Daimler “expects a gradual normalization of economic conditions in the important markets.
Daimler AG (DAI) today reported its results for Q2, which ended 30 June 2021. The Group’s total unit sales increased by 36% to 736,400 passenger cars and commercial vehicles (Q2 2020: 541,800). Revenue grew by 44% to €43.5 billion (Q2 2020: €30.2 billion). EBIT was €5,185 million (Q2 2020: minus €1,682 million). Adjusted EBIT, reflecting the underlying business, was €5,420 million (Q2 2020: minus €708 million). Net profit was €3,704 million (Q2 2020: net loss of €1,906 million).
However, Daimler assumes that the current worldwide supply shortage of semiconductor components will affect Mercedes-Benz Cars unit sales also in the third quarter. Mercedes-Benz Cars unit sales “could be in the magnitude of the second quarter or below.” Full year unit sales are expected to be at prior year level (previously: significantly above).
Daimler “expects a gradual normalization of economic conditions in the important markets. The company assumes that the world economy will be able to recover from the pandemic-related softness of the year 2020, aided by the increasing availability of effective vaccines, among other things.”
Daimler assumes that the worldwide shortage of supply of semiconductor components will affect the business also in the second half of the year. “The company also recognizes that the visibility how the supply situation will actually develop further is currently low. Based on the expected market development and the current assessments of the divisions, Daimler anticipates revenue and EBIT in 2021 to be significantly above the prior year’s level.”
Daimler Q2 Snapshot
- Unit sales increased by 36% to 736,400 passenger cars and commercial vehicles
- Revenue of €43.5 billion (Q2 2020: €30.2 billion)
- EBIT of €5,185 million (Q2 2020: minus €1,682 million)
- Industrial free cash flow of €2,586 million (Q2 2020: €685 million)
- Net industrial liquidity of €20.9 billion (end of Q1 2021: €20.1 billion)
- Group net profit of €3,704 million (Q2 2020: net loss of €1,906 million)
- Outlook 2021: Revenue and EBIT significantly above prior year’s level
- Industrial free cash flow expected slightly below prior year’s level
Divisional Results
Sales by the Mercedes-Benz Cars & Vans division increased by 29% to 619,600 vehicles in the second quarter (Q2 2020: 480,800). Revenue was €28.2 billion (Q2 2020: €18.9 billion). EBIT amounted to €3,438 million (Q2 2020: minus €1,125 million) and the return on sales was 12.2% (Q2 2020: minus 5.9%). Positive effects resulted from the increase in unit sales, a favorable product mix, pricing and ongoing cost measures. Adjusted EBIT reached €3,604 million (Q2 2020: minus €284 million) with the adjusted return on sales at 12.8% (Q2 2020: minus 1.5%). Cash flow before interest and taxes (CFBIT) was €2,502 million (Q2 2020: €430 million). Adjusted CFBIT amounted to €2,805 million (Q2 2020: €522 million). The adjusted cash conversion rate (CCR) was plus 0.8 (Q2 2020: minus 1.8).
Sales by Mercedes-Benz Cars rose by 27% to 521,200 vehicles in the second quarter (Q2 2020: 408,900). Mercedes-Benz Vans’ sales were up 37% to 98,400 vehicles (Q2 2020: 71,900).
The Daimler Trucks & Buses division showed an increase in unit sales of 91% to 116,800 vehicles in the first quarter (Q2 2020: 61,000). Revenue was €10.0 billion (Q2 2020: €6.2 billion). EBIT amounted to €819 million (Q2 2020: minus €756 million) and the return on sales was 8.2% (Q2 2020: minus 12.2%). Positive effects resulted from the sales increase in almost all regions, primarily from the market recovery, as well as a higher contribution to earnings from the after sales business, pricing, ongoing cost discipline as well as a contribution from the listing of Proterra, Inc. and the sale of the Campinas plant. Adjusted EBIT was €831 million (Q2 2020: minus €747 million) and adjusted return on sales was 8.3% (Q2 2020: minus 12.0%). Cash flow before interest and taxes (CFBIT) soared to an inflow of €667 million (Q2 2020: outflow of €121 million). Adjusted CFBIT amounted to an inflow of €693 million (Q2 2020: outflow of €121 million). The adjusted cash conversion rate (CCR) was plus 0.8 (Q2 2020: 0.2).
Unit sales by Daimler Trucks increased by 94% to 112,100 vehicles in the second quarter (Q2 2020: 57,900). Daimler Buses sold 4,700 vehicles, an increase of 52% (Q2 2020: 3,100).
At Daimler Mobility, new business increased by 23% to €17.2 billion in the second quarter (Q2 2020: €14.0 billion), driven by strong sales developments at the industrial business. Contract volume was €150.6 billion at the end of the quarter (end of the first quarter 2021: €152.7 billion/end of 2020: €150.6 billion). Revenue was €6.9 billion (Q2 2020: €6.5 billion). The division’s EBIT amounted to €924 million (Q2 2020: €205 million). Positive effects resulted from lower credit-risk provisions, a credit provision release of €120 million, lower refinancing costs and improved development of the business operations, as well as from strict cost discipline. At 23.9%, return on equity was much higher than the 5.6% in the prior-year period. Adjusted EBIT was €930 million (Q2 2020: €313 million) and adjusted return on equity was 24.0% (Q2 2020: 8.6%).
Daimler Truck Spin-off on Track
Daimler claims it will “generate value for its shareholders and to raise its profitability by creating two pure-play companies, one focused on cars and vans with the other on trucks and buses. It is intended that a significant majority stake in Daimler Truck will be distributed to Daimler shareholders. The transaction and the listing of Daimler Truck on the Frankfurt Stock Exchange are on track and expected to be completed before year-end 2021. The project is currently in the preparatory and auditing phase. At an extraordinary general meeting in autumn, Daimler shareholders will have to approve this historic strategic step.”
2021 Forecast
Based on the performance in the first half of the year and the above-mentioned assumptions, the divisions expect the following adjusted returns in the year 2021:
- Mercedes-Benz Cars & Vans: adjusted return on sales of 10 – 12% (unchanged)
- Daimler Trucks & Buses: adjusted return on sales of 6 – 8% (previously: 6 – 7%)
- Daimler Mobility: adjusted return on equity of 17 – 19% (previously: 14 – 15%).
Daimler’s business plan covers the full year 2021 and is based on the existing Group structure, including Daimler Trucks & Buses. The spin-off of Daimler Truck, including significant parts of the related financial services business, will be examined before the end of 2021. Before the spin-off, Daimler will reclassify Daimler Truck as discontinued operations. The expected considerable positive effects in the second half of the year cannot be reliably determined at present.
The adjusted cash conversion rate (ratio of cash flow to EBIT) for the Mercedes-Benz Cars & Vans division in 2021 is expected to be between 0.7 and 0.9 and for Daimler Trucks & Buses between 0.8 and 1.0. Investments in property, plant and equipment in 2021 on a group level are expected to be in the magnitude of the previous year; research and development investments on a group level are now expected to be significantly (previously: slightly) above the prior year’s level.
Daimler now expects the free cash flow of the industrial business for 2021 to be slightly (previously: significantly) below 2020’s figure. This includes payments in the context of the settlement with the US-regulators and plaintiff representatives of the consumer class actions relating to diesel emissions, cash-outs due to the restructuring program, higher cash taxes than in 2020, as well as costs related to the planned spin-off of Daimler Truck. The adjusted free cash flow of the industrial business is now expected to be in the magnitude of the prior-year level or slightly above (previously: in the magnitude of the prior-year level).
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About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
Daimler Q2 Results – Group Net Profit of €3,704 million
Daimler “expects a gradual normalization of economic conditions in the important markets.
Daimler AG (DAI) today reported its results for Q2, which ended 30 June 2021. The Group’s total unit sales increased by 36% to 736,400 passenger cars and commercial vehicles (Q2 2020: 541,800). Revenue grew by 44% to €43.5 billion (Q2 2020: €30.2 billion). EBIT was €5,185 million (Q2 2020: minus €1,682 million). Adjusted EBIT, reflecting the underlying business, was €5,420 million (Q2 2020: minus €708 million). Net profit was €3,704 million (Q2 2020: net loss of €1,906 million).
However, Daimler assumes that the current worldwide supply shortage of semiconductor components will affect Mercedes-Benz Cars unit sales also in the third quarter. Mercedes-Benz Cars unit sales “could be in the magnitude of the second quarter or below.” Full year unit sales are expected to be at prior year level (previously: significantly above).
Daimler “expects a gradual normalization of economic conditions in the important markets. The company assumes that the world economy will be able to recover from the pandemic-related softness of the year 2020, aided by the increasing availability of effective vaccines, among other things.”
Daimler assumes that the worldwide shortage of supply of semiconductor components will affect the business also in the second half of the year. “The company also recognizes that the visibility how the supply situation will actually develop further is currently low. Based on the expected market development and the current assessments of the divisions, Daimler anticipates revenue and EBIT in 2021 to be significantly above the prior year’s level.”
Daimler Q2 Snapshot
Divisional Results
Sales by the Mercedes-Benz Cars & Vans division increased by 29% to 619,600 vehicles in the second quarter (Q2 2020: 480,800). Revenue was €28.2 billion (Q2 2020: €18.9 billion). EBIT amounted to €3,438 million (Q2 2020: minus €1,125 million) and the return on sales was 12.2% (Q2 2020: minus 5.9%). Positive effects resulted from the increase in unit sales, a favorable product mix, pricing and ongoing cost measures. Adjusted EBIT reached €3,604 million (Q2 2020: minus €284 million) with the adjusted return on sales at 12.8% (Q2 2020: minus 1.5%). Cash flow before interest and taxes (CFBIT) was €2,502 million (Q2 2020: €430 million). Adjusted CFBIT amounted to €2,805 million (Q2 2020: €522 million). The adjusted cash conversion rate (CCR) was plus 0.8 (Q2 2020: minus 1.8).
Sales by Mercedes-Benz Cars rose by 27% to 521,200 vehicles in the second quarter (Q2 2020: 408,900). Mercedes-Benz Vans’ sales were up 37% to 98,400 vehicles (Q2 2020: 71,900).
The Daimler Trucks & Buses division showed an increase in unit sales of 91% to 116,800 vehicles in the first quarter (Q2 2020: 61,000). Revenue was €10.0 billion (Q2 2020: €6.2 billion). EBIT amounted to €819 million (Q2 2020: minus €756 million) and the return on sales was 8.2% (Q2 2020: minus 12.2%). Positive effects resulted from the sales increase in almost all regions, primarily from the market recovery, as well as a higher contribution to earnings from the after sales business, pricing, ongoing cost discipline as well as a contribution from the listing of Proterra, Inc. and the sale of the Campinas plant. Adjusted EBIT was €831 million (Q2 2020: minus €747 million) and adjusted return on sales was 8.3% (Q2 2020: minus 12.0%). Cash flow before interest and taxes (CFBIT) soared to an inflow of €667 million (Q2 2020: outflow of €121 million). Adjusted CFBIT amounted to an inflow of €693 million (Q2 2020: outflow of €121 million). The adjusted cash conversion rate (CCR) was plus 0.8 (Q2 2020: 0.2).
Unit sales by Daimler Trucks increased by 94% to 112,100 vehicles in the second quarter (Q2 2020: 57,900). Daimler Buses sold 4,700 vehicles, an increase of 52% (Q2 2020: 3,100).
At Daimler Mobility, new business increased by 23% to €17.2 billion in the second quarter (Q2 2020: €14.0 billion), driven by strong sales developments at the industrial business. Contract volume was €150.6 billion at the end of the quarter (end of the first quarter 2021: €152.7 billion/end of 2020: €150.6 billion). Revenue was €6.9 billion (Q2 2020: €6.5 billion). The division’s EBIT amounted to €924 million (Q2 2020: €205 million). Positive effects resulted from lower credit-risk provisions, a credit provision release of €120 million, lower refinancing costs and improved development of the business operations, as well as from strict cost discipline. At 23.9%, return on equity was much higher than the 5.6% in the prior-year period. Adjusted EBIT was €930 million (Q2 2020: €313 million) and adjusted return on equity was 24.0% (Q2 2020: 8.6%).
Daimler Truck Spin-off on Track
Daimler claims it will “generate value for its shareholders and to raise its profitability by creating two pure-play companies, one focused on cars and vans with the other on trucks and buses. It is intended that a significant majority stake in Daimler Truck will be distributed to Daimler shareholders. The transaction and the listing of Daimler Truck on the Frankfurt Stock Exchange are on track and expected to be completed before year-end 2021. The project is currently in the preparatory and auditing phase. At an extraordinary general meeting in autumn, Daimler shareholders will have to approve this historic strategic step.”
2021 Forecast
Based on the performance in the first half of the year and the above-mentioned assumptions, the divisions expect the following adjusted returns in the year 2021:
Daimler’s business plan covers the full year 2021 and is based on the existing Group structure, including Daimler Trucks & Buses. The spin-off of Daimler Truck, including significant parts of the related financial services business, will be examined before the end of 2021. Before the spin-off, Daimler will reclassify Daimler Truck as discontinued operations. The expected considerable positive effects in the second half of the year cannot be reliably determined at present.
The adjusted cash conversion rate (ratio of cash flow to EBIT) for the Mercedes-Benz Cars & Vans division in 2021 is expected to be between 0.7 and 0.9 and for Daimler Trucks & Buses between 0.8 and 1.0. Investments in property, plant and equipment in 2021 on a group level are expected to be in the magnitude of the previous year; research and development investments on a group level are now expected to be significantly (previously: slightly) above the prior year’s level.
Daimler now expects the free cash flow of the industrial business for 2021 to be slightly (previously: significantly) below 2020’s figure. This includes payments in the context of the settlement with the US-regulators and plaintiff representatives of the consumer class actions relating to diesel emissions, cash-outs due to the restructuring program, higher cash taxes than in 2020, as well as costs related to the planned spin-off of Daimler Truck. The adjusted free cash flow of the industrial business is now expected to be in the magnitude of the prior-year level or slightly above (previously: in the magnitude of the prior-year level).
AutoInformed.com on
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.