybe to get some earlier warning from you, because it was pretty obvious already in the course of last year, that you will book a quite significant loss, that’s maybe all I can say.

Bodo Uebber

Okay. We will keep that in mind. Of course, hopefully now and through the positive.

Arndt Ellinghorst – Credit Suisse

Okay, thank you.

Dieter Zetsche

I hope you will have no need to learn from that lesson, as I hope this won’t occur again, but really the point is taken.

Michael Muhlbayer

Okay. Thanks Arndt. Next, question, we take from John Lawson, please.

John Lawson – Citigroup

Thanks very much. John Lawson at Citi. There’s quite a big gap between the EBIT line and net income line, especially in the fourth quarter. And the area of that, that I wanted to ask you to particularly explore is the financial, the interest income and financial income line. Can you give us a clue as to what the current level of pension rollover less the plan return is actually running at? And secondly, on that line, I mean, I guess you are carrying an awful lot of excess liquidity at the moment. I think I heard you this morning talk about, I think it was around 8 billion. I mean, what do you regard as the interest of burden penalty that is occasioning you at the moment and how quickly can we hope to see that roll-off? That’s one question. The second question is well, firstly, I am glad to hear that you are going to pay out 5 billion from the domestic company reserves in the future to shareholders. Does what might happen at EADS have any significant bearing on the level of reserves that might be in that domestic company? Thanks.

Bodo Uebber

John, to your last question as you know,

John Lawson – Citigroup

Yes.

Bodo Uebber

So, there should not be an impact of that. Of course, I am happy that you mentioned the 5 billion, of course as a potential to, but I know, but I have understood what you meant with this. Your first question, what is between EBIT and net profit? I go through the interest on pensions is roughly 300 million. We will disclose this number at the 1st of March, but that’s roughly 300 million. The interest cost on liquidity, on excess liquidity on the one hand, but also liquidity for the working capital, so to say, but we need liquidity for running all the legal entities. This to get, all in all, is 500 million negative.

John Lawson – Citigroup

All right.

Bodo Uebber

And the remaining part is 350 million roughly for tax expenses. So, starting with the tax – in the tax expenses, we booked for the whole year. In the first quarter, we made a review of our tax assets, and we did some write-off in the amount of 0.7 billion in the first quarter, which is of course a one-time subject what we do, and we think we will not see it again of course, to see expectations over the next couple of years. Within the liquidity of 500 million, I expect it’s within 2011 and 2012 that we get down with this number to let’s say zero positive. Of course, it depends how fast the markets will be stable, the financial markets. We can go down very fast of course during the course of the year 2010 towards the 7 billion level. We can even, I do speak about the gross liquidity, we can even go further down than we optimize it further. So, this level of liquidity is a question of time when we reduce it of course, you know, after we have some more stable situation in terms of questions like big countries or other subjects, and as I said, EBIT is stable. We run it down very fast.

John Lawson – Citigroup

So, at the moment, you would hold it probably through the first half, but you would expect to run it down?

Bodo Uebber

Somewhat.

John Lawson – Citigroup

Yes.

Bodo Uebber

Yes.

John Lawson – Citigroup

Thank you.

Michael Muhlbayer

Okay, next question, we take Horst Schneider.

Horst Schneider – HSBC

Yes, good afternoon, Horst Schneider here from HSBC. Two questions if I may, first of all, it’s regarding volume structure and net pricing. So, worked on that you provide also in your presentation, could you please be a bit more specific, what was the development of net pricing in 2009 and to what do you expect in terms of net pricing for 2010? And if actually if you expect for Mercedes Cars a positive impact from net pricing or if you should rather go for stable or negative impact? And the direction that I am heading for is I would be interested if Mercedes Cars is prepared to sacrifice volumes in favor of higher prices. And the second question is regarding potential one-offs in 2009, maybe could you provide a bit more guidance, you know, what we can expect in terms of one-offs, especially what could be a special burden related to EADS and related charges from the A400 project and my question would be if you would book these charges also as special items? Thank you.

Dieter Zetsche

Perhaps I can briefly refer to the net pricing development in relation to volume and then hand over to Bodo. The development last year was highly negative in the beginning of 2009, very much related to excess inventory, especially on the high end of their portfolios. From thereon, things developed more positively, especially in the second half of the year, and in particular, against the normal seasonality in the fourth quarter as well. Now applying that to 2010, our clear intention is to have positive net pricing in 2010. We are having right now a situation where our dealers are accusing us of not enough supply, which is very good as far as pricing is concerned. So, directionally yes, or the other way around, we will not sacrifice our intent to improve pricing by our volume aspiration. This is not black and white, I have to say. Of course, market cap, and we have to somewhat act in these markets, that is clear. But the prioritization is very clear. We want to recover the margin. At the same time, we want to grow, but not at any price clearly.

Horst Schneider – HSBC

Okay, thank you.

Bodo Uebber

Your question regarding EADS, of course as I stated also in the morning, I do expect that we have not too far from today that we have a result out of the negotiation, the first results which makes it possible that EADS and also Daimler then afterwards can book this special item I would say then into the 2009 books of Daimler too, and therefore it’s not an impact in 2010. It will be booked as a special reporting item of course.

Horst Schneider – HSBC

Okay. And regarding other special items potentially in 2010?

Bodo Uebber

I think there is only one minor – two minor subjects. These are the follow-up restructuring charges for Fuso repositioning program and Freightliner repositioning program. In total, it should be roughly 50 million for 2010. I am not aware of anything else.

Horst Schneider – HSBC

Okay. Thank you.

Michael Muhlbayer

Okay, next in line is Jochen Gehrke.

Jochen Gehrke – Deutsche Bank

Yes. Good afternoon. Three questions if I may, first of all, to Mr. Renschler, in Q4, the truck division didn’t improve really sequentially when compared that to most of your competitors, that appears to be somewhat of a clear underperformance. I wonder whether you could shed some light on why that was the case in your view. Secondly to Dr. Zetsche, we all followed the announcement that Mr. Bernhard is now taking over as the COO. I wonder whether you could just explain to us what you expect from Mr. Bernhard from what to do differently than Mr. Schmuckle, and whether I read it correctly that the Brazilian plant has actually disappeared from your production network at least when I look at one of your presentations. And then thirdly, really on your guidance, a more broad question to your communication policy here. Over the last couple of quarters already, guidance of Daimler proved to be more of a slow rather than a sense of reality at least retrospectively. If that’s the case, again is that feeling that we should take away and seeing that your stock price is falling very heavily today similar to what happened after the first quarter release, is that actually a policy that you might think to rethink? Thank you.

Dieter Zetsche

The first question referring to Wolfgang Bernhard, at least technically, as we announced today or yesterday evening, he is responsible for production and procurement plus his successor on the van side will report to him. So, he’s formerly not a COO, which in anyway Germany is not a very typical job to be held by anybody. But other than that, first of all, of course, I expect from Wolfgang Bernhard to continue successfully the improvement on the productivity side and on the quality side, we have seen in recent years. Beyond that, it’s clear that this is direct receipt for any future success that we continue with maximum cost discipline always guided by a benchmark consideration for the Mercedes operations, but at the same time, I am not saying you cannot save your way to prosperity. Ultimately, there are at least about every success of Mercedes will depend on great exciting products, on strong development of the brand and aspiration of our customers and prospects feel for the ownership of the Mercedes car. And that is the kind of spirit we have to instill throughout the organization. If you want guided by their claim, the best or nothing, and on that basis, I am very much convinced that the team being built between Joachim Schmidt, Wolfgang Bernhard and myself, and I exclude myself now is the best team I can think of to pursue exactly this objective. And as part, as a member of this team, this describes the role of Wolfgang Bernhard as well.

Jochen Gehrke – Deutsche Bank
z
Okay, with regarding your Brazilian…?

Dieter Zetsche

I am sorry. By the way, if the Brazilian plant disappeared from our horizon, this was a mistake. It’s still there and still producing the CLC as it did in the past.

Andreas Renschler

Okay. Mr. Gehrke, your truck question, at least if you look for the result in the fourth quarter, we booked 75 million of SRE inside. So, we are ending at 149 million if I am calculating it right. And at least it was what we promised at the third quarter. The reason is the following thing. As we already said, there is a different mix, we had a different mix in the third quarter, we had also in the third quarter, we have also some exchange rate effects. In addition, we put some product-related provisions inside, nothing else than some conservative approaches in warranty and that was the last thing we did was some, I would call it, cleanup in inventory in some markets where we have still some trucks mainly in eastern Europe where we had some depreciation also done there, that was to make sure.

Dieter Zetsche

Guidance, certainly a very complex issue, first of all, we have decided to give specific guidance which we thought should be received as a sign of confidence and a feeling of strength in our site. But because what we think and what we see might not always be the same. Secondly, I think we all agree that the volatility of the environment and the transparency of the future development, the first one still being very high, the latter one still being very low, on that basis, certainly you do not want to give a guidance and there three months later being forced to correct it downwards. So, you want to find the right balance between an ambitious goal and a reasonable chance to deliver on your forecast. Now, certainly we can discuss, is it better to promise the blue of the sky and then say what do I give and what I said yesterday, if you don’t need it, I put it on an extreme of course. And then have a positive direction on the marketplace and afterwards perhaps the negative one if you can’t meet it. I think that overall last year, our stock market performance was not that bad in comparison with our peers either. And as you said, we started with kind of a slump, on the stock market, but I am open to discuss in more detail in the future what would be the right policy as far as guidance is concerned, how ambitious, how reliable and we might come to different conclusions.

Jochen Gehrke – Deutsche Bank

Okay. Thank you. But just maybe as a follow-up to that statement, the 1.5 billion Euro guidance for Mercedes, do you see this as ambitious or should we read this as a flow?

Dieter Zetsche

Let me be quite frank and open. In fall last year, we are building up our operated plan and that time, we would have seen that guidance as unachievable, quite simply. Since things have developed considerably more positive to quite some extent as a result of our own efforts, to some extent based on external developments, which enabled us to give you this guidance today, it’s February. So, in April, I might tell you that was a piece of cake, or I might tell you what we have said there, we shouldn’t have said. I don’t believe the latter one clear, but if that’s one to ask for your understanding that in this environment, it’s pretty difficult to give a very reliable forecast. We have set 1.5 billion because we intend to and we are convinced that we can deliver on it, and this means there should be an upside as well, but I am not willing and not able in February now to just a minute after we gave the guidance, start to correct it in what direction ever.

Jochen Gehrke – Deutsche Bank

Okay. Thank you.

Michael Muhlbayer

Okay. Next question, we take from Christian Breitsprecher.

Christian Breitsprecher – Oppenheimer Research

Breitsprecher from Oppenheimer, I have two questions. One related to the exchange rate headwinds, I am a bit surprised that you talked about headwinds from that side because I don’t really see that the dollar had made such moves that it would be a disadvantage for you in terms of average exchange rates. So, maybe you can explain that a little bit. And secondly, on your cost savings, I mean, I definitely understand that in 2009, you had quite a few one-off cost savings that are not sustainable. On the other hand, there are a lot of cost savings that really will take their full effect in 2010. So, can you help us a little bit with the numbers, you know, how much was kind of one-off and then in 2009, how much did we really get in terms of incremental cost savings in 2010, and what is going to be the net effects, that we are somehow able to model that?

Dieter Zetsche

As far as exchange rate is concerned, obviously you cannot just look at the spot market, because for good reason, they are hedged and in 2009, certainly we were successful in our hedging, which means that our exchange rate, effective exchange rate was better than what you could see on the spot market, which then makes obviously the comparison to 2010 more difficult. And on that basis, we have very substantial three-digit million number in our plan as happened in 2010. For good reason, we have not closed 2010. So, in case, the spot markets are continuing to develop favorably, we will benefit from that, to which extent we know 31st of December, benefit versus this increase, versus this headwind we are seeing right now, certainly not versus 2009 since we can rule that out. Bodo will continue.

Bodo Uebber

Maybe also net on to the exchange rate, we should not forget that other than three to four weeks ago, we had 1.45 to 1.48. So, the question is, okay, what kind of volatility do we see in the exchange rate, and I do think we should not make conclusion when right now the exchange rate is right now trading at 1.37, what is now for the next 11 months to go.

Dieter Zetsche

And the dollar is just one currency. The British pound and so on and have the impact as well.

Bodo Uebber

So, to your question of the sustainability of one-offs in the 5.3 billion, of course, I do think we have told that the market also last year that we of course try to be better than 2009 in terms of efficiency, including one-off, one-timers, or sustainable measures. We have a lot of programs which we started already a couple of years ago with the GoFor10, the modular strategy. We have implemented the repositioning programs in Freightliner and Fuso. We have our national sales organization strategy starting now in 2009, which will head into 2010 and 2011. So, all of these measures are thought to offset some of the one-offs we had in ’08 or in ’09. But I can also promise, we will have one-timers also in 2010, because we will not give up so to say in terms of savings also to save some of the stuff one-time in 2010, but it’s the long-term strategy that we have, and so in the long run, we will get to more and more efficiencies of course over the years.

Michael Muhlbayer

Next in line is John Buckland, please.

John Buckland – MF Global Securities

Good afternoon, thank you. Just on that last question, maybe I wasn’t listening, concentrating well enough, but I mean, I don’t think I got any real clue about how to quantify these one-timers and what’s sustainable and not sustainable. I mean, there must be – if implied, if I were to say that you made a profit in 2010 sooner to the margin in 2010 then into the fourth quarter, it would imply that, you know, 2 billion or 3 billion of savings are given back in 2010. I wonder if you could just comment on that. Is it a number which is you know completely wrong or somewhere closer, that should give us an idea. And then on the Mercedes Car division and expenditure you expect to increase in 2010 on R&D and CapEx for new model CO2 etc I wonder if you could give us some figures for that and perhaps where you think you are going to be with all of this expenditure? I mean how can you quantify or qualify your competitiveness versus BMW or Audi or anyone else. You got to be catching up and that’s leading to this high expenditure now, but how much of an advantage are you going to get when it’s finished and when will that be finished? And then on the truck division, you talk about flat market and perhaps any real improvement in the second half? The order intake clearly improves a lot in the fourth quarter, and now that truck markers are saying you know, the market will go up in 2010, but you are not so confident. I just wonder whether there’s something happened in the order intakes of various companies in the first weeks of – over the last weeks of 2009, first weeks of 2010, which are unusual and suggest that you know, as we progress through this year that we won’t see such a good order intake and indeed, the deliveries will show very weak growth.

Dieter Zetsche

Perhaps your CO2 question, in 2009, we have reduced our fleet emission average from 173 in 2008 to 160 in 2009. We don’t have, of course, these are still not the official numbers, the numbers of our competitors, but we are very confident that we have improved the fastest in the field. We have already said that by 2012, we want to be below 140 gram and you should always bear in mind that we will continue to sell the richer mix of vehicles and coming to similar numbers means that per segment, we have to be better than our peers in order to come to these averages.

On the legal side, this is recognized, because their weight is considered as the parameter to allow you for higher emissions, but at the end, you have one number and then the number that does compare without the recognition of the different distribution of the fleets, which is okay, but that means, we are very much convinced that for the fleet in average, but even more so for the individual vehicles, think for instance, about S-Class, with 3.2-liter fuel consumption, 100 kilometer and 350 horsepower with all the safety and comfort and so on you can expect from S-Class, we are absolutely confident that with these results, which are real, which we can drive today with a prototype, we will be in the lead in this race for CO2, which again and we have said that various times, has its impact not only on our one-time expenditure on R&D and CapEx but as much or as well on the variable cost of all vehicles, because this technology is not for free, and that’s one element you have to consider as well looking forward to 2010, coming to your first question that beyond exchange rate, the content of CO2 reducing technology in our cars is increasing and thereby increasing our variable costs. We have talked various times, that is our task to offset that by reducing the cost for these technologies, by offsetting it with further productivity gains, and by having the customer pay for some of it as well in order to reestablish our 10% margin target.

But that is a path we have to go for and not something we can accomplish from one day to the next. With that, I would just like to ask Andreas to do a better job in explaining you why the markets will not develop faster than he did when he tried to explain it to me.

Andreas Renschler

First of all, I think I don’t see any more conservative approaches in our market forecast in Europe actually. In Europe, we see higher than 2009, but slightly higher, and in NAFTA we see 10% to 15%. Japan I repeat flat, growth to go to Brazil and some growth also expected in Southeast Asia. And all the order intakes we see now January or also in the fourth quarter, supporting this market forecast. There is no order intakes that support the market forecast now, but over 50% up, very clearly not. So, that’s the reason we say, okay, we see some chances to have a slight reason to say. If we look to the first quarter, like I tried to explain already in the past, the first quarter was also driven specifically in NAFTA, with some re-buy effect between EPA ’07 and EPA ’10. Now, the delivery of this EPA ’10 trucks will be, let’s say going through May, June, and now it has to be, the acceleration phase, the orders for EPA ’07 coming in this are more or less in the second half of the year. So, this was the specific situation in the field of NAFTA, but overall, the order intake we see is supporting our forecast also in the market and that means also our sales force.

John Buckland – MF Global Securities

But just on, excuse me, it’s in Europe where you are the most conservative and it’s in Europe where still all the other guys reckon that the market would go up and I mean, and your order intake –

Andreas Renschler

You know, John, my guys can deliver every document in my order book. So, if the market is better than what we see, fine. But I see not the order intake. Today, the market is going up.

Dieter Zetsche

I think what Andreas saying is fair. That’s a guidance of 200 million based on this market assumptions. You will and I will expect when the market develops better than that, that this will have an impact on the profits, and I think that’s just positive.

John Buckland – MF Global Securities

Okay. And could you give us the figure for what your CapEx and R&D spend is going to be in 2010, the increase?

Dieter Zetsche

Again, totally transparent. For 2009, we were planning on a certain CapEx number, and working throughout the year to maintain the content we want to accomplish with this CapEx and to spend less for it. And we were quite successful in doing so. Not clearly accepting as well that there was some postponement as far as spending is concerned as well as every year towards the end is happening, which then of course goes in 2010. But the original plan for 2009 was about the same altitude as the plan for 2010. We spent less than that in 2009 and now we will work hard to come as close to the 2009 spending, in 2010 as well. At that time, the plan calls for our spend and we do not want to delay or cut content, which we need for our product, for our technology, and for our global expansion in the markets.

John Buckland – MF Global Securities

Am I allowed to ask one other quick question and that is – what was the, or can you tell us what that 85 million supply support, how was that divided amongst the divisions and amongst the quarters? I think 85 million was the figure, I think given in the press conference.

Bodo Uebber

Of course, I mentioned the number now in the third quarter. Therefore, I do think it was 60 million in the third quarter, year-to-date September, total year was 85, it was a spending for the suppliers, is that what you mean?

John Buckland – MF Global Securities

Yes.

Bodo Uebber

And between the divisions, roughly the main bulk of the 85 was passenger costs. I would say maybe 68% of that, but you can call Investor Relations for that question.

John Buckland – MF Global Securities

Okay, thank you.

Michael Muhlbayer

Okay, thanks John. We take the next question from Christina Church, please.

Christina Church – Barclays Capital

Yes, hello. It’s Christina Church from Barclays Capital. I have got a couple of questions. Firstly, I was just wondering if you could update us on the negotiations that you have had with the unions on wages. I think I understand that those negotiations happening recently would be mostly on call. And also a little bit more about costs. Just wondering how you expect, you know, considering a lot of your cost savings in 2009 were based on lower labor costs, what you see for 2010 as you have work presumably coming back of costs. And second question is on raw material prices and what we should be expecting for 2010, what you are putting into your numbers, still with the headwinds that we might see for raw materials for Daimler? And then finally, just a follow-up on financial services, I know you said high cost risk in 2009, which are taking the sale of non-automotive assets, and then that your financial services division, there is no viscosity previously, but could you just give us an update again on what you are expecting from 2010 in financial services, and what the residual value development you have been seeing particularly in the German market? Thank you.

Dieter Zetsche

Thank you for the questions. I understood at least the first three ones, and the rest, we will then be answered by someone else. Wages, the contract negotiations which ended yesterday for one state in Germany, potentially being applied throughout Germany, but that remains to be seen, my assessment is that you will, on both sides of the table, you are always shooting for better results than the one you accomplished. That’s the nature of negotiations, but having said that, I think the result is reasonable. I think it takes into concern on the one hand the crisis situation of the economy for the enterprises and on the other hand, the needs of the employees being affected and between those two, if you want contrary demand or conflicting demand, I think we can live with the results, which has been negotiated, including the fact that it’s a two-year contract, which gives to your planning transparency and with reasonable numbers I think. As far as 2009, 2010 of Daimler labor cost is concerned, as you know, starting in April last year, we negotiated the short work contract, which gives us the 8.75% reduction in time or perhaps payment as well. This runs through June this year, therefore it’s 8 months versus 6 months of the same kind of savings.

On the other hand, we have short labor, which obviously is very much dependent on the system plans and specific demands for these products in the marketplace. This has already been reduced quite a bit. It will stay more or less stable on the truck side and further be probably further reduced on the car side. We have reduction in employment. If you talk of Germany, five and a half thousand in ’09, over the course of the year which will have annual effect now in ’10, which is a positive side, plus we will see further reduction in employment basically on a natural flow, which will have another positive impact on 2010. So, putting that all together, I would say 2010 versus 2009 is relatively balanced as far as labor cost is concerned, including their limited labor increase, which has not a base effect being negotiated just yesterday night.

Material cost, we saw a decent reduction of material costs in 2009. The way we calculate that is always the commercial success of negotiations. Is the technical success of more efficient design for our parts and components? Is raw material development, plus the content development, so, when we talk about for instance, CO2 technology coming increasingly into our cars, we calculate the material cost effect of that within this total number of development of material costs. And having said that, 2010 will be much more challenging, even though we see further opportunities, strong further opportunities on the commercial side and on the technical side. The content is growing and therefore the final result will not necessarily be a negative percentage.

Bodo Uebber

Christina, on financial services side, well, he is right. The credit loss ratios for 2010 will slightly increase compared to 2009, but of course that’s naturally, because we have some write-offs, which we also have made at the year-end where we have customers of course, where you don’t get the money anymore from where we do a final write-off, which increased the loss rates. So, I expect this loss rate to increase in 2010, but the good news is we are well reserved for that. So, I don’t expect that, that will hit as an extraordinary item or so, the 2010 numbers, and therefore also the guidance in terms of minimum 350 million for 2010 compared to more or less zero in 2009.

Christina Church – Barclays Capital

And if you could give a quick update on residual values and how you are seeing wage moving in Germany?

Bodo Uebber

Of course, the development last year was quite favorable over the quarters, especially in the US. We got to a very balanced and perfect situation in terms of residuals, losses out there very, very low, and there was only a slight volatility. We expected Q4 a little bit to go up. We were surprised it was not the case. So, the assets, it’s fine. We are also well reserved for that in the UK, too. In Germany, we have a little pressure on the residual value side, but we can handle that also with our current reserves for the balance sheet.

Christina Church – Barclays Capital

Thank you.

Michael Muhlbayer

Thank you. Next in line is Adam Jonas.

Adam Jonas – Morgan Stanley

Adam Jonas from Morgan Stanley, just two questions, first again, a follow-up on Christina’s question on residual value at Mercedes. I am not mistaken, am I, that you take the profit of off-lease vehicles at Mercedes, is that right, Bodo?

Bodo Uebber

Can you repeat this – I have not…?

Adam Jonas – Morgan Stanley

Sorry, I will go slower. The profit that you, the profit recognized on the sale of off-lease vehicles, for example in your lease program in the United States, that profit is taken at the Mercedes-Benz division, is my understanding not at the finance co, is that correct?

Bodo Uebber

You are right, you are right.

Adam Jonas – Morgan Stanley

Okay.

Dieter Zetsche

It goes both directions.

Bodo Uebber

So, of course both, the losses and the gains or whatever the –

Adam Jonas – Morgan Stanley

Understood.

Bodo Uebber

This is in the industry side and not in financial services. We have some risk-sharing agreements, but only for 1% or 2%. So, the minor part we share.

Adam Jonas – Morgan Stanley

Sure. But, the majority is at Merc?

Bodo Uebber

Right.

Adam Jonas – Morgan Stanley

Okay. And you highlighted that to go better throughout the year and that’s pretty evidenced by the data that provided externally, so the question is how much of a benefit was that excluding your German dealer support issue of course, how much was it positive was that on the Mercedes in the fourth quarter?

Bodo Uebber

Zero.

Adam Jonas – Morgan Stanley

And how is that?

Bodo Uebber

Zero means of course we were reserved for the ones what we have expected. So, there is no impact on that.

Adam Jonas – Morgan Stanley

So, absolutely no improvement, do you think you were –?

Bodo Uebber

You know, I don’t talk about 5 million to 10 million up or down, but it’s beautiful, so we kept our reserves, there is no release also.

Adam Jonas – Morgan Stanley

Perfect, thank you. Next question I guess is for Renschler on Trucks, you were specific, and if not brave, on the 200 million profit outlook and you gave some decent idea on the volume. Can I ask on pricing, what is your rough assessment of pricing behind that 200 million? Is it stable, up or down for trucks?

Andreas Renschler

Stable.

Adam Jonas – Morgan Stanley

Stable pricing. Do you think that’s realistic given how or given the – how realistic is that given the development of used truck prices on very low mileage used trucks that you are seeing?

Andreas Renschler

First of all, you may be experienced also in 2009 and I think 2009 was the worst market we ever had and we saw some good net pricing there. The only thing negative came up when we had some, you know, inventory trucks that we put a little bit cheaper into the market. That was the only issue in the net pricing in 2009. And so, we see a good chance that we can also phase through in 2010. There is one thing, of course you will also see some increase, but this is more driven by emission norms. As you know in the United States, we announced already the price, already we are selling EPA ’10. Last year, the price tag for EPA ’10 and will be for the heavy duty truck $90,000. So, if you take this into consideration, the rest is more or less very stable.

Adam Jonas – Morgan Stanley

Thank you very much. And your capacity utilization for Europe trucks in 2010?

Andreas Renschler

We had in 2009, at least we followed our whatever decline 45%. We produced a little bit lower, because we had to clean up the inventory. So, we were down, if I remember right, 55% in capacity. And as you know, we are expecting a slight improvement. So, it will be a little bit better than the 50%, but the best thing is that we could survive also in Europe was the flexibility instruments we had including floor work of course, this time of prices of costs we had to also – we have no temporary work of course, this is also a kind of flexibility.

Adam Jonas – Morgan Stanley

Right. So, slightly above 50% utilization and structural capacity?

Andreas Renschler

Yes. Bodo just asked me to give one further clarification on my explanation on how we calculate material cost development. When I said that our content increase is part of this calculation, this is right, but I have to be more specific in non-priceable content. So, when we, for instance, at an option and we can charge for it, then this content is not part of raw material calculation, but we contrast for it, like we see it too typically, at least the portion of CO2, then it is part of this calculation.

Michael Muhlbayer

Okay. Thank you Adam Jonas. Adam Hull, you are next.

Adam Hull – WestLB

Hi, good afternoon. Adam Hull from WestLB. Three questions, first on R&D, you have given guidance at least for 2010, 2011 a combined number for significant increase in R&D and CapEx, but if I look at ’09, what is striking is that your amortizing of R&D is very low. So, when I look at your charged P&L for R&D, it’s actually 600 million lower than the cash R&D, and there is no point of benefit to revenue, and then if you could give us a bit of guidance, you know, what should we be assuming for 2010 and 2011 on that net effect? Would that stay towards zero? And then secondly, on short-time working, if you could give us some specific figures from a government scheme, what kind of number was the benefit for the Group in ’09? What was it for trucks, and what kind of number, am I right in assuming you are saying for the similar things for 2010? And then finally, on China, could you give us what the Chinese joint venture profit was in ’09? I believe that’s actually included in your EBIT number, and could you give us some indication on what the cash dividend, perhaps even ’08 if it’s too early for ’09, what the cash dividend was in ’08 if any and maybe ’09, and maybe sort of guidance from whether you expect cash dividends from that venture in the future? Thanks.

Bodo Uebber

So, your question to, Adam’s call, for R&D, of course we had in the past in 2007 and ''08, of course due to the fact that we have developed certain vehicles at this point and later other vehicles, the capitalization ratio was for truck and for passenger cars roughly 20% to 25% roughly. That increased over the years to 30% to 35% and that depends only because we are starting to develop or developing the future truck for Euro 6, for Euro ''06. Therefore, of course the percentage has increased because the project is there and the same is true for passenger cars when you have the certain projects, you come to 30% to 35%. Last year, it was on average, I do think 33% for both roughly. So, that number I do think will stay at this range between 30% to 35% also for the next two years.

Adam Hull – WestLB

What about amortizing if I could ask? Your amortizing quarterly number at 638 in ''08?

Bodo Uebber

The amortizing is clearly depending on the amount of units. So you have capitalized a number of X and then you have, of course, you have a depreciation – depreciation rate per unit which depends on the total lifecycle volume and of course the volume you write it down and that is until the end of the lifecycle of the vehicle.

Adam Hull – WestLB

Should we expect that to rise in 2010 with regards to the E-Class?

Bodo Uebber

Of course, we have more units. We have more cost sales, that’s right. But it''s per unit based. So, more revenues, more units, more depreciation.

Dieter Zetsche

And I ask for your understanding that we do not consider a total number of contribution to the short labor as it was in 2009 to the year and needed their information to the market and not to the media. And then we had another question, China, the same applies.

Bodo Uebber

The only information of course we always disclose how many people we are in short timing but we have said that we have extended for trucks until the mid of this year and for passenger cars, I do think 30,000 people are for the first quarter in short timing and that is 13,000 in trucks right now and 13,000 in passenger cars.

Adam Hull – WestLB

Just on China on the JVs at least and from others we do get disclosure, it is quite an important part in the sense that you are seeing sales growth there and your capacity is fully utilized. It''s helping unit sales but we are not seeing that much in revenues but just to get some idea as to what scale is, because if I look at the overall associates in Q3 and first nine months, it seems quite a small number but I do understand it is an EBIT?

Dieter Zetsche

You are asking for specific numbers and we are not willing to disclose that. What I can tell you is that our Chinese business which is obviously growing very fast is all together between CKD and CBU a very profitable business.

Adam Hull – WestLB

Okay. Thanks.

Michael Muhlbayer

Okay. Next in line is Daniel Schwarz, please.

Daniel Schwarz – Commerzbank

Yes. Hello. Daniel Schwarz, Commerzbank. I have three questions. First is what financial effect from the McLaren transaction in the fourth quarter? Second question would be with regard to production at Mercedes first quarter 2010 versus the fourth quarter 2009? And the third question was about the take rate of the hybrid ver