Daimler Q1 2020 Net Profit Down -92% at €168m from €2149  

AutoInformed.com on Daimler Earnings Drop

The effects of the pandemic and the decrease in sales led to a significant earnings drop.

Daimler AG (ticker symbol: DAI) today reported its results for the first quarter ended March 31, 2020. Group net profit was €168 million (Q1 2019: €2,149 million). Total unit sales decreased by -17% to 644,300 passenger cars and commercial vehicles (Q1 2019: 773,800) due to the global spread of the corona virus. Revenue slipped slightly by 6% to €37.2 billion (Q1 2019: €39.7 billion). First-quarter EBIT was €617 million (Q1 2019: €2,798 million). Adjusted EBIT, reflecting the underlying business, was €719 million (Q1 2019: €2,310 million). AutoInformed: Daimler Confirms 2020 Group Sales and Revenue Will Decline 

 

AutoInformed.com on Daimler Q1 Results

Grim…

Daimler says it responded to the temporary drop in demand caused by the Covid pandemic by proactively taking production stoppages in March and April. The net liquidity of the industrial business decreased to €9.3 billion at the end of first quarter, compared to €11.0 billion at year-end 2019. The decrease is particularly due to the negative free cash flow of the industrial business.

In early April, Daimler AG increased its financial flexibility with a further loan facility agreement in the amount of €12 billion. This is in addition to the existing €11 billion revolving credit facility, which has not yet been utilized, and has a term until 2025 including extension options. The additional loan facility was agreed with an international banking syndicate and can be utilized within a 12-month period with two extension options of six months.

Divisional Results

The effects of the virus pandemic and the resulting decrease in unit sales led to a significant earnings downturn at Mercedes-Benz Cars & Vans as well as Daimler Trucks & Buses. Earnings at Daimler Mobility were also negatively impacted by additional expenses for credit risk provisions in connection with the pandemic.

Sales by the Mercedes-Benz Cars & Vans division decreased by -16% to 546,700 vehicles in the first quarter (Q1 2019: 652.400). Revenue was €23.2 billion (Q1 2019: €24.1 billion). EBIT amounted to €510 million (Q1 2019: €1,143 million) and return on sales was 2.2% (Q1 2019: 4.8%). Adjusted EBIT was €603 million (Q1 2019: €1,372 million) and adjusted return on sales was 2.6% (Q1 2019: 5.7%). Cash flow before interest and taxes (CFBIT) was minus €1,729 million (Q1 2019: minus €835 million). Adjusted CFBIT amounted to minus €1,281 million (Q1 2019: minus €756 million). The adjusted cash conversion rate (CCR) was minus 2.1 (Q1 2019: minus 0.6).

Sales by Mercedes-Benz Cars dropped by -15% to 470,600 vehicles in the first quarter (Q1 2019: 555.300). Mercedes-Benz Vans’ sales were down -22% to 76,200 vehicles (Q1 2019: 97,000).

Daimler Trucks & Buses division showed a decrease in unit sales of -20% to 97,600 vehicles in the first quarter (Q1 2019: 121,400). Revenue was €8.7 billion (Q1 2019: €10.2 billion). EBIT amounted to €247 million (Q1 2019: €553 million) and return on sales was 2.8% (Q1 2019: 5.4%). Cash flow before interest and taxes (CFBIT) was minus €85 million (Q1 2019: minus €232 million) leading to a cash conversion rate (CCR) of minus 0.3 (Q1 2019: minus 0.4).

Sales by Daimler Trucks fell by -20% to 92,500 vehicles in the first quarter (Q1 2019: 115,900). Daimler Buses sold 5,100 vehicles (Q1 2019: 5,500), a decrease of -8%.

At Daimler Mobility, new business decreased by -7% to €16.2 billion in the first quarter (Q1 2019: €17.3 billion). Contract volume was €159.6 billion at the end of the quarter (December 31, 2019: €162.8 billion). Revenue was €7.1 billion (Q1 2019: €6.9 billion). The division’s EBIT amounted to €58 million (Q1 2019: €1,209 million). At 1.6%, return on equity was lower than the figure of 35.7% in the prior-year period. Adjusted EBIT was €58 million (Q1 2019: €491 million) and adjusted return on equity was 1.6% (Q1 2019: 14.5%).

Outlook

Given the continuing pandemic, Daimler “believes that the original forecast for the financial year 2020, as disclosed in connection with annual report 2019, is no longer valid.”

Therefore, as previously disclosed, Daimler expects for

  • the Group and for Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks and Daimler Buses unit sales in 2020 to be below the levels of the previous year.
  • Daimler Mobility expects for the financial year 2020 a lower new business volume than in 2019.
  • Daimler expects Group revenue and Group EBIT for the financial year 2020 to be below the prior year.
  • As the EBIT of the Mercedes-Benz Cars & Vans division was adversely affected by substantial special items in 2019, EBIT for this division is anticipated above the prior-year level despite the effects of the pandemic.
  • The adjusted return on equity of Daimler Mobility for the financial year 2020 will not reach the prior year level.
  • The expected decline in the results should lead to a decrease in the Group´s industrial free cash flow for 2020.

About Ken Zino

Ken Zino is an auto industry veteran with global experience in print, broadcast and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.
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