The Daimler Group’s divisions are exposed to a large number of risks which are inextricably connected with entrepreneurial activity. At the same time, it is important for the Daimler Group to identify possible opportunities so that they can be utilized in the context of entrepreneurial activity, thus securing and enhancing the Daimler Group’s competitiveness. In order to identify risks and opportunities at an early stage and to assess and deal with them consistently, effective management and control systems are applied, which are integrated into a risk and opportunity management system.
The risks and opportunities that can have a significant influence on the profitability, cash flows and financial position of the Daimler Group as well as detailed information on our risk and opportunity management system are presented in the Risk and Opportunity Report of our Annual Report 2013. Otherwise, we refer to the notes on forward-looking statements provided at the end of this Interim Report.
At the beginning of the second quarter of 2014, considerable economic risks still exist for the world economy, whereby the geographical focus has primarily shifted towards the emerging markets. In particular, those economies remain endangered that depend on cash inflows due to their foreign-trade imbalances. In the further course of the year, this could result in repeated negative impacts, especially on stock markets and currencies, which would ultimately lead to perceptible growth losses. A particular risk relates to the possible escalation of tension between Russia and the Western countries, primarily in the form of an accelerating spiral of sanctions and countersanctions. In China, concern increased during the first quarter about the possibility of uncontrolled developments in the financial market, caused by a bursting of the credit bubble, the insolvency of various investment products, or a crash of the real-estate market. Furthermore, the restructuring of the Chinese economy continues to entail the risk of a “hard landing.” In the European Monetary Union (EMU), the peripheral countries proved to be surprisingly stable in the first quarter, but we are still far from a full all-clear with regard to the sovereign-debt crisis. In the United States, economic risks have decreased significantly, partially due to the unexpectedly smooth increase in the public-debt ceiling. With the beginning of the new fiscal year, there are now concerns in Japan about how the increase in value-added tax will affect the real economy. The ongoing smoldering tensions in the Middle East have received relatively little attention, but could flare up again at any time. On the opportunities side, the main potential is of a quick improvement and rapid economic recovery of the emerging markets. But the euro zone could also expand significantly faster than anticipated if reforms are initiated quickly and investors and consumers react accordingly. In the United States, economic growth could accelerate in particular if companies’ investment activity gains traction.
Apart from the aforementioned factors, our assessment of risks and opportunities has not changed significantly since publication of the Annual Report 2013.