Thursday 15th July 2021
Despite the lack of a chip
Daimler makes a surprising amount of profit
The corona pandemic caused the car markets to collapse, and sales are now picking up again. That puts Daimler back in the black in the second quarter. However, the low availability of semiconductors continues to cause problems for the Dax group.
Daimler defied the lack of chips in the second quarter and once again clearly exceeded the expectations of the analysts. Thanks to increasing sales and higher prices, the group generated earnings before interest and taxes (EBIT) of almost 5.2 billion euros, as the car and truck manufacturer announced. Analysts had expected an average of only 4.1 billion euros, according to the Stuttgart-based company, after the group had reported a loss of just under 1.7 billion euros in the same period of the previous year due to the Corona crisis. Adjusted for legal and conversion costs, the EBIT was now 5.4 billion.
“We continue to achieve a strong financial performance in all divisions, despite the persistently low availability of semiconductors, which had a negative impact on our production and sales in the second quarter,” said CEO Ola Källenius. Like numerous car manufacturers around the world, Daimler had to repeatedly stop production in several of its plants and temporarily put employees on short-time work due to the lack of chips.
From April to June, the passenger car subsidiary Mercedes-Benz delivered 581,201 vehicles worldwide, 27 percent more than in the same quarter of the previous year, but the delivery bottlenecks for semiconductors limited the growth. Daimler manages like the competition by installing the scarce chips primarily in high-margin models such as the S-Class. The Stuttgart-based company therefore also identified a “favorable product mix” and “good price enforcement” as the reasons for the increase in profits. The Mercedes-Benz Cars & Vans passenger car division exceeded analysts’ estimates of a good three billion euros in the second quarter with an adjusted EBIT of a good 3.4 billion euros.
Return on sales in double digits again
The return on sales was 12.8 percent for the third quarter in a row in double digits. For the year as a whole, Daimler had set a target of ten to 12 percent. The Dax Group was also able to exceed the analysts’ expectations in the other sectors as well as in the free inflow of funds in the industrial business, which was observed by investors. The truck division Daimler Trucks & Buses achieved an adjusted EBIT of 831 million euros, resulting in a return on sales of 8.3 percent.
Despite gushing profits, Daimler remains on the cost brake. For some time now, the management has been tightening the cost screws and reducing staff. With this, the Swabians want to remain attractive for investors and cope with the expensive switch to electric cars. “The key to our success is our strong range of highly attractive vehicles that are increasingly becoming electric, combined with our relentless focus on profitable growth and strict cost control,” said Källenius. Daimler did not provide any information on sales and surplus. The group plans to publish the full figures for the second quarter on Wednesday.
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