Daimler-Benz: Broad-Based Improvement In 1996 Results; 12% increase in revenues in first quarter of 1997.

STUTTGART/NEW YORK--(BUSINESS WIRE)--April 16, 1997 --

Schrempp: "Strategic decisions are now bearing fruit - growth from inner strength"

Daimler-Benz recorded an operating profit of DM 2.4 billion (US $1.6 billion) in 1996 and a net income of DM 2.8 billion (US $1.8 billion) according to US-GAAP (Generally Accepted Accounting Principles). Earnings per share amounted to DM 5.35 (US $3.48). Daimler-Benz boosted its sales revenues last year by 10% to DM 106.3 billion (US $69.1 billion). In the first three months of the current year, sales revenues increased by 12% to nearly DM 26 billion, a trend which promises further improvements in results for 1997.

The first stage of the measures taken by the Daimler-Benz Board of Management to bring about a sustained increase in earning power has proved successful. Daimler-Benz Aerospace (Dasa) improved its contribution to the consolidated result by DM 7 billion from a loss of DM 7.2 billion in the previous year. Although directly managed industrial holdings showed an operating loss of DM 600 million (1995: DM - 2.2 billion), this was in large part due to the final closing of AEG's operations.

The contribution of the Passenger Cars division to operating profit increased in 1996 to DM 3.1 billion. The operating loss of the Commercial Vehicles division of DM 400 million was attributable particularly to European truck business, while other units performed well. The services subsidiary Daimler-Benz InterServices (debis) continued its upward trend, posting an operating profit of DM 288 million (1995: DM 112 million).

Unhampered by non-recurring expenses - particularly in connection with portfolio restructuring and divestment of chronic loss-making areas - which had a substantial impact on the 1995 financial statements, Daimler-Benz improved the overall operating profits by DM 2.6 billion.

At the Annual Press Conference in Stuttgart, the Daimler-Benz Chairman, Juergen E. Schrempp, said: "Recent strategic decisions are now showing results. In 1996, we achieved our goal of sharply improved results in virtually all our business units. The most important task facing us now is to ensure that all business units achieve a level of return on par with the world's-best competition."

DM 1.10 dividend

The dividend of DM 1.10 per DM 5 share proposed for 1996 reflects the positive trend in operating results. At the same time however, the company strengthens the equity capital base underpinning future growth. For 1996, it intends to increase equity capital by DM 3.5 billion to DM 26.4 billion.

To strengthen its capital base further for the long term, Daimler-Benz will issue Mandatory Convertible Notes in the amount of approximately DM 1.1 billion. At the latest by the time it reaches maturity, in 2002, this instrument will be converted into shares of Daimler-Benz AG. Favorable prevailing interest rates and the positive climate in the stock markets were among the reasons for the decision to issue this instrument now. Dr. Manfred Gentz, CFO of Daimler-Benz, said: "Such an instrument will assist us in optimizing capital costs and ensuring long-term financial flexibility."

Entering global growth markets while strengthening German operations

By focusing on 23 business units and through extensive cost-cutting programs, Daimler-Benz has significantly improved its earning power. This success is supported by the new corporate structure in operation at Daimler-Benz since April 1, 1997 and designed to make the company still faster, more efficient and more effective.

Mr. Schrempp emphasized that "the large-scale transfer of responsibilities to the business units, coupled with expanded arrangements for profit participation, is making our managers `entrepreneurs' within the company."

Daimler-Benz will continue its drive to make its German operations more competitive. Progress has already been made through agreements concluded at all domestic vehicle plants, thereby safeguarding 135,000 jobs in Germany. Similar agreements were concluded at Dasa. On the basis of such competitive measures, Daimler-Benz is currently investing DM 2 billion in new production equipment in the Stuttgart area alone. For 1997 through 1999, Daimler-Benz is planning fixed asset investment worldwide of nearly DM 20 billion, with a further DM 15 billion earmarked for research and development.

Juergen E. Schrempp said: "The Daimler-Benz group has a clear program for the future, and with its focus on transportation and services is positioned in expanding markets. We shall generate future growth from our new-found inner strength."

First statements prepared entirely in accordance with U.S. GAAP 

With its 1996 accounts, Daimler-Benz is the first German company to present financial statements conforming entirely with U.S. GAAP (Generally Accepted Accounting Principles). "We are using one and the same system of key figures both for internal controlling within the group and also for external reporting. In this way we can make the performance of our business activities more transparent, giving both German and foreign investors and the public a clear picture of the profitability and prospects of our company", commented CFO Dr. Manfred Gentz.

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