Vienna Business is booming at Daimler Truck. The world’s largest manufacturer of heavy articulated lorries and buses almost tripled its profit in the first quarter of 2023. From January to March of the current year, Daimler Truck posted consolidated earnings of 795 million euros, after 275 million euros in the same quarter of the previous year. This corresponds to an increase of 189 percent. The company announced this on Tuesday.
The commercial vehicle manufacturer increased sales by a good quarter to 13.2 billion euros. The main reason for the increase was strong demand. Daimler Truck was able to increase its sales by 15 percent in the first three business months and delivered a total of 125,000 trucks and buses thanks to increasingly stable supply chains.
This is also noticeable in the cash inflow in the industrial business. This climbed from 73 to 168 million euros. The operating profit adjusted for special effects is also clearly in the black at around 1.2 billion euros. At 8.8 percent, the adjusted return on sales is almost three points higher than in the same quarter of the previous year.
Daimler Truck hopes to be able to maintain “positive momentum”.
“Our first quarter results exceeded capital market earnings expectations and all of our industrial businesses contributed to the growth in profitability,” said Jochen Goetz, Chief Financial Officer of Daimler Truck.
The manager hopes to maintain the “positive momentum” in the coming quarters. “We expect 2023 to be another year with demand well above supply,” said Goetz. There is no indication that customers are canceling orders.
Analysts from Jefferies, on the other hand, warn of increasing pressure on margins due to higher wage costs and a foreseeable tougher price competition as a result of the ebbing shortage of chips in the second half of the year. In the past three years, there has been limited supply in the truck market overall. The manufacturers sometimes had to reject orders because they could not process them quickly enough.
Truck builder: Increasing pressure on margins, falling orders at Daimler Truck
However, Jefferies expert Himanshu Agarwal assumes that the industry will have reached the peak of this cycle in 2023 and that sales and margins for truck manufacturers are likely to fall again. At Daimler Truck, orders are already falling. Compared to the same quarter of the previous year, incoming orders fell by eleven percent to 123,000 vehicles.
Hacker attacks, which could endanger the stability of the supply chain, are also a concern for Daimler Trucks. At the end of the first quarter, cyber attacks caused problems for Daimler Truck suppliers, CFO Goetz said on Tuesday. After improving the chip supply, there are now bottlenecks in other parts. “We are not sure that the supply chain is stable enough for a higher volume,” Goetz said.
Therefore, despite the strong first quarter, the Dax group left the outlook at an adjusted return on sales of 7.5 to 9.0 percent for the year as a whole. With a stable supply chain, however, there could be upside potential over the course of the year. At least Daimler does not currently expect production stops like last year.
The cautious forecast was not well received on the stock exchange. The Daimler Truck share price fell by more than four percent on Tuesday by noon, so the stocks clearly led the list of losers in the leading index.
The coach business has returned to operating profit but remains a concern for the company.
(Photo: dpa)
Important competitors like the Volvo Group are already significantly more profitable. The Swedes achieved an adjusted margin of 14 percent in the first quarter. In addition, Volvo was able to increase its new orders by a third compared to Daimler Trucks. Nevertheless, the Swabians have also made progress.
Daimler Truck: Strong US business, weak buses
In particular, the central business in North America is doing well. The division’s sales increased in the first quarter by 27 percent to 5.8 billion euros. The margin increased by more than three points to 11.6 percent.
Meanwhile, in Europe and Latin America, the restructuring of the core Mercedes-Benz brand is paying off. The division’s adjusted operating profit rose by almost a third to 440 million euros. At 8.8 percent, the return is at the upper end of expectations.
The bus business, on the other hand, remains difficult. In particular, the sale of coaches has plummeted in the wake of the corona pandemic. The division was able to make at least a small operating profit again in the first quarter with nine million euros. In the same quarter of the previous year, it was still a loss of 45 million euros.
The situation in Asia is also better, but still difficult for Daimler Truck. The sales of the unit are almost 40,000 vehicles and thus a third above the sales of the same quarter of the previous year. However, the adjusted operating result is still rather weak at 80 million euros. The adjusted return on sales of 4.6 percent is well below that in North America and Europe.
With material from Reuters
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