The shortage of semiconductors is putting the German auto industry under pressure.
(Photo: Reuters)
Munich The lack of chips continues to affect Daimler. In the third quarter, the Stuttgart-based automaker was only able to sell 578,000 cars, vans, trucks and buses. This corresponds to a decrease of 25 percent compared to the previous year, which was burdened with corona. Nevertheless, the Swabians were able to noticeably limit the financial effects of this drop in sales.
The Mercedes manufacturer’s sales of 40.1 billion euros are only slightly below the previous year’s level. Better still: The Swabians were even able to increase their earnings before interest and taxes (EBIT) noticeably – from 3.1 to 3.6 billion euros. The bottom line is that Daimler earned almost 2.6 billion euros from July to September – around a fifth more than in the previous year.
“We are staying on course to achieve our goals for the year as a whole. Thanks to a more robust business, we increased the EBIT despite a challenging environment, ”said Daimler CFO Harald Wilhelm, commenting on the performance of his group. The manager also sees “substantial progress” in implementing the Group’s strategy.
In fact, Daimler is profiting from its enthusiasm for savings and a new focus on luxury. Under the leadership of CEO Ola Källenius, who has headed the brand with the star since May 2019, tens of thousands of jobs will be cut worldwide, unprofitable models will be crushed and superfluous factories will be sold.
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At the same time, the Swede is increasingly focusing on quality instead of quantity. Unlike his predecessor Dieter Zetsche, he does not strive for ever new sales records, but for consistently high margins. All available semiconductors are therefore prioritized at Mercedes in the production of particularly profitable models such as the S-Class or the GLE. The assembly of volume models such as A- and B-Class with rather thin margins, on the other hand, is being throttled.
Maybach sales at a record level
The result: Although the deliveries of the brand with the star remain at the level of 2020 after nine months, profit increases. The positive mix effects, i.e. the increasing share of models with high profit margins in total sales, become particularly clear when looking at three lucrative sub-brands.
Daimler was able to sell almost 32,000 units of the massive G-Class SUV this year. That is roughly as much as after twelve months in 2019 and an increase of around 30 percent in relation to the same period of the previous year. Sales of the noble Maybach bodies are also at an all-time high of 10,800 units after three quarters. And at the tuning subsidiary AMG there never seems to have been a crisis anyway. With more than 116,000 units sold, the sub-brand is heading for a new all-time high.
Not least thanks to these cash cows, Mercedes’ return on sales after nine business months is a whopping 11.8 percent. Nevertheless, the trend is negative. The margin fell noticeably from over 15 percent in the first to below eight percent in the third quarter. Nevertheless, Daimler was able to increase its net liquidity from 20.1 to 23.5 billion euros during this period. And the free cash flow after nine business months, at 6.6 billion euros, is almost 90 percent up on the previous year.
Daimler is therefore sticking to its forecast for the full year, according to which the group will achieve a return on sales of more than ten percent with its passenger car division and a margin of at least six percent with its truck division. In the financial division of Daimler Mobility, the Stuttgart-based company is even raising its outlook. In the division, Daimler now expects an adjusted return on equity for the full year of up to 20 to 22 percent. Previously, the forecast corridor was 17 to 19 percent.
Concern about the truck division Daimler Truck
Investors, on the other hand, are likely to be somewhat concerned about the Daimler Truck division. Here, the operating profit dropped in the third quarter despite a slight increase in sales by eleven percent – to 482 million euros. The decrease was triggered by higher energy and raw material costs, which Daimler Truck was only able to partially offset with higher prices.
After all, the truck unit’s order book is well filled. After nine months, the company recorded new orders for 448,000 units – an increase of 75 percent compared to the previous year. Also positive: Overall, Daimler expects the semiconductor bottleneck to ease somewhat in the fourth quarter and the supply situation to “improve”.
The third quarter of Daimler marks the last interim results of the group as a large industrial conglomerate. The reason: In December, the truck and bus business will be spun off and listed on the Frankfurt stock exchange. The remaining auto division is then to be renamed Mercedes-Benz Group AG at the beginning of 2022 in order to underline the company’s future focus on the passenger car and van business. It marks a turning point in the more than 130-year history of Daimler.
More: Daimler is also preparing to split up the company in the executive suite