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A big year ahead for Daimler as it consolidates with volume recovery and restructuring that will see the truck division spun off |
Daimler has reported its annual net profit (2020) up by 48% to EUR4 billion (2019: EUR2.7 billion). Lower vehicle sales due to the pandemic were more than offset by lower costs and cash preservation measures.
The company also said it expects sales, revenues and operating profit (EBIT) in 2021 to be significantly above the prior-year’s level. It has also announced its intention to spin-off Daimler Truck with a majority listing on the stock exchange.
Daimler Group’s 2020 total unit sales of passenger cars and commercial vehicles decreased by 15%, to 2.84 million (2019: 3.34 million) due to the pandemic. Revenue was EUR54.3 billion (2019: EUR172.7 billion), a reduction of 11%.
However, it said that due to extensive cost and cash preservation measures and strong performances across all divisions, EBIT of the Daimler Group increased by 53% to EUR6.6 billion (2019: EUR4.3 billion). Adjusted EBIT, reflecting the underlying business, was EUR8.6 billion (2019: EUR10.3 billion).
Ola Källenius, Chairman of the Board of Management of Daimler AG and Mercedes-Benz AG, said: “The year 2020 was a stress test for just about every company in almost every industry. The Daimler team mastered this test very well.
“Our products continue to be in great demand across all major markets and divisions. With rapid growth in our xEV sales and the introduction of new products and technologies, we have also taken important steps in terms of electrification and digitalization. Our financial results are significantly above market expectations reflecting substantial progress on cost-efficiencies.
“In addition, we have achieved a significant margin improvement based on strong product mix and pricing – especially in the second half of the year. We proved our ability to generate substantial cash flow and to drive the ongoing transformation on our own – even under the adverse circumstances of a pandemic.”
On restructuring plans he said the intended separation of our industrial businesses is designed to unlock the full potential for Mercedes-Benz as the world’s pre-eminent luxury car business, committed to leading in electric drive and car software, and Daimler Truck as the world’s largest truck and bus producer and technology leader.
Daimler plans to spin-off and list Daimler Truck. It is intended that a significant majority stake in Daimler Truck will be distributed to Daimler shareholders. Daimler Truck will have a fully independent management, stand-alone corporate governance including an independent Chairman of the Supervisory Board, and is targeted to qualify for listing on Germany’s blue-chip DAX index.
The transaction and the listing of Daimler Truck on the Frankfurt stock exchange is expected to be completed before year-end 2021. In addition, it is also Daimler’s intention to rename itself as Mercedes-Benz at the appropriate time.
2020 sales by the Mercedes-Benz Cars & Vans division decreased by 13% to 2,461,800 vehicles (2019: 2,823,800). Revenue was EUR98.6 billion (2019: EUR106.9 billion). EBIT amounted to EUR5,172 million (2019: minus EUR109 million) and return on sales was 5.2% (2019: minus 0.1%). Adjusted EBIT was EUR6,802 million (2019: EUR6,151 million) and adjusted return on sales was 6.9% (2019: 5.8%).
Volume recovery expected in 2021
With the expected rise in availability of effective vaccines to combat the COVID-19 virus and in the absence of further unexpected pandemic-related setbacks, Daimler said it assumes that the global economy will recover strongly in 2021. Based on the expected market development and the current assessments of the divisions, Daimler anticipates group sales, revenues and EBIT in 2021 to be significantly above the prior-year’s level. Although bottlenecks in the semiconductor industry will impact sales mainly in the first quarter it is currently anticipated that lost production volume can be compensated for by the end of the year.
In 2021, Mercedes-Benz Cars will push the xEV strategy forward and introduce four all-new EV models with the EQS, EQA, EQB and EQE as well as increase the proportion of PHEVs. Therefore, the division expects European passenger car CO2 emissions to be significantly below previous year’s number.