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. In addition, we refer to the notes on forward-looking statements provided at the end of this Interim Management Report.
At the beginning of the fourth quarter of 2014, economic risks for the world economy have increased somewhat, mainly reflecting increased political risks. Those risks are on the one hand the possible escalation of tension between Russia and the Western countries, primarily in the form of an accelerating spiral of sanctions and countersanctions. On the other hand, the considerable tension in the Middle East constitutes a considerable threat for the development of the oil price. In particular, those economies that depend on cash inflows due to their foreign-trade imbalances remain susceptible to growth slowdowns. In the United States, the expected monetary-policy turnaround could lead to unforeseen effects in particular on investments. Although the peripheral countries of the European Monetary Union have so far remained rather stable, we are still far from a full all clear with regard to the sovereign-debt crisis, and deflationary risks still exist in this region. The ongoing economic weakness of France and Italy gives increasing cause for concern; due to the size of those countries’ economies, there could be an impact on the economic development of the entire euro zone. In China, there is undiminished concern 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. On the opportunities side, the main potential is of a quick improvement and rapid economic recovery of the emerging markets, as well as a sustained revival of the economy of the euro zone. Should political tension in the Middle East quickly subside, there also would be positive effects from a falling oil price. The reduction of the legal period for payment of invoices to 30 calendar days means that the Group will have to maintain higher levels of working capital.
Apart from the aforementioned factors, our assessment of risks and opportunities has not changed significantly since publication of Annual Report 2013.