...Large, Leading, Diversified Business: Daimler AG has wide geographical and business diversification. It has leading positions in the premium passenger-car segment with its Mercedes-Benz and Smart brands (MBC division). Daimler Trucks (DT) is the world's largest heavy-truck manufacturer. It is number one in Europe and North America and ranks second or third in several other countries/regions, including Brazil and Japan. The group also holds leading positions in the global van and bus markets. Increasing Profitability, Weak FCF: Group operating margin before exceptional items recovered to 7.7% in 2014 from 6.4% in 2013 and 7.5% in 2012, and Fitch Ratings projects a further improvement to 8.2% in 2015 and towards 8.5%-9% by 2017. However, the free cash flow (FCF) margin is relatively weak for the rating category as cash from operations (CFO) has been absorbed by increasing capex and generous dividends. We expect FCF to improve to levels more commensurate with the ratings in the short-term....
