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Executives

Michael Muhlbayer – Head of Daimler IR and Treasury

Bodo Uebber – CFO

Analysts

Arndt Ellinghorst – Credit Suisse

Christina Church – Barclays Capital

Horst Schneider – HSBC

Max Warburton – Sanford Bernstein

Christian Breitsprecher – Oppenheimer Research

Daniel Schwarz – Commerzbank

Charles Winston – Redburn Partners

Christian Hessner – Reuters

Thierry Huon – Exane BNP Paribas

Jochen Gehrke – Deutsche Bank

Adam Hull – WestLB

Aleksej Wunrau – BHF

Daimler (DAI) Q1 2010 Earnings Conference Call April 27, 2010 7:30 AM ET

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 also 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)

I would like to remind you that this teleconference is governed by the Safe Harbor wording that you will find in our published results 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 such as assume, anticipate, believe, estimate, expect, intend, may, plan, project and should.

Such 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.

May I now hand over to Dr. Michael Mühlbayer, Head of Daimler Investor Relations and Treasury. Thank you very much.

Michael Mühlbayer

Good afternoon. This is Michael Mühlbayer speaking. On behalf of Daimler, I would like to welcome you to our first quarter presentation. We are very happy to have with us today, the CFO, Bodo Uebber, in order to give you maximum time for your questions. Bodo Uebber, will begin with a short introduction directly followed by Q&A. Now I would like to hand over to Bodo Uebber.

Bodo Uebber

Thank you, Michael. Ladies and gentlemen welcome to our conference call on the results of the first quarter of 2010. After our last year’s deep recession, the world economy continued along its recovery pass in the first months of 2010. Strong growth came once more from the rapidly expanding Asian economies, especially China and India and the economies of South America also achieved significant growth.

Our automotive divisions unit sales provided from both from the globally higher demand and from the market success of our attractive model range. EBIT of EUR1.2 billion in the first quarter underlined our strong performance. Especially the very positive development of Mercedes-Benz cars and Daimler Trucks led to the strong improvement. Revenue rose in line with the increased unit sales by 13% to EUR21.2 billion. Net profit is positive again with open EUR6 billion. And we achieved a positive free cash flow from the industrial business in the first three months of the year leading to a slight increase in net liquidity of the industrial goodness.

On April 7, Daimler entered Renault-Nissan, and also strategic cooperation which focuses on concretely defined projects in the area of small cars and engines. The partners have signed a general framework agreement on long term strategic cooperation. This involves the following projects. First, we will develop a common architecture for our Smart in the Renault Twingo. As part of this project, we would launch a new Smart four seater and other aspect is that an electric drive version of all Smart models will be supplied right from the beginning. And second, we will expand our engine portfolio by jointly developing new small three and four-cylinder engines. Third, Nissan and its premium brand Infiniti were procured larger gasoline and diesel engines from Mercedes-Benz and fourth, we will extend our range of Benz by using a common architecture for city events and we will also share our partnering components for mid-size Benz.

With this strategic cooperation we will strengthen our product range both for small engines as well as in the small car and compact car segments and the partners in this cooperation we’ll be able to exploit increased economies of scale. The cooperation with be supported by a symbolic cross-shareholding of 3.1% which Daimler will hold in the Renault and Nissan and the two of them in aggregate will hold them in Daimler.

Let's now come back to our business developments. In the first quarter, global demand for cars generated continued to recover primarily due to the rapid growth in China. However car sales in many major markets are still profiting from various state incentive programs although this applies more to the next market segment than to the premium segment. Worldwide demand for trucks benefited from the strong Chinese markets, our truck demand remained rather restrained in Western Europe. The US truck markets continued to stabilize and expanded slightly compared to the week prior year quarter.

Daimler’s strong performance in the first quarter of 2010 can be demonstrated if you look at our key figures. Revenue increased by 13% to EUR21.2 billion. We posted group EBIT of plus EUR1.2 billion compared to minus 1.4 a year ago. This strong improvement not only compared to the weak prior year period but also to the fourth quarter of 2009, is due to the significantly improved earnings duration mainly at Mercedes-Benz trucks and Daimler trucks. Net profit was open EUR6 billion, a positive swing of EUR1.9 billion in comparison with the first quarter of last year.

Earnings per share improved to $0.65, the free cash flow of industry business in the first quarter totaled EUR4.3 billion, net liquidity from our industrial business of EUR7.3 billion remained at the high level at the end of 2009. The free cash flow of the industrial business was positively affected by the positive earnings. In addition the sale of our stake in Tata Motors led to a cash flow in-flow of approximately EUR300 million. On the other hand our working capital increased by EUR4.6 billion due to the higher inventories in line with the growing Vito demand and preparations for the spring selling season which are usual for the first quarter.

Let's now take a closer look at the individual divisions. For the first quarter of this year, Mercedes-Benz cars continued positive development of the first quarter of 2009, unit sales increased compared to the first quarter of last year by 20% to 277,000 vehicles. This increase was due in particular to a strong growth in the E-Class and X-Class segments, but we also sold more cars of the A and B class and in the SUV segment. While unit sales in Western Europe was slightly than best of prior year level, sales in the United States increased by 28% to 65,000 units. In China, Mercedes-Benz cars more than doubled its unit sales to 27,000 vehicles and thus maintained its position as a premium brand with a strongest growth in that very important market.

The divisions revenue increased from EUR9.1 billion to EUR11.6 billion. Mercedes-Benz cars increased its EBIT to plus EUR806 million compared to minus EUR1.1 billion last year and return on sales went up to 7%. The main sectors contributing to this distinct earnings improvement was a significant increase of unit sales especially in the full size and luxury segments. The related improvement in the product mix and improved pricing. Currency effects had a negative impact on earnings but were partially offset by efficiency gains and cost reductions.

In comparison to the first quarter of 2009, EBIT improved by another EUR200 million. This improvement compared to Q4, 2009 could be achieved despite lower unit sales. With the introduction of the new Cabriolet, the Mercedes-Benz E-Class family is now complete. Sales of the two-door convertible started in Europe in January, at the end of March the first vehicles were delivered to customers. In the exciting E-Class Cabriolet, we have introduced the all new AIRCAP system, which reduces turbulence substantially for the occupants of all – for all of our four seats.

At the same time, the Mercedes-Benz SLS AMG was launched on the market the new Gullwing model has enjoyed an excellent response from our customers which orders significantly exceeding our expectations. The SLS AMG has already received a number of major awards like the Prestigious Golden Steering Wheel 2009 award. Recently the Gullwing also even picked up the Red Dot Design Award, one of the most renowned international design prices to be awarded. The new generation (odd class) at this all over premier at the 2010 New York International Auto Show, the original SUV tour has been extended for the updated including a completely pre-designed content.

Our latest research vehicle the S800 presented in Geneva, impressively demonstrates Mercedes-Benz ability to harmonize automobile festination. With the continually increasing demands of environmental compatibility and unparallel safety features. Daimler Trucks sold 71,000 vehicles in the first quarter of 2010, 8% more than in the prior year period. Particular the positive sales development in South America and South East Asia more than offset lower unit sales in Germany, in the Middle East and Japan. Trucks Europe, Latin America sold 26,000 vehicles representing an increase over the low number of 23,000 units sold in the first quarter of 2009.

Unit sales in Brazil were boosted by 81%, driven by the economic recovery, tax relief and state support with the provision of favorable financing packages. In Western Europe, unit sales decreased from 11,600 to 8,600. Vehicles following the general weak market development. The sharpest sales decline was recorded in Germany was a minus of 31%. Unit sales of trucks NAFTA rose by 4% to 18,000 vehicles, while the business in the US American market showed slight signs of recovery, unit sales declined in Canada and Mexico.

Trucks Asia sold 27,000 vehicles in the first quarter at plus of 8%, compared to last year’s periods. The biggest increase was in Indonesia, units sales in Japan declined further, however overall demand in the regions outside Japan was 18% higher than in Q1, 2009. Revenue of Daimler Trucks of EUR4.9 billion was close to the level of the prior year period. From the signs of recovery apparent from the development of incoming orders, especially the Trucks Europe Latin America and the Trucks Asia units achieved more order than in the previous quarters, as expected incoming orders in the NAFTA region decreased in Q1 due to some poor forward effects in the prior quarters before the introduction of the (EPA) ‘010 emission regulations.

Due to the growing demand for Mercedes-Benz Trucks short time working arrangement will be discontinued in Wörth and Gaggenau plants at the end of May, one month earlier than originally planned. Daimler trucks is bagging the brick, the division achieved EBIT of EUR130 million in the first quarter of 2010 after four quarters of negative earnings in 2009. Return on sales improved to 2.7%. Although overall markets in Detroit remained around the weak at the beginning of the current year, the turnaround was achieved mainly due to the positive business development in Brazil.

Furthermore the measures taken to reduce costs and positive effects from the repositioning of Daimler Trucks North America and Mitsubishi Fuso Truck and Bus Corporation also led to the earnings improvement. On the other hand the implementation of the repositioning programs to crossed charges of EUR17 million in the first three months. As a significant product enhancement Daimler Trucks is extending its product range and will gradually introduce EEV versions in certain output classes of the (inaudible) up to July 2010. EEV means Enhanced Environmentally friendly Vehicle and is a classification used for engines which comply with an even more stringent exhaust emission standard than Euro 5.

The EEV standard reduces particular emissions by roughly one-third compared to the already stringent Euro 5 limits. Also as part of our shaping future transportation initiative Fuso Canter Eco Hybrid undergoing a three year fleet trial in London, depending on its particular application the Canter Eco Hybrid uses around 10 to 15% less fuel than the conventional light duty truck with correspondingly lower CO2 emissions. Last week Mitsubishi Fuso Truck and Bus Corporation unveiled the new generation of the Fuso Super Great, the fuel efficient and environmentally friendly truck complies with the JP 09 which is currently the world’s most stringent emission standards.

Fuso expects these trucks features in 6R10 diesel engine with BlueTec technology from Daimler Truck’s new engine generation for using commercial vehicles worldwide. And the Trucks North America has presented two new heavy duty trucks to its customers. The updated Freightliner Coronado for on-highway use and the Freightliner Coronado Severe Duty for specialized applications such as the construction sector for municipalities cities. Our Van divisions sold 47,000 vehicles in the first quarter compared to 29,000 units a year ago. In Western Europe the most important market for Mercedes-Benz Vans, unit sales increased by almost 60% to 35,000 vehicles despite the continued difficult market situation in this region, the division was able to improve its market leadership in the segment of midsized and large vans.

In the NAFTA region, sales jumped from 500 to 3,000 units. At the beginning of this year, sales of the Sprinter in the United States and Canada were taken over by our own retail organization. The division’s revenue increased by 31% to EUR1.7 billion.

Mercedes Benz vans achieved an EBIT of EUR64 million in the first quarter after minus EUR91 million a year ago. Return on sales improved to 3.8%. The main reason for this improvement was the increase in unit sales, negative exchange effects could largely be compensated by efficiency enhancement and cost reductions. A prototype of the Mercedes Benz Vito with battery electric life recently undertook and passed a series of the harshest winter tests near the polar circle. The test van encountered no problems with even in extreme cold, snow and ice with regard to the safety systems, drive, suspension or all of the other components of a Mercedes Benz van.

The electric Vito is the first vehicle in its class worldwide that is delivered from the factory with an electric drive system as standard equipment, equipped with a lithium ion battery, the range of the Vito average 130 kilometers; that can be considerably higher given the appropriate driving style.

There is no loss in terms of payload of load volume compared to a conventional powered Vito. In the middle of the year, up to 50 Vito E-Cell vans are participating in a test project in the (inaudible) area. The project is supported by public funds and is intended to promote to development of the infrastructure in electric mobility of public transport.

Daimler buses raised its unit sales from 6800 to 8400 vehicles. A significant recovery of demand was posted in Latin America driven by the positive development in Brazil. Daimler buses sold 5800 Mercedes Benz chassis representing a gross of 74%. In Western Europe we sold 1100 buses and chassis, thus remaining 4% below the high level of the first quarter of 2009. Declines were posted in the city bus business, which had previously been stable as well as in the (coach).

Sales in the NAFTA region decreased by 58% to 500 units, whereas the sales level was stable in the United States and Canada demand declined considerably in the Mexican market. Revenue of the division increased by 12% to EUR1 billion. Daimler buses posted an EBIT of EUR41 million in Q1. As expected, the higher earnings level of the prior year could not be fully repeated. The less favorable regional and model mix contributed to the lower EBIT, earnings were particularly impacted by the lower sales of complete buses in Western Europe.

Return on sales was 4.1%, which is still a high level in the industry. The Mercedes Benz (Tabigo) is now offered as a safety edition. The coach of the year 2010 includes all the safety features which are available in the market and the customer benefits from both from the utmost safety in road traffic and also from the very attractive price and low insurance cost. Last month EvoBus handed over two Mercedes Benz Citaro G BlueTec Hybrid buses to the Hamburger municipal transport company. The Citaro BlueTec Hybrid is the only hybrid bus in existence today that can travel for certain distances solely on electric power without using its diesel engine. Following the comprehensive facelift for the new Citaro top class 400 Europe, the Citaro presented the revised U.S. version, the Citaro Top Class S417 in Las Vegas.

Daimler Buses North America delivered the last (inaudible) buses to New York City transit from an order of (inaudible) 1350 diesel electric hybrid transit buses. Daimler Buses is the world’s largest manufacturer of diesel electric hybrid buses with over 3000 unit either in surface or on order.

Daimler Financial Services posted EBIT of EUR119 billion in the first quarter of this year. The improvement compared to Q1 2009 was preliminary due to the lower cost of risk and higher margin. On the other hand, we recognize charges in particular from the valuation of held for sale non-automotive assets, which are subject to lease agreements compared to with the first quarter of last year new business increase by 6% to EUR6.2 billion and Daimler Financial Services worldwide contract volume amounted to EUR59.9 billion at the end of the first quarter, adjusted for exchange rate effects. Contract volumes slightly decreased by 1% compared to the end of the year 2009.

In view of the difficult economic situation, the focus remains on taking measures to reduce credit risks, collection management and remarketing processes were further intensified. As planned, Mercedes Benz Van’s total deficit volume decreased by EUR1.5 billion in the first three months of 2010 to EUR11.1 billion at March 31.

The next chart shows the impressive improvement of group EBIT over the last five quarters from the low point of minus EUR1.4 billion in the first quarter of 2009, EBIT rose to EUR1.2 billion in the (call on the review). We have rigorously reduced our cost and substantially improved our efficiency. Furthermore we profited from the increase in demand and margins particular for premium cars. And above all, we are able to offer exactly the right products with the new models of the E-Class and the new generation S-Class.

What do we now expect for automotive markets in 2010? At the beginning of the second quarter, most available indicators suggested the upturn of the world economy will continue. However, substantial stimulus is still being provided by special and one time effects. Based on current estimates, we assume that the global demand for automobiles will grow by between 3% and 4% in 2010. In Western Europe, we expect the end of gradual expiry of scrappage incentives to lead to a decrease in new car registrations. In the United States, the market for cars and light trucks should recover gradually from a lower level following the massive declines of recent years. Demand for cars in China and India should continue to grow substantially this year. The Brazilian market is expected to weaken following the expiry of tax relief in Russia should recover moderately following the last year’s demand slump with support from a recently introduced scrappage program.

Worldwide growth in the upper premium car segment is expected to be more pronounced than in the market overall because these markets hardly profited from state incentive programs last year.

Worldwide demand for commercial vehicles should also increase again following the distinct market decline in 2009. In Europe, market volume in the segment of trucks above six tons should be slightly above the level of 2009. For the NAFTA region, we anticipate growth of 10% from medium and heavy duty trucks after three years of decline. In Brazil, we assume the demand in this segment will increase by 20% to 25% and in Japan, the growth rate should be between 20% and 30% although from a very low level.

Demand for vans should increase from a low level. We anticipate worldwide market growth for buses, mainly driven by the Latin American markets, and Western Europe for (ever), demand for buses is likely to decrease.

On the basis of these market expectations, we assume that Mercedes Benz cars will increase its unit sales in 2010. We were profited from our attractive and competitive model range. We therefore plan to grow at around double the rate of the global passenger car market in full year 2010. Daimler Trucks also anticipates higher unit sales in 2010. We foresee impetus from some Latin American markets as well as from a very low base in NAFTA in our Asian markets, Fusa unit sales should increase once again.

We also anticipate higher unit sales for Mercedes Benz Vans and Daimler Buses this year, at Daimler Buses, the growth will be preliminary driven by the Latin American markets whereas in Western Europe, we will probably not quite achieve the level of 2009 due to the market reasons.

What does it mean now for our earnings? We expect the Daimler Group to post EBIT from its ongoing business of more than EUR4 billion in 2010. The key factors of this result are the further recovery of the market, the improvement of the economic climate, and the market success of our products. The biggest sources of risk are still to be seen in renewed turbulence of financial and capital markets, the debate about high levels of public debt, raw material prices and possible overheating of the Chinese economy. We will still have a cautious look at the development of the automotive markets and continue to monitor the risks in the automotive value chain.

At Mercedes Benz Cars we anticipate EBIT in the range of EUR2.5 billion to EUR3 billion this year, assisted by increased unit sales and higher margins. We expect Daimler Trucks to achieve EBIT between EUR500 million and EUR 700 million in 2010 with contributions from increased unit sales as well as from our programs to reposition the truck business in North America and Asia.

For the Mercedes Benz Vans division, we anticipate EBIT of approximately EUR250 million in 2010. At Daimler Buses, we foresee significantly positive EBIT in the magnitude of the prior year. In the Financial Services business, we assume that the cost of risk will decrease this year. Furthermore Daimler Financial Services will continue its efficiency enhancement actions. As a result, we anticipate EBIT of more than EUR500 million.

Ladies and gentlemen, thank you for your attention. I will now be happy to answer your questions.

Michael Muhlbayer

Thank you very much, Bodo Uebber. Ladies and gentlemen, you may ask the questions now. I will identify the questioner by name, but please also introduce yourselves with your name and the name of your organization before asking your question. To 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)

Michael Muhlbayer

Now we take the first question from Arndt Ellinghorst.

Arndt Ellinghorst – Credit Suisse

Yes, thank you. It’s Arndt Ellinghorst from Credit Suisse. I have two questions. The first one is on your order book. Given you have better visibility now in Cars and Trucks, how long really is your order book in these divisions and how does that compare to the start of the year? And the second question is on residual values, you are reporting almost 19 billion of operating leased assets on your balance sheet, end of the first quarter. Could you quantify the effect from selling used cars coming off lease at an obviously better price now than a year ago and how much that is impacting your earnings at Mercedes and also your cash flow? And also on that topic, when you speak to your accountants, do they urge you to write up your leasing book and at which stage maybe this year could we expect this?

Bodo Uebber

Of course, coming to your questions of order backlog first to passenger cars, of course, we don’t distribute the order backlog lengths in terms of (most), What I can tell you is that we saw during January, February, March an increase of course in order intakes and also an increase so to say in order backlog especially on the March development. March was an extraordinary good month in that three months, that holds not only true for passenger cars but also for the vans and also we saw some uptick in the order books of trucks. So good news in Mercedes Benz cars that it also due to – led to the question whether we increased our sales expectations what we did then one week ago.

For the truck business, the order intake you have seen on to order intakes development of the first quarter, especially also in Europe we had a better run in March again, not in January and February that led to the – also led to the decision to – as of May to reduce the short timing in the two factories, but we have announced right now, so some uptick there. We are in Japan also with order intakes, let’s say on – but on the level we have seen it before. So not a surprise in the first quarter there. In NAFTA, of course, we are at a low level, you have seen that and we have the prebuy effect in the fourth quarter.

So for trucks, of course, we have given our estimations for the markets. There, I would say, are not these totally positive – slight positive elements? Yes, in Europe and also some – a little bit in NAFTA to stabilize and in Japan we see a positive but not as huge as I just described it in passenger cars for example. The same as I said in Vans for the March situation, also positive development. Residue value, of course, first to make it clear, we are what we have reserved for that was I do think in Q4 2008, if I remember right, Q3 2008. Of course, we are (inaudible). No release of provision with that regard. And there is nothing in our first quarter year here of this.

The other residue values at all in passenger cars are stabilizing compared to Q4. So we are on the same good situation as it was in Q4. Even this German situation has a little bit – is doing a little bit better. Though we have some concerns in the German market, but in Q1, it can only confirm that the residue values are on the – let’s say, of course, a level you can discuss but they are in a good shape compared to the first quarter, stabilizing and even some room of improvement. Of course, at the end of the day in our earnings there's not a huge effect -- not an effect of this residue values in the first quarter.

Also from a cash flow point of view, the residue of value -- so the off lease vehicles are not a subject of our good cash flow. What I regard as a good cash flow is right now it comes more from the EBIT development on the one hand and of course, due to the fact that our working capital management was better as we had expected. The fourth question was the write-up. We don't get to a write-up because under IFS, there is no possibility even to write it up as your question is. So, from the auditors we get no pressure because we cannot do it.

Michael Muhlbayer

Second in line is Christina Church.

Christina Church – Barclays Capital

This is Christina Church from Barclay's Capital. I've got a couple of questions. Firstly, just going back to your guidance change, can you say that the huge increase in guidance that was when you only set the guidance in February, was that all because of the change in orders in March or is there anything else in that that made that guidance change so significant.

Second question is on slide 23 where you give your walk down and you put in EUR2 billion for price volume, could you break that down as to how much impact was from volume and how much from price and even if possible break down to how much do they impact regionally so how much of the mix improvement came from Asia in particular, from China.

And then final question is on foreign exchange. You took a big hit in the Q1 from FX and I was just wondering whether you are changing your guidance for the full year. I think you said it would a mid triple digit hit from FX, does that change since the Q1 or is it that we'll just get more favorable FX in the next few quarters, thank you.

Bodo Uebber

Well, Christina, thank you for your couple of questions. With regard to the guidance, as of now, of course, I do think -- one thing we have better visibility right now and that is also based on the development of the business in March and April. As I mentioned it before that is a question also of order intake and then the question of are we able based on facts to increase our sales in the respected divisions so March and April business development was an impetus to deliver to this change guidance. Of course, also it affected our margin developments based on our March actuals, facts which we got last week, of course, showed us a good margin development and a good pricing development more or less not only in passenger cars but also in trucks and therefore, of course, we came to the change of the guidance, which of course is significant but also of course we are regarding this as positive news so to say. I hope that I even be in that position more often.

Your question regarding the breakdown in (walk), of course, we do not distribute further breakdowns to this walk, I do think we in this regard are okay with delivering transparency to quantify it a bit is first of all the volume impact of course to Q1 was the biggest one. Of course, you know that our Q1 in 2009 was a very -- from a sales point of view very, very low. Secondly, I would name pricing. Of course, you know, that we in passenger cars had last year the inventory stuff and the old E-Class introducing of the new one and therefore the old E-Class inventories. Of course, therefore in passenger cars a huge amount of cost was also related to pricing.

Then you had your third question was regarding exchange rates changes here. One thing is, first of all for our guidance we take into account more the current level of exchange rate whether we had in our first guidance more the higher numbers on the fourth quarter of 2009. Therefore, of course, it has an impact also on our guidance.

In the walk, you see a huge impact on currency of EUR347 million for cars and overall in Daimler EUR432 million. One main impact here is the British Pound and the fact that we had last year due to the fact that the markets went down so drastically, we had an over hedge position in the Pound and that lead to sale of hedges, of course, positively so that had a positive effect in 2009, which you cannot repeat twice, of course, and therefore two thirds of that is more related to the Pound. It doesn't mean that we have worst hedges in the pound now but of course we had a positive effect in 2009.

Christina Church

So could I just clarify, will you change your guidance for FX for the full year or –

Bodo Uebber

We have already changed it so to say with the new guidance, of course, we have changed the expectations of the currencies.

Christian Church

Okay.

Bodo Uebber

We already did it today. I cannot foresee whether we have another change now in the next three or six months. Of course, we will then look at the currency developments and make a new assessment for the total year.

Michael Muhlbayer

So, next in line is Horst Schneider please.

Horst Schneider – HSBC

Yes, good afternoon. Horst Schneider here from HSBC. Two questions are left on my side. The first one is with regard to Mercedes Benz Cars, what I understand now from your better guidance for the division, it's among other things mainly an impact also from better pricing. So what do you expect here the better pricing to continue also in the next few quarters and that’s it on Mercedes. And the second one is regarding market shares. It strikes me that you have lost market shares in a couple of divisions in a couple of regions and I get the feeling that you are prepared to sacrifice a bit of market share in favor of a better price. So, would you confirm that?

Bodo Uebber

Of course, due the pricings what we see right now of course we can confirm that the pricing in passenger cars a positive development we have seen, will hold on for the next quarters. That is also the basis of our guidance. And of course it is based on our good product range we do have and our strong so to say our strong position in the market and with the customers.

The second question you had regarding market share we have to differentiate a bit. When you see market shares going down somewhat in passenger cars it might be related to scrappage fees and other developments. So you have to adjust these kind of numbers or they are impacted in 2009 by something like scrappage programs or other development.

In Trucks, of course, we have a -- last year in Q1 we had an impact of course due to a strong order backlog but we had in Q4 2008, we had a strong market share in 2009, we are now more on a normal level. So I would not reflect here any pricing stuff or that we are too, let’s say not too aggressive also. So that is what I count for long-term strategic rates are fully okay and pricing is disciplined of course, also we see some kind of actions from competitors. In the U.S., it is reflected for example due the decision that we stop sterling. So therefore you see some impact but on the other hand we can offset some of that sterling market share into freightliner share, so even that is even positive.

In Fuso, the development there is based -- of course, we have a weaker market share there and I mentioned in my speech the new super grade, which we will get into the market and this truck fulfills for instance the conditions which are in Japan necessary to get the subvention – of the state subventions currently. And therefore I assume that our market shares and we have already some data on hand right now that our market shares are improving in Japan again. So that was related to a product special thing, so we have removed it. We will come up with other products I do think in June with an updated list, which will also meet this requirements and therefore the market share should improve there.

So, in Vans, we have improved our market share, as I've got the numbers now but I have it, I have not the paper is in front of me. And within bus you have always fluctuations due to tenders. So all in all I regard the development of the market shares if you look at it rightly, of course, it's some more information and you adjusted a bit I do think full okay with our, let's say, strategies and product portfolio and so on.

Horst Schneider – HSBC

But sorry, add-on question from my side. But then with regard to Mercedes Benz cars again, since you say that you intend to grow double the rate of global currency this year we should expect in the next few quarters that you gain market share on an unadjusted basis and globally in various regions is that right.

Bodo Uebber

I can only confirm what you said.

Horst Schneider – HSBC

Okay, that means we see an acceleration of the volume increase.

Bodo Uebber

Of course, you know we have given the guidance that we sell more than double as much as the 3% to 4% of course. You have seen our first quarter. We know that the first quarter was 277,000. You know that we might have some quarters which are better than the 277,000 and you said this and therefore yes, it’s right.

Michael Muhlbayer

So, next in line is Max Warburton please.

Max Warburton – Sanford Bernstein

Yes, hi, it's Max Warburton at Sanford Bernstein. Mr. Uebber, as you can probably appreciate we all spent a lot of time talking with investors in the last week about how a company can change its guidance so much. Could you just help us understand how Daimler organizes its divisional reporting and how often you as CFO get this information because you actually said something in response to a previous question, you said I think we got the March actuals last week, did I hear that correctly? Is it right that it takes three weeks to get a monthly P&L for each division or could you clarify how the reporting works and how it might be improved going forward so we don't have this kind of confusion that we're seeing in 2010?

Bodo Uebber

Max, thank you for that question that I can clarify some subject. On the one hand, I do think fortunately the market and the industries have developed (inaudible) positively and they developed positively also in the first quarter and even in March although we had some subject like Greece or big countries and so on and so forth. And the market developed better as expected as I referred in my former answer and that was really based on the March development, which was very positively in many of our divisions.

And therefore I do think we have seen in the last couple of weeks a lot of companies coming out with positive news and also let's say, it was this kind of I would say surprisingly better than expected also from the capital market. So that was not only a pattern with Daimler, it was a pattern, which you could see not only in the automotive industry but also in other industries. And therefore we hedged to adjust our expectations too because we had some of that, as I said it before information to rethink our guidance. We have done that after we had all the effects on the table and therefore I have to tell you I'm sorry that we are not the slowest one, we are unfortunately if you might say so the fastest one. You should compare our disclosure right now compared to many other companies we are early on even in Germany to disclose our numbers and therefore the numbers we get are early.

You get most, of course, quite logically you get the sales numbers pretty early. Yes, we are here, I don't know third or fourth working day somewhat like this. And to get the P&L, I would call us pretty much in the first in the, I would say so of industry to report this numbers and therefore I regard our disclosure as a very fast one.

Michael Muhlbayer

Okay, we take the next question from Christian Breitsprecher.

Christian Breitsprecher – Oppenheimer Research

Yes, hello, good afternoon, it’s Christian Breitsprecher. (Inaudible) also have a question on the earnings progression, it's very hard to understand when we look at the fourth quarter 2009 and the first quarter 2010. In Mercedes and in trucks you have virtually flat revenues first quarter versus fourth quarter but you have a significant earnings progression quarter over quarter. And can you explain a little bit what was different in the first quarter versus the fourth quarter because most of the cost cutting measures had their full effect already in the fourth quarter and also when we look at the mix in Mercedes fourth quarter, first quarter it's virtually the same. So can you go a bit more into detail on that issue please?

Bodo Uebber

Christian, thank you for your questions. I do think I will go to the – let’s say the two bigger divisions, I do think Mercedes Benz cars and trucks, also maybe a comment on van and buses. Although, of course, we have to keep in mind Q4, Q1 some seasonality and other stuff, of course we have that figures.

First of all, Mercedes Benz cars, our mix was positively especially when you see S Class and E Class development. Therefore, also, the margin development also is positive in this regard. Pricing as I said before was not only compared to Q1 2009, but also to Q4 2009, very positively developing. And therefore, of course, these are the two main factors.

The third one is that although you are right that the measures of course were in Q4 we had, but you don’t have to – also you have a loss to imagine that the – the cost, we could keep the cost on a very low level in the first quarter, although, you should assume that for some preparation of the growth, of course, it should have more costs.

And therefore, the cost level also in Q1 we were able to keep on the very low levels, so and not to increase even though we have seen we have produced work. And therefore, of course, normally you should have more cost on board. And therefore, this kind of development was positively on top impacting Mercedes Benz cars.

Within trucks, of course, we can clearly see that the developing of the repositioning programs of Freightliner and Fuso are getting more and more traction, so the development in Q1 2010 compared to Q4 are on the light pass of our objectives being breakeven with Freightliner and Fuso that has had a positive impact.

Secondly, we had a Brazilian – a very strong Brazilian business, of course, which was not have been so far, so big in the fourth quarter of 2009, and we can also see here that the cost are on a very low level, although, as you have seen it, the revenues were more or less kind of flat. So both of that altogether leads to a truck number which is positive now for us the first time in Q1 2010.

On the van side, we had always said in the fourth quarter that we had a periodic impact, so that the – so to say the underlying margin development in the first quarter was half of the amount we reported and that number you can see in the first quarter again is on the same level. But as I have already commented too I do think in financial services, of course, as I said before, we have seen some better developments on the margin sides and on the interest side, and therefore, and so this division is doing well.

Michael Muhlbayer

Next question, we will take from Daniel Schwarz, please.

Daniel Schwarz – Commerzbank

Schwarz from Commerzbank. I have two questions. One is on China, you mentioned overheating of the Chinese economy is one of the risk in 2010. What are the metrics you are looking at for your own planning for China? What would indicate the weakening of the Chinese markets? And what would be a negative scenario for the Chinese auto market? Is it no further growth or is it a significant decrease? Is that risk? Do you see that risk?

Bodo Uebber

I would to your last point, Daniel, lower – slower growth we would assume. Of course, if you would see a overheating right now, not a – I don’t know breakdown of 40% or whatever. And, of course, our assessment is right without going to different sales numbers for our division here what the Benzs would be. But, of course, I do think it’s common knowledge that on the real estate sector in China for example.

There could be happening something as a bubble. Of course, it’s a huge economy which they have to develop. And, therefore, I do think we are looking at this as a common indicators of what is available in the market, not more and not less. So no specific stuff which is Daimler so to say knowledge.

Daniel Schwarz – Commerzbank

Okay. And the second question would be with regard to your growth cash in the industrial business. Are you planning to reduce this number and should we expect improved financial income in the coming quarters or is the negative $200 million round about $200 million in Q1 is a good number for the next quarter?

Bodo Uebber

I expect that this will be a positive development, what means of course that this number should be better so to say, negatively, but better. There are two subjects. One is from the – is the interest cost of the pension plans worldwide and the other one is of course our liquidity interest rates expense and income in this regard.

And on the second subject, I expect a further positive impact, because we will now having seen this positive cash flow in the first quarter and you know you asked me of course last time of cash flow guidance, and you said – I said, okay, we were reluctant to give one.

Now based on the results we have seen, of course, we do expect a significantly positive cash flow for the year 2010, which on the other hand mean with the pre condition that all the markets will be not as volatile that we don’t get any risk scenario, we will reduce our liquidity further. Of course at the end of the day that we also – that we can estimate that this burden so to say shrinks. And I do expect for 2011, somewhat the turning point that we might get into the positive.

Daniel Schwarz – Commerzbank

Okay. But you would not say what significant cash flow means in 2010?

Bodo Uebber

Significant cash flows means of course they are significant. Of course you have to keep in mind of course we have given our guidance of more than 4 billion. We have to keep in mind that we will invest a lot in CO2 and there is CapEx and R&D and we had given this number in the press release of the year in figures. That means, of course, there is sort of substantially increase in these numbers, which will burden the cash flow.

But now based on the 4 billion guideline, we have – you can subtract these numbers so to say, because we are more investing than we are depreciating. We have to take into account that we have to build up some working capital. We have to put some money into regional growth like India, more truck related 4-ton for example. And we have the interest and tax related subject of course to consider all-in-all of course, but make your equation for the 4 billion, but we will stay significantly positive.

Daniel Schwarz – Commerzbank

Okay, thank you.

Michael Muhlbayer

Next question, we will take from Charles Winston.

Charles Winston – Redburn Partners

Yes, hi there, Charles Winston from Redburn Partners. Three questions if I may, but fairly quick. So I was just wondering if you could give a bit more detail on the breakdown of revenue growth in the auto’s division. In other words, perhaps, quantify how much of the revenue growth came from pricing, how much it came from product mix, what the impact of FX was and that sort of thing?

Secondly, I was just wondering if you could give us an update in terms of the process of converting your short-term cost savings in last year into more longer-term gains, you talked about the fact that there was also a quite large amount of (inaudible) in other areas. Can we see more progress there in terms of converting those to more structural gains?

And then thirdly, just very quickly, why are you planning a reduction in your banking deposits? You mentioned they fell, you mentioned it was planned, surely that helps finance the finance – financial services division. What was the thinking behind reducing that deposit position? Thank you.

Bodo Uebber

Charlie, I will start with the most easiest question which was the last one. The deposits – of course, the deposits were higher than the asset. So that means, of course, it normally, of course, you should be in a perfect situation when the deposits are matching the assets, the portfolio of leasing and financing. And so we had an overshoot in that last year due to high deposits.

And so on purpose, we bring this number more close to the asset, because you know for more liquidity, right now, you don’t get a good interest rate, therefore a safe one of course. And therefore, we are reducing it as planned, but we will stay at a very high number of deposits of course, because it makes the financing industry, it’s the cheapest source of course of refinancing in the long run.

Secondly, you asked for the efficiency enhancements, of course, as I said before, we are – right now on the costs – on the costs side in Q1, very – on a very lean basis, I would say, we don’t see any increases. Although, you would expect in some areas some increase, but we can hold on with that cost management on the one hand. And therefore, we stay with our message that we shoot for same kind of numbers as we have done it in 2009 to stay stable to make this efficiencies more sustainable at the end of the day, taking one time into sustainable efficiency program, so we hold on with that.

And we look in every – we have some programs running, we have commented on that that is in the phase of marketing area as we have said it before a long-term program, but we have there – we have our modular strategies and then so forth some global excellence programs in trucks. So many programs which we are doing more or less also sustainable at the end of the year.

We have to take into account that we will of course save our working time reduction will lead us to 13th of June. Right now, therefore, there will be some, of course, if you might say so cost increase in third and fourth quarter, but positively spoken.

And now on top of our decision in trucks, based on the better visibility and the order intakes that we can that we stop our short timing, and based on that you know most of these – if you get more sales, of course, in passenger cars, if you have less short timing, we will get higher sales contribution which will offset, offset by far effect from short timing on the one hand or the working time reduction on the other hand. Therefore, I do think with every good news that we have no short timing, we have positive news for top line effects on the sales contribution side.

Your first question was about revenue growth, whether we can break that down. Unfortunately, of course, we cannot – of course our disclosure gives you I do think a lot of information. The revenue growth at all between Q1 2009 and as I said in Q1 2010 was mainly based on the volume at the end of the day and pricing mix and pricing of course was only at the lower part if you compare that to Q1, but it is not a miracle, because Q1 was really depressed in passenger cars and not as big as in trucks.

Charles Winston – Redburn Partners

Thank you. But just a follow-up, I mean, you are probably aware for instance PSA gave a figure of less pricing minus 2.5% and taking about a whopping great mix impact of plus 7% in it. And pricing – list pricing figure does seems to be a figure that people are prepared to give and even if you can’t perhaps put into the context, could you at least perhaps give us some idea as with the impact from revenue just some list price?

Bodo Uebber

I do think if that gets industry standard, we might do so, but unfortunately not today.

Charles Winston – Redburn Partners

Okay, thanks.

Bodo Uebber

Sorry. So we will take the next question from Christian Hessner. Mr. Hessner from Reuters. Sorry, we can’t hear you.

Christian Hessner – Reuters

Can you hear me now?

Bodo Uebber

Yes.

Christian Hessner – Reuters

Okay, sorry, my apology. First of all, could you tell me – do you feel that the Fiat e-merger of its passenger car and having trucks operations has any sort of impact for your business model, considering some of the very clear statements made by Mr. Marchionne?

Secondly, I was wondering if you might be able to say you had recently re-evaluated your business ties with Iran, following the regime’s nuclear policies, something that you had announced at the AGM. On a separate but similar note, considering the ongoing investigation into Goldman, would you plan on doing the same at least until – as far as Goldman here specifically, at least as far as – as long as it takes until the SEC investigations are over? And in general any comments you might make about FX and the banking industry and your take on that Porsche has already made some statements in that regard?

And also I would just be curious whether you would potentially think about with tracking your dual listing in – on New York, just like Deutsche Telecom did? And yes, if you can make one comment quickly about the level of inventories. Your production levels at Mercedes were about 48% higher in the first quarter, sales obviously close to that. But could we expect that going on from now on that production and sales would largely be in the correlation of one and another? Thank you very much.

Bodo Uebber

Thank you, Christian, for those many questions.

Christian Hessner – Reuters

Sorry.

Bodo Uebber

No, no, it’s okay. First of all, your question regarding Fiat, I do see – I do see no impact, no impact right now on our company, so I do think they will work as they worked before. Their sales department will try to sell a lot of trucks and they will do so after they will incorporated in one legal entity. So I don’t expect any different management behavior and that what is of course and would be affecting us. So I do think that would be on the same as it was before, so not a question.

On Goldman, I am sorry I don’t want to comment on the case of somebody who is into that. Of course, we are following the case, yes. And following whatever investigations outcome is and to make up our mind afterwards of the facts on the table. I do think there is a lot of speculation right now that from everybody in that case. So I am – I do think we will get this information after the investigation is over, and then we do our evaluation of that case. Whether that will impact our behavior? I don’t know today.

On the FX side, of course, of banking and so on, I do think FX and compliance, I do think in the ranking of many companies as a higher ranking now, maybe as it was I don’t know, maybe 50 years ago I don’t know. And I would say in regard to as for our company, we have also introduced our values in Daimler. Of course, we had already some work, but we needed to write it down and to talk about it, and we made in subject I think three to four years ago especially to talk within the company about FX values and other things. And I do think that the healthy process in this regard, I can only recommend that everybody is doing it also in your business I do think it makes sense that you do it.

From a listing point of view, we have nothing as planned. I have seen what Deutsche Telecom have done. And, of course, we have – so nothing more than this. And your last question, of course, it can be precise. I do think we have build up inventory in the first quarter in the direction of 190,000 units and that is a increase of 30,000 units compared to the end of the year. But I have to see that is in plan, because we have the spring selling season and especially we are shipping cars positively spoken to the US and China and that is roughly 20,000 units out of the 30,000 units and they should be sold then so to say in the second quarter as planned and everything is okay.

Christian Hessner – Reuters

So, if I could just make a couple of follow-up comments. First of all, that would sound like your inventory levels would creep back down again from where they were at the –

Bodo Uebber

We will inform you about the development always in the conference calls. Then I do think that makes sense as we have done it in the past.

Christian Hessner – Reuters

And just one last question about the Fiat issue, I think that means that you are not interested in re-evaluating the position between having passenger cars and heavy truck operations in the same company and whether that –

Bodo Uebber

We have not thought about it, if you raised question.

Christian Hessner – Reuters

Okay.

Bodo Uebber

Okay, thank you.

Christian Hessner – Reuters

I appreciate it.

Bodo Uebber

We go on with Thierry Huon please.

Thierry Huon – Exane BNP Paribas

Yes, good afternoon. This is Thierry Huon speaking from Exane BNP Paribas. So a few questions if I may. First of all, could you give us an idea of the split in China between what you are producing locally and what you are shipping from Germany? And could we expect rather significant change in the mix given the Class launch?

Second question, about the pricing you mentioned several times, do you feel that the pricing improvement came mainly because you have the right lineup or because your main competitors are more keen to improve the pricing on the market?

Last question, could you share with us what could be the tax rate for the full year with so significant increases in the first quarter? Could you share with us what should we expect for the full year?

Bodo Uebber

To your last question, our tax rate in Q1 was 38%. If you adjust for – and you have to for kind of normal rates, for example, the EADS impacts (inaudible) industry participations are handed tax wise differently. You come to a normalized rate of 33%. So for the year, I would take 35% roughly.

You asked about the pricing, I would – I do think I would again say that is our strong product range what we have right now. And, of course, I would mention another subject is our people in sales and marketing. And there, I do think these people have shown that they of course that products can deliver that pricing. So I would mention the second aspect of people and especially the head of sales of marketing.

The first thing, the split between – of course you have the C Class and the E Class, but this is – call Investor Relations please, I do think – I will go you a wrong number in percentages. You will get this number, so it’s not a secret here what we are producing there and what we are importing.

Thierry Huon – Exane BNP Paribas

Okay.

Bodo Uebber

Yes, thank you.

Thierry Huon – Exane BNP Paribas

And maybe, a very last question about raw materials, so when you do think that you will start to feel the – or when you would have to agree on the highest steel price?

Bodo Uebber

Of course for steel, we are on the Daimler level, so looking at roughly more or less I would say between 60% and 70% so to say for this year, done with our contracts, these are older contracts and long-term contracts. We will go in negotiations with the objective to keep again long-term context, although we have to say that might be – let’s say the other ones they would like maybe to talk us into shorter-term contracts.

But for this year of course as a remaining, if you might so open exposure, but I do think we can handle this open exposure. So the question of raw material pricing development will have more impact on our 2011 and 2012 developments and there we have to cope with that maybe – the current developments are always increasing raw material pricing. The same holds true for precious metals for the year 2010.

Thierry Huon – Exane BNP Paribas

And what is long-term contract in your view is three years.

Bodo Uebber

One to two years, maximum I do think.

Thierry Huon – Exane BNP Paribas

One to two years.

Bodo Uebber

Yes, maximum. Three years we don’t get.

Thierry Huon – Exane BNP Paribas

Okay, thank you.

Bodo Uebber

So in my list, I have one person left which is Jochen Gehrke.

Jochen Gehrke – Deutsche Bank

Yes, good afternoon. I have three quick questions if I may. Just firstly on trucks; you reported a small sequential order intake decline in Europe. Now don’t want to be splitting here, but obviously one of your larger competitors in Sweden, appears to be much more optimistic. When you look at your order intake numbers and we compare it in the industry, do you think there is a standard way of reporting that or is there a different way of putting this number out to investors that might then lead to some misinterpretations?

Secondly, then, you talked already about currency, but I didn’t really understand your response on that point. When we look at the $350 million in the first quarter that you reported in the bridge, should we expect them further significant headwinds or shall I read your communication in a way that we should say that’s pretty much on a full-year basis, knowing what the dollar is, since the start of the year.

And thirdly, just finally, just a follow-up here. You said, you have three weeks that you get the numbers that you report them. I suppose, you talked about the external reporting and not the internal reporting or if they are really a three-week lag within Daimler that management sees numbers that has happened? Thank you.

Bodo Uebber

Jochen, thank you for your questions. First of all, I will start again with the last question. Of course, we are – I do think regardless of being in really in as I said sort of the first third close to benchmark of delivering of our numbers, because you can see how – which company is when disclosing numbers. First of all, I do think you can do a ranking. I don’t think that we are – I don’t think that we are on the – in the first third in this regard.

When you say, of course, the numbers we are having there, of course, the actual data including provisioning write-offs everything, audited and pre-audited numbers, of course, you come to that what I said before that you have the effect including the cost position on the table in that timeframe. Of course, you have the sales numbers and other information of course early on.

But what do we do is only revenues when you don’t have the cost numbers so to say including that like pricing and everything. So I regard that as a benchmark. And you have to take into account a little bit, but I don’t know want to ask you this, therefore, I am not sure anything, but you have to look to working days. And, of course, I do think there was something like Easter in that timeframe that is always case in every months I would like to, but it is not. And, therefore, I do think you have to look at the subject.

And if you look at this, I do think I call us in this regard very fast, having all the facts on the table and not partially sort of a anyone can imagine on the partially fact, you cannot make a guidance or an estimation, you have to have the full picture on your table. Especially when I talk about March, because we have extraordinary developments in March as I said before.

Currency, of course, I mentioned the – the pound effect in these 350 million, which was more or less two-third of that number. And the impact, of course, it will not be in every quarter this kind of effect, and therefore, I expect this number if we do know our quarter to Q2 to Q2, end of July, and so on, that should be shrinking if we have the current rate so to say. And, of course, at the current rates level, we incorporated in our guidance of the 2.5 billion to 3 billion currently. And I hope that the markets will not be volatile, that it stays at this level or hopefully, hopefully, it will be even in the other direction means even somewhat little bit weaker euro again on top.

With the order intake of incoming orders of Daimler trucks, of course, right now we have this slight increase even if you compare to Q4 2009. And I am not aware that there are – it will be of different kind of methods to count order intake. We now that we are more conservative in when is a order intake a order intake, what kind of contract you have, and is it just the intention or do you have the conflict and how firm is it. And then we say we are always conservative.

I don’t know whether we have within other truck companies that the baseline in their companies affected by some news at this point of time, which I don’t know yet. We will certainly do also analyze their data what we are – currently are doing, but have not finalized to make up their mind whether there is something we have to look into. But as of today, as I said, we have nothing in mind that they are developing better than we do.

Jochen Gehrke – Deutsche Bank

Alright, thank you. And maybe just as a final follow-up, I think over the last three quarters, you had a policy of trying to be as conservative as possible to not miss after the developments in 2008. Now, obviously, this last swing in guidance appears as if you have given up that policy and this is much more a realistic picture now so to say on the relative scale. Is that fair or do you consider yourself to be still as conservative as you are trying to be over the last three quarters?

Bodo Uebber

Jochen, the question is whether I should say whether that’s fair or unfair so to say. But I do think our – I do think that we – as we gave guidance in February and also during the road show beginning of March, we based our guidance on the underlying data we had. And, of course, we said it – once we said for example of more 2.3 billion, yes. We said this was a underlying ceiling so to say for our guidance and we have update it. And, therefore, we regard now – and if we come to a new guidance, I do think you should assume that we are doing our job based on another set of facts, which I currently as I described it with the March data, with the cross data and so on with the pricing data so that we can now take this fact and to build up our new guidance. I do think it would be not good to give a guidance, which is let's say under too much of hope in it so to say and now you can do it the other way around you might can say you were right and we were too conservative in this aspect. On the other hand I do think -- I hope that I have not have maybe more of this kind of maybe smaller surprises during the course of the year and hopefully also for the upcoming years.

Michael Muhlbayer

Okay, I got four more questions. For timing reasons please one question each, Adam Hull. Adam?

Adam Hull – WestLB

It's just Adam Hull WestLB. It's a question on the cash flow. I just wanted it to be clear that I've understood you. You're saying a significant positive net cash flow for the full year and just to be clear within that, working capital -- an inflow last year of $5 billion, could you give us some guidance of your thinking on your new guidance as to what I presume an outflow but what the working capital would be and just to be clear on the R&D and CapEx, I think your guidance for the full year was $8.9 billion roughly 10% of revenue. Your number in the net Q1 were about 8% spending, just to be clear have you changed that full year guidance on the cash CapEx and R&D or not, are you still going for that 8.9 billion or so, thanks.

Bodo Uebber

So, Adam of course, last year we had a positive impact from the working capital management no doubt, due the inventory affect and I do expect the working capital for the total year being the way that its negative but that means positively that we expect revenue increase and sales increase and therefore the investment if you might say so in gross but we don't quantify it. As I said before our cash flow will depend of course first of all on our $4 billion EBIT, yes as a baseline and then of course you rightly mentioned our CapEx and R&D figure for the two years 2010 and 2011 but we have said in our press release in February and that you compare with last year that there is an increase of course to the figures we had last year in CapEx, a higher one and a small increase or slighter increase in R&D compared to 2009 and then of course will certainly impact also our cash flow but taking that into account including investment into gross and regional gross we will stay significantly positive.

Adam Hull – WestLB

I mean just and maybe don't give an exact number but just are we talking here, roughly half of that coming -- sorry an outflow roughly half of your info last year because it still would seem to be a relatively good position to be.

Bodo Uebber

I do think that given a lot more guidance than this and we have given everything a very detailed EBIT guidance and of course with all the numbers you have seen of course you can build up your opinion on that and we leave it there.

Michael Muhlbayer

Another call please.

Aleksej Wunrau – BHF

Hi good afternoon, Aleksej Wunrau of BHF, thanks. Two short ones if I may. The Q1 figures seem to have been largely positively impacted by the positive gap between wholesale and retail volumes, so my question is how long we should expect this trend to continue and by how much it contributed to your first quarter EBIT and secondly would you please provide a figure of order intake -- of volume order intake in the truck segment compared to the shipments for March alone, so the question is by how much in percentage terms order intake exceeded the shipments in March in the truck segment.

Bodo Uebber

To your second question we had roughly on Daimler trucks level I do think 10% more order intakes and shipments and secondly you asked for the -- sorry.

Aleksej Wunrau – BHF

Retail.

Bodo Uebber

The retail wholesale, this I cannot confirm because the profit intake of course the wholesale number of 275,000 or 276,000 in cars defines the profit impact, not the retail so to say and retail was 272,000 so that is pretty much in line, what you mean I do think is the difference between wholesale and production. Production was higher roughly, I don't know 30,000 units roughly and as I said it before these are cars which we ship to China and to the US more or less two third of that, which will get into revenue in the second quarter. So therefore the profit impact you will see more or less to a high degree in the second quarter and you have not seen it in the first quarter.

Aleksej Wunrau – BHF

Okay, and the same applies to the other segments, especially vans and trucks.

Bodo Uebber

That is more or less -- you have to look at the wholesale number, which we're distributing, compared to the production of course, the wholesale number is defining the revenue impact and the sales contribution and therefore that is the impact on the profit.

Michael Muhlbayer

Okay, now for the last quick question from (inaudible).

Unidentified Participant

Yes hello, good afternoon. Just two quick questions, the one again on the material cost side. Here we saw a dramatically increase in the material costs. You elaborated that the impact on 2010 earnings should be rather limited, can you confirm that per unit cost increase per car is in the range of roughly EUR700, 800 since the beginning of 2009 and the other question is on the truck side in Brazil, a very strong development in the South American market, is there a margin of a double-digit reach in Brazil?

Bodo Uebber

So for your first question of course we cannot go into the discussion of raw material per unit here, unless it stays in 2009 we think we can manage raw materials because we are with more longer term contracts and we are somewhat hedged with the precious metal therefore I do think we have the stuff under control. There is a limited risk of course that would explode and your second question about Daimler trucks in the Legend America, I can well imagine that we have double-digit returns there.

Michael Muhlbayer

And the final quick question from Michael (inaudible). So, then we close this call. Ladies and gentlemen thanks for your questions and for being with us today, corporate communications and investor relations. We may at your disposal to answer any further questions you may have. We hope to talk to you soon again, thanks and goodbye.

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Source: Daimler Q1 2010 Earnings Conference Call Transcript
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