decoupling from the economy
Daimler Truck blocks – raised targets
7/11/2023 3:46 p.m
In the current year, the truck manufacturer Daimler Truck is already sold out. By the end of the decade, revenue and returns are expected to increase significantly. A stronger solution to economic fluctuations should help. Last but not least, investors also benefit from this.
The truck manufacturer Daimler Truck wants to significantly increase sales and profits by the end of the decade and become significantly more efficient. The DAX group announced that the company is well on the way to achieving the target set for 2025 of more than ten percent adjusted return on sales in the industrial business. Ambition for 2030 is a sales growth of 40 to 60 percent compared to 2025 and a return of more than twelve percent. The higher bar, like the current one, applies to the scenario of a favorable market environment.
“We are ready to take Daimler Truck to the next level by 2030,” said CEO Martin Daum on the capital market in Boston on the US east coast. This year, the world market leader for heavy trucks is aiming for an average turnover of 55 billion euros with a return of up to ten percent. The growth will be driven by the technology strategy with uniform platforms for software and different drive types, more service sales and the market launch of autonomous and emission-free trucks.
The Swabians are hoping for three billion euros in sales and an operating result of more than one billion euros from self-driving trucks in 2030. Large quantities based on a uniform technology architecture for diesel and electric drives or software solutions should make the business highly profitable. In addition, lower costs and investments stabilized profitability, the Stuttgart group explained.
Daimler Truck is less exposed to the ups and downs of the economy than it used to be. In the future, profits should suffer even less from economic downturns. “Active portfolio management” should also contribute to this – as an example, Daimler refers to the planned merger of the Japanese subsidiary Mitsubishi Fuso with the Toyota division Hino Motors.
forecast raised
The evening before, Daimler Truck had announced higher targets for sales, revenue and profit for the current year and a share buyback. Strong demand and increased prices are driving sales this year in the industrial business to 54 billion to 56 billion euros and the adjusted return to 8.5 to 10.0 percent. That would be a billion euros more revenue than previously expected and a percentage point more return. Last year sales were 51 billion euros and the margin was 7.7 percent.
Starting in August, the DAX group intends to use the increasing liquidity to buy back its own shares worth up to two billion euros over a period of 24 months. In the future, 40 to 60 percent of the Group’s earnings are to be distributed to the shareholders in the form of dividends, from which the former parent company Mercedes-Benz, as the main shareholder, will also benefit. Last year, the rate was 40 percent with a dividend of EUR 1.30.
Despite all the concerns of analysts, the globally weaker economy has not slowed down the cyclically dependent demand for commercial vehicles at Daimler Truck. The truck builder is still working off the backlog of orders from the Corona years, when a lack of chips affected production, and is already sold out for the current year. The supply chains stabilized, the company said. That’s why Daimler Truck also increased its sales forecast for the year as a whole: 530,000 to 550,000 vehicles are to be sold, 20,000 more units than previously targeted. From April to June, the group delivered 131,888 vehicles, nine percent more than in the same period last year.