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      Scope affirms Daimler at A/Stable

      Daimler AG - EUR 1,250,000,000 0.850% Bond due February 28, 2025 Daimler AG - GBP 450,000,000 1.500% Bond due January 13, 2022 Daimler AG - EUR 110,000,000 1.375% Bond due January 11, 2030 Daimler Finance North America LLC - USD 750,000,000 3.450% Bond due January 06, 2027 Daimler Finance North America LLC - USD 850,000,000 2.850% Bond due January 06, 2022 DAIG 1.000 11/11/25 MTN DAIG 0.092 03/12/21 FRN MTN DAIG 1.500 02/09/27 MTN DAIG 2.250 01/24/22 MTN DAIG 1.500 07/03/29 MTN DAIG 2.250 12/15/22 MTN DAIG 1.875 07/08/24 MTN DAIG 3.050 05/16/22 MTN DAIG 0.625 02/27/23 MTN DAIG 2.230 12/16/21 DAIG 3.300 08/16/22 MTN DAIG 2.000 09/04/23 MTN DAIG 1.500 08/18/21 MTN DAIG 0.750 05/11/23 MTN DAIG 0.850 11/14/25 MTN DAIG 2.970 03/13/24 MTN DAIG 0.250 05/11/22 MTN DAIG 0.200 09/13/21 MTN DAIG 1.375 05/11/28 MTN DAIG 1.600 10/01/25 MTN DAIG 01/11/23 FRN MTN DAIG 2.375 12/16/21 MTN DAIG 1.000 11/15/27 MTN DAIG 0.875 04/09/24 MTN DAIG 2.125 07/03/37 MTN DAIG 2.000 02/27/31 MTN DAIG 2.375 09/12/22 MTN DAIG 4.500 09/21/21 MTN DAIG 2.125 06/07/22 MTN DAIG 1.750 05/24/22 MTN DAIG 0.250 11/14/22 MTN DAIG 2.375 03/08/23 MTN DAIG 2.000 06/25/21 MTN DAIG 3.780 03/22/22 MTN DAIG 1.500 03/09/26 MTN DAIG 1.375 06/26/26 MTN DAIG 0.140 07/03/24 FRN MTN DAIG 2.290 05/09/22 MTN DAIG 4.800 04/09/21 MTN DAIG 05/11/22 FRN MTN DAIG 1.400 01/12/24 MTN DAIG 2.570 11/22/22 MTN DAIG 0.250 08/09/21 MTN DAIG 1.238 02/22/22 FRN DAIG 1.211 11/05/21 FRN DAIG 2.200 10/30/21 DAIG 3.400 02/22/22 DAIG 2.300 02/12/21 DAIG 1.106 05/04/21 FRN DAIG 2.700 06/14/24 DAIG 2.700 06/14/24 DAIG 3.650 02/22/24 DAIG 3.350 05/04/21 DAIG 1.292 02/15/22 FRN DAIG 1.750 03/10/23 DAIG 1.238 02/22/22 FRN DAIG 1.396 05/04/23 FRN DAIG 1.106 05/04/21 FRN DAIG 4.300 02/22/29 DAIG 0.865 02/12/21 FRN DAIG 4.300 02/22/29 DAIG 2.125 03/10/25 DAIG 1.211 11/05/21 FRN DAIG 1.292 02/15/22 FRN DAIG 2.125 03/10/25 DAIG 3.400 02/22/22 DAIG 3.750 11/05/21 DAIG 0.808 02/22/21 FRN DAIG 2.200 10/30/21 DAIG 2.300 02/12/21 DAIG 2.625 03/10/30 DAIG 3.000 02/22/21 DAIG 3.700 05/04/23 DAIG 3.000 02/22/21 DAIG 3.750 11/05/21 DAIG 2.850 01/06/22 DAIG 3.350 02/22/23 DAIG 3.700 05/04/23 DAIG 2.625 03/10/30 DAIG 2.550 08/15/22 DAIG 3.100 08/15/29 DAIG 3.750 02/22/28 DAIG 1.750 03/10/23 DAIG 2.550 08/15/22 DAIG 3.750 02/22/28 DAIG 1.396 05/04/23 FRN DAIG 3.650 02/22/24 DAIG 0.808 02/22/21 FRN DAIG 0.865 02/12/21 FRN DAIG 3.350 02/22/23 DAIG 3.350 05/04/21 DAIG 3.100 08/15/29 DAIG 3.450 01/06/27 DAIG 0.404 11/12/21 FRN MTN DAIG 1.625 11/11/22 MTN DAIG 2.750 03/15/21 MTN DAIG 0.177 08/30/21 FRN MTN DAIG 2.500 03/20/22 MTN DAIG 1.625 08/30/22 MTN DAIG 0.375 11/08/26 MTN DAIG 02/08/24 MTN DAIG 1.125 08/08/34 MTN DAIG 1.125 11/06/31 MTN DAIG 0.750 02/08/30 MTN DAIG 2.625 04/07/25 MTN DAIG 2.540 08/21/23 MTN DAIG 3.250 04/16/24 MTN DAIG 0.677 09/06/22 FRN MTN DAIG 2.250 11/07/22 MTN DAIG 2.270 11/12/24 MTN DAIG 2.000 09/11/23 MTN DAIG 1.250 09/05/22 MTN DAIG 0.250 11/06/23 MTN DAIG 0.625 05/06/27 MTN DAIG 1.625 11/11/24 MTN DAIG 3.100 04/21/25 MTN DAIG 2.375 05/22/30 MTN DAIG 2.000 08/22/26 MTN DAIG 1.625 08/22/23 MTN DAIG 0.750 09/10/30 MTN DAIG 1.250 09/08/23 MTN DAIG 0.207 09/12/22 FRN MTN DAIG 1.650 09/22/25 DAIG 0.600 11/30/23 MTN DAIG 0.750 01/22/24 MTN DAIG 1.450 03/02/26 DAIG 0.750 03/01/24 DAIG 1.000 03/15/24 MTN DAIG 2.450 03/02/31 DAIG 2.450 03/02/31 DAIG 0.750 03/11/33 MTN DAIG 1.450 03/02/26 DAIG 0.750 03/01/24 DAIG 0.207 07/01/24 FRN MTN DAIG 3.100 09/27/23 MTN DAIG 3.300 09/27/24 MTN DAIG 09/17/24 MTN DAIG 0.211 04/08/22 FRN MTN
      WEDNESDAY, 03/02/2021 - Scope Ratings GmbH
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      Scope affirms Daimler at A/Stable

      The affirmation reflects the strong financial risk profile and the unchanged assessment of the business risk profile.

      The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

      Rating action

      Scope Ratings has affirmed the ratings of A/Stable on Daimler AG, Daimler International Finance B.V., Daimler Canada Finance Inc., Daimler Finance North America LLC, Mercedes-Benz Japan Co. Ltd., and Mercedes-Benz Australia/Pacific Pty Ltd. Scope has also affirmed the A rating on senior unsecured debt issued by any of the entities listed as well as Daimler AG’s S-1 short-term rating.

      Rating rationale

      Scope has updated the rating case on Daimler AG (Daimler) since the last rating review in June 2020, mainly to capture developments in the global automotive markets in the second half of 2020. The Scope-adjusted EBITDA margin for 2020 was calculated at around 9%, based on Daimler’s solid preliminary results. While the Covid-19 pandemic left its mark on 2020 volumes, it had less of an impact on overall profitability than anticipated at the onset of the crisis.

      Going into 2021F, Scope foresees that various factors will have a positive impact on profitability: the mix effects from the new S-Class, good pricing for the high-margin SUVs (GLE, GLS), first effects from the cost-reduction programmes on both fixed and variable production costs, and contributions margins from the expected rebound of volumes in 2021. Scope cautiously expects volume growth in 2021 of 9% for MB Cars & Vans and 17% for Daimler Truck & Bus following an estimated decline of almost 30% in 2020. Daimler’s preliminary profit data for 2020 give a good indication that last year’s weakened profitability will not persist. This is in line with Scope’s earlier assessment that Scope-adjusted EBITDA margins of below 8% are unlikely to be permanent. The business risk profile assessment is likewise unchanged, with Scope’s view on market position and business diversification being the same as in the previous rating review.

      Daimler achieved its CO2 targets for 2020, having sold about 7% of electrified (PHEV/BEV) vehicles in that year. Scope also expects CO2 targets in 2021 to be met, in view of the planned share of about 13% of electrified vehicles at Mercedes-Benz Cars. Any minor shortfall on the target is unlikely to negatively affect the overall business risk profile.

      The key support for the rating remains the strong financial risk profile. Entering the Covid-19 pandemic, Daimler had significant surplus liquidity that could cover reported financial debt in its industrial business (Scope’s debt calculation adjusted for pension obligations, with operating leases having moved onto the balance sheet in 2019). Scope-adjusted debt is negative (net of cash), which resulted in the strong credit ratios. Scope also expects the credit ratios to stay negative given that Scope-adjusted debt will remain negative. Daimler’s preliminary data for 2020 suggest that free operating cash flow (FOCF) in the industrial unit was EUR 8.3bn, reflecting EUR 4.8bn on top of the EUR 3.5bn reported for 9M 2020. The significant FOCF reflects Daimler’s ongoing cash preservation measures and operating performance in the second half of 2020. The earnings effects in 2021, combined with a further focus on fixed-cost reduction, including selective capital spending, should support positive FOCF in the medium term. Cash effects from accruals booked in 2019 for legal proceedings will lower FOCF from the industrial business, but we expect overall FOCF to stay positive and exceed projected dividend payments in 2021 and 2022.

      Scope’s positive view on the financial risk profile is supplemented by the group’s adequate liquidity. Unrestricted cash and cash equivalents collectively exceed all financial obligations in the industrial business. In addition to a EUR 11bn undrawn revolving credit facility, granted by an international banking consortium and maturing in 2024 with an extension option of one year, a new EUR 12bn credit facility was arranged in April 2020 with a maturity of 12 months and two extension options of six months. During its capital markets day in November 2019, Daimler likewise communicated a minimum net liquidity goal of EUR 10bn for its industrial operations.

      Outlook and rating-change drivers

      The Outlook is Stable and incorporates Scope’s expectation that Daimler should keep a strong financial risk profile. Scope-adjusted debt is expected to remain negative with no meaningful incremental financial debt in the industrial business, if any.

      Scope would consider a negative rating action if FOCF in the industrial business turned negative on a sustained basis, triggered by an unexpected decrease in operating profits (EBITDA) owing to a substantially lower unit-sales volume in the car and truck divisions. In line with its perception of Daimler’s financial policy, Scope does not expect material changes to shareholder remuneration or any sizeable acquisitions.

      The ratings could be negatively impacted if Daimler’s financial policy became more aggressive, for example, by engaging in a large acquisition funded by cash and debt. However, Scope does not view this as a likely scenario. A negative rating action would likewise be considered if Daimler’s Scope-adjusted EBITDA margin failed to reach above 8% in the medium term, as this would prompt a negative adjustment on the business risk profile.

      Scope would consider a positive rating action if Daimler maintained its cautious financial policy, including moderate dividend pay-outs, substantial liquidity, and strong credit metrics, coupled with an improvement in the Scope-adjusted EBITDA margin to above 12%.

      Long-term and short-term debt ratings

      Long-term senior unsecured debt has been affirmed at A, the level of the issuer rating.

      Daimler’s short-term rating has been affirmed at S-1, supported by the better-than-adequate liquidity, good banking relationships and strong access to capital markets. Scope believes that Daimler can address any short-term financing and refinancing requirements.

      Stress testing & cash flow analysis
      No stress testing was performed. Scope performed its standard cash flow forecasting for the company.

      Methodology
      The methodologies used for this rating(s) and/or rating outlook(s): (Corporate Rating Methodology, 26 February 2020; Rating Methodology: Automotive and Commercial Vehicle Manufacturers 14 February 2020) are available on https://www.scoperatings.com/#!methodology/list.
      Information on the meaning of each rating category, including definitions of default and recoveries can be viewed in the “Rating Definitions - Credit Ratings and Ancillary Services” published on https://www.scoperatings.com/#!governance-and-policies/rating-scale. Historical default rates of the entities rated by Scope Ratings can be viewed in the rating performance report on https://www.scoperatings.com/#governance-and-policies/regulatory-ESMA. Please also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and rating notations can be found at https://www.scoperatings.com/#governance-and-policies/rating-scale. Guidance and information on how Environmental, Social or Governance factors (ESG factor) are incorporated into the rating can be found in the respective sections of the methodologies or guidance documents provided on https://www.scoperatings.com/#!methodology/list.
      The rating outlook indicates the most likely direction of the rating if the rating were to change within the next 12 to 18 months.

      Solicitation, key sources and quality of information
      The rated entity and/or its agents participated in the rating process.
      The following substantially material sources of information were used to prepare the credit rating: the rated entity, third parties, public domain, and Scope internal sources.
      Scope considers the quality of information available to Scope on the rated entity or instrument to be satisfactory. The information and data supporting Scope’s ratings originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data.
      Prior to the issuance of the rating or outlook action, the rated entity was given the opportunity to review the rating and/or outlook and the principal grounds on which the credit rating and/or outlook is based. Following that review, the rating was not amended before being issued.

      Regulatory disclosures
      This credit rating and/or rating outlook is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The credit rating and/or outlook is UK endorsed.
      Lead analyst Werner Stäblein, Executive Director
      Person responsible for approval of the rating: Olaf Tölke, Managing Director
      The ratings/outlooks on Daimler were first released by Scope on 27 April 2017. The ratings/outlook were last updated on 24 June 2020

      Potential conflicts
      Please see www.scoperatings.com under Governance & Policies/EU Regulation/Disclosures for a list of potential conflicts of interest related to the issuance of credit ratings.
       
      Conditions of use / exclusion of liability
      © 2021 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Analysis GmbH, Scope Investor Services GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.

      Daimler AG - EUR 1,250,000,000 0.850% Bond due February 28, 2025 Daimler AG - GBP 450,000,000 1.500% Bond due January 13, 2022 Daimler AG - EUR 110,000,000 1.375% Bond due January 11, 2030 Daimler Finance North America LLC - USD 750,000,000 3.450% Bond due January 06, 2027 Daimler Finance North America LLC - USD 850,000,000 2.850% Bond due January 06, 2022 DAIG 1.000 11/11/25 MTN DAIG 0.092 03/12/21 FRN MTN DAIG 1.500 02/09/27 MTN DAIG 2.250 01/24/22 MTN DAIG 1.500 07/03/29 MTN DAIG 2.250 12/15/22 MTN DAIG 1.875 07/08/24 MTN DAIG 3.050 05/16/22 MTN DAIG 0.625 02/27/23 MTN DAIG 2.230 12/16/21 DAIG 3.300 08/16/22 MTN DAIG 2.000 09/04/23 MTN DAIG 1.500 08/18/21 MTN DAIG 0.750 05/11/23 MTN DAIG 0.850 11/14/25 MTN DAIG 2.970 03/13/24 MTN DAIG 0.250 05/11/22 MTN DAIG 0.200 09/13/21 MTN DAIG 1.375 05/11/28 MTN DAIG 1.600 10/01/25 MTN DAIG 01/11/23 FRN MTN DAIG 2.375 12/16/21 MTN DAIG 1.000 11/15/27 MTN DAIG 0.875 04/09/24 MTN DAIG 2.125 07/03/37 MTN DAIG 2.000 02/27/31 MTN DAIG 2.375 09/12/22 MTN DAIG 4.500 09/21/21 MTN DAIG 2.125 06/07/22 MTN DAIG 1.750 05/24/22 MTN DAIG 0.250 11/14/22 MTN DAIG 2.375 03/08/23 MTN DAIG 2.000 06/25/21 MTN DAIG 3.780 03/22/22 MTN DAIG 1.500 03/09/26 MTN DAIG 1.375 06/26/26 MTN DAIG 0.140 07/03/24 FRN MTN DAIG 2.290 05/09/22 MTN DAIG 4.800 04/09/21 MTN DAIG 05/11/22 FRN MTN DAIG 1.400 01/12/24 MTN DAIG 2.570 11/22/22 MTN DAIG 0.250 08/09/21 MTN DAIG 1.238 02/22/22 FRN DAIG 1.211 11/05/21 FRN DAIG 2.200 10/30/21 DAIG 3.400 02/22/22 DAIG 2.300 02/12/21 DAIG 1.106 05/04/21 FRN DAIG 2.700 06/14/24 DAIG 2.700 06/14/24 DAIG 3.650 02/22/24 DAIG 3.350 05/04/21 DAIG 1.292 02/15/22 FRN DAIG 1.750 03/10/23 DAIG 1.238 02/22/22 FRN DAIG 1.396 05/04/23 FRN DAIG 1.106 05/04/21 FRN DAIG 4.300 02/22/29 DAIG 0.865 02/12/21 FRN DAIG 4.300 02/22/29 DAIG 2.125 03/10/25 DAIG 1.211 11/05/21 FRN DAIG 1.292 02/15/22 FRN DAIG 2.125 03/10/25 DAIG 3.400 02/22/22 DAIG 3.750 11/05/21 DAIG 0.808 02/22/21 FRN DAIG 2.200 10/30/21 DAIG 2.300 02/12/21 DAIG 2.625 03/10/30 DAIG 3.000 02/22/21 DAIG 3.700 05/04/23 DAIG 3.000 02/22/21 DAIG 3.750 11/05/21 DAIG 2.850 01/06/22 DAIG 3.350 02/22/23 DAIG 3.700 05/04/23 DAIG 2.625 03/10/30 DAIG 2.550 08/15/22 DAIG 3.100 08/15/29 DAIG 3.750 02/22/28 DAIG 1.750 03/10/23 DAIG 2.550 08/15/22 DAIG 3.750 02/22/28 DAIG 1.396 05/04/23 FRN DAIG 3.650 02/22/24 DAIG 0.808 02/22/21 FRN DAIG 0.865 02/12/21 FRN DAIG 3.350 02/22/23 DAIG 3.350 05/04/21 DAIG 3.100 08/15/29 DAIG 3.450 01/06/27 DAIG 0.404 11/12/21 FRN MTN DAIG 1.625 11/11/22 MTN DAIG 2.750 03/15/21 MTN DAIG 0.177 08/30/21 FRN MTN DAIG 2.500 03/20/22 MTN DAIG 1.625 08/30/22 MTN DAIG 0.375 11/08/26 MTN DAIG 02/08/24 MTN DAIG 1.125 08/08/34 MTN DAIG 1.125 11/06/31 MTN DAIG 0.750 02/08/30 MTN DAIG 2.625 04/07/25 MTN DAIG 2.540 08/21/23 MTN DAIG 3.250 04/16/24 MTN DAIG 0.677 09/06/22 FRN MTN DAIG 2.250 11/07/22 MTN DAIG 2.270 11/12/24 MTN DAIG 2.000 09/11/23 MTN DAIG 1.250 09/05/22 MTN DAIG 0.250 11/06/23 MTN DAIG 0.625 05/06/27 MTN DAIG 1.625 11/11/24 MTN DAIG 3.100 04/21/25 MTN DAIG 2.375 05/22/30 MTN DAIG 2.000 08/22/26 MTN DAIG 1.625 08/22/23 MTN DAIG 0.750 09/10/30 MTN DAIG 1.250 09/08/23 MTN DAIG 0.207 09/12/22 FRN MTN DAIG 1.650 09/22/25 DAIG 0.600 11/30/23 MTN DAIG 0.750 01/22/24 MTN DAIG 1.450 03/02/26 DAIG 0.750 03/01/24 DAIG 1.000 03/15/24 MTN DAIG 2.450 03/02/31 DAIG 2.450 03/02/31 DAIG 0.750 03/11/33 MTN DAIG 1.450 03/02/26 DAIG 0.750 03/01/24 DAIG 0.207 07/01/24 FRN MTN DAIG 3.100 09/27/23 MTN DAIG 3.300 09/27/24 MTN DAIG 09/17/24 MTN DAIG 0.211 04/08/22 FRN MTN

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