May and June are crucial: Daimler Truck senses a “depressed mood” in Germany

May and June are crucial
Daimler Truck senses “depressed mood” in Germany

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The global market leader for heavy trucks reports robust growth in North America. But things are anything but smooth for Daimler Truck in the home market. CEO Daum complains about a lack of optimism in this country. If the spark doesn’t fly by the end of June, production will probably have to be cut.

The truck manufacturer Daimler Truck is struggling with weak demand in Europe and Asia. The European brand Mercedes-Benz is suffering above all from the reluctance of customers in Germany, explained CEO Martin Daum. “The problem is a really depressed mood in Germany these days.” The economy needs a shot of optimism. Since Daimler Truck’s market share in its home market is twice as high as in the rest of Europe, this has an impact on the commercial vehicle manufacturer’s cyclical business. In general, Daum speaks of a normalization of the markets after strong developments since the end of the corona pandemic.

Daimler trucks 40.95

Incoming orders worldwide in the first quarter were 14 percent below the same period last year. While orders in Daimler’s main market of North America increased by almost a third, orders in Europe fell by almost a fifth. In Asia, new orders have halved, where Indonesia is particularly weak.

Daimler Truck confirmed its annual outlook, but announced a result for Europe at the lower end of the return range of 8.5 to 10.5 percent. The more cautious assessments of Europe weighed on the shares, explained industry analyst Fabio Hölscher from Warburg Research. With a loss of around six percent, the Daimler truck titles were the biggest losers in the Dax.

“No short-time work on the horizon”

In the first quarter, the world market leader for heavy trucks achieved stable results despite a significant decline in sales. Sales increased slightly. The adjusted operating result (EBIT) rose by four percent to 1.2 billion euros from January to the end of March. With sales at the previous year’s level, the operating margin climbed from 8.8 to 9.3 percent. “We had a positive start to 2024 with robust profitability despite lower sales volume,” explained Daum. The bottom line is that the Swabians earned 847 million euros in the first quarter, seven percent more than in the previous year.

Sales fell by 13 percent to just under 109,000 commercial vehicles in the first quarter, primarily due to the weakness in Asia. Daimler spoke of an expected normalization after previously strong sales, which came from the backlog of orders due to semiconductor shortages during the corona pandemic. The company reiterated its annual forecast: Sales and adjusted EBIT are expected to be at the previous year’s level, and the return on investment at group level should be between 9.0 and 10.5 percent.

The decisive factor in Europe is the order development in May and June, added Daum. Daimler still expects sales to improve in the second half of the year. If that doesn’t happen, production will be adjusted. But he sees “no short-time work on the horizon,” emphasized Daum. Price cuts to boost sales are out of the question for Daimler. The cost pressure from rising wages and higher prices from suppliers is too high.

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