M-B Cars & Vans released Q3 retail sales figures that showed the substantial impact of the semiconductor shortage. Nonetheless, the company’s higher-end and electrified models appear to have remained mostly unscathed by the supply issues, seeing significant volume growth ytd. Overall, the higher ASPs should help offset the lower volume effect on revenues and support margins.
Companies: Daimler AG
Daimler’s management and board of directors have approved the spin-off of Daimler Truck as an independent company and will submit it to a vote to shareholders at an extraordinary shareholders meeting set for 1 October. The spin-off and listing is expected to take place before the end of 2021.
Mercedes-Benz presented its new electrification strategy, which entails accelerating the pace towards an EV-only future. While the 2030 target for full electrification has a caveat depending on a swift adoption of EVs across the globe, the plan presented appears quite sound and bold enough to keep M-B in the race for dominance in the premium EV space. All this while sticking to its financial targets presented last October.
Daimler had already pre-released most of the key Q2 figures, showing another strong quarter that beat consensus and our own estimates, despite mounting supply-chain pressures from the semiconductor shortage. The full release still held some surprises, with improved margin expectations for Daimler Trucks and reassurance that the 2021 top-line and earnings will stand well above the 2020 levels, still, the impact of the chip crunch won’t abate in H2, casting a shadow on Mercedes-Benz’s FY volume ou
Daimler Truck hosted its first CMD, setting the stage for its corporate strategy ahead of the spin-off and separate listing, expected before the end of 2021. During the presentation, the company did not hesitate in recognising its faults and challenges for lagging regional performances, particularly in Europe. Through a new region-based corporate structure, a more aggressive clean mobility strategy and broad cost reduction targets with a 2025 horizon, DT is building a compelling case for the soo
Daimler delivered well above expectations in Q1, with volumes benefiting from the solid Chinese demand but also from the outperformance of the premium segment overall. With a product mix led by SUVs and higher-end luxury cars, margins were also exceptionally strong, leaving the FY targets in the dust. No surprise then that management has upped its automotive division profitability targets for the year, seeing a continuation of the strong momentum shown since H2 20.
While rumours of a potential IPO of Daimler Trucks have circulated for a while, the company surprised by announcing the division’s spin-off with Daimler remaining as a minority shareholder. The valuation implications for the truck business are very supportive when compared to peers like Volvo and the Traton/VW precedent. At first glance, this corporate move stands to benefit shareholders, while more information on Daimler Trucks’ future strategic plan as an independent entity should serve as the
While a good Q3 was already on the cards, as suggested by recovering sales volumes in key markets like China and Germany, the extent of the outperformance is a definite surprise. Strong operating profitability across all divisions and impressive industrial FCF generation paint a much improved picture for FY20. This should be confirmed by an updated guidance, to be shared with the full release of the Q3 figures on 23 October.
Mercedes-Benz Cars’ strategy update sees the division moving away from the path laid by the previous management, abandoning the race for volumes to focus on improving profitability. The new product strategy will put more emphasis on the higher-end of the market, joined by bolder cost cutting and efficiency efforts through 2025. All of this should aid Daimler to face the challenges brought by electrification, a hurdle that MB plans to tackle with the launch of two new dedicated EV platforms.
Daimler’s preliminary Q2 results included, as expected, a sizeable EBIT loss of €1.68bn. Nonetheless, the operating performance was not as bad as anticipated thanks to a strong June rebound. Moreover, it appears that diligent working capital management led to a surprising positive industrial FCF. As a result, concerns about a severe liquidity crunch should start to dissipate now that customer demand is on the road to recovery.
Daimler’s Coronavirus-hit Q1 results came in above our expectations, with revenues, EBIT and cash flow reflecting a better preparedness for a crisis this time around. However, expectations for the next quarter are quite grim, with group EBIT potentially shifting into negative territory. The focus on liquidity and managing the progressive recovery will be crucial.
The group’s divisional EBIT numbers were about in line with our projections, except for Vans. Costs associated with Daimler’s own Dieselgate plus Takata recall costs have resulted in another €1bn loss in Q4 19 and, consequently, the full-year number was a loss of more than €3bn on revenue of slightly less than €15bn. As a result, Daimler’s consolidated EBIT is a good €1bn below our projection.
Dieselgate and the Takata airbag problem resulted in provisions of some €3.5bn in H1 19 and management is now arguing that another €0.3bn were needed for the portfolio optimisation of Vans in Q4 19. Finally, €0.3bn of restructuring costs were added to Mobility which is the consequence of terminating the car sharing offer in North America and several European cities as it has been unprofitable.
We had expected the combined Mercedes-Benz and Smart passenger car sales number to fall by 0.7% in the last year. In fact, the combined delivery numbers increased by 0.7% to 2.46m.
Truck demand remained strong in Europe through to June and in the USA through to November last year. However, European registration numbers started to fall in July. Orders for new trucks have also been falling in Nafta and Asia (Japan, Indonesia and India) for a while.
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Companies: Shoe Zone PLC
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