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An Analysis of Daimler AG

An Analysis of Daimler AG

Entering 2021, the German car manufacturer Daimler Group is thinking differently and is charting a new course for its future development.

The new plan of Daimler

On April 23, Daimler Group officially announced the plans to adjust its corporate structure to two independently operated companies to improve the group through independent operations. One focuses on passenger cars, light commercial vehicles. 

The other one focuses on trucks and buses. According to reports, the related transactions of separation and the plan for listing on the Frankfurt Stock Exchange are proceeding smoothly. It is still in the preparatory and review stage and expected to complete before the end of 2021. 

At the shareholders meeting to be held in the fall of 2021, existing Daimler shareholders will approve this historic step. This move highlights the urgent desire of Daimler AG’s chairman of the board of directors and Mercedes-Benz AG’s chairman of the board of directors, Ola Kallenius, to deepen Daimler’s restructure and also marks the difference between it and its predecessor, Dieter Zetsche. It is worth noting that after splitting the truck business, Daimler Group may change its name to Mercedes-Benz in due course.

Daimler is advancing the adjustment of its corporate structure and accelerating the transition to electrification. In the future, they will build a rich product portfolio ranging from city cars to heavy trucks.

In the next few decades, passenger cars and trucks will have different technological trends. Passenger cars are rapidly transforming to pure electric drive, and hydrogen fuel is likely to play a more crucial role in future commercial vehicles. Daimler confidently stated that Mercedes-Benz and Daimler Trucks have different businesses, specific customer groups, technical routes, and financial needs. 

The two parts will operate most effectively as independent entities and improve the net liquidity of the company.

Daimler is confident of this fiscal year with a smooth start under the momentum that has continued last year. Based on the expected market development and the current assessments of various business units, it is expected that the sales volume, turnover, and EBIT in 2021 will still be significantly higher than the previous year’s levels.

The operating performance

As the financial reporting season, in addition to the progress of the truck business split in the current period, the outside world is also very concerned about the Daimler Group’s operating data.

From the perspective of various business sectors, Daimler Group performed well in the first quarter of 2021.In the first quarter of 2021, Daimler Group’s profits have doubled. The group’s net profit was 4.4 billion euros, compared with 168 million euros in the same period in 2020. 

At the same time, the current strategic transformation of the Daimler Group, such as the planned independent launch of Daimler trucks and the accelerated expansion of the lineup of pure electric models, is progressing smoothly.

In the first quarter of 2021, Daimler Group’s performance was strong and its turnover increased to 41 billion euros (37.2 billion euros in the same period in 2020). The operating performance in the first quarter also allowed the group’s profit before interest and tax to rise to 5.748 billion euros (for the same period in 2020, 617 million euros). Based on the performance of the market, Daimler raised its 2021 full-year performance forecast.

On April 23, Daimler Group announced that thanks to the global economic recovery and attractive model portfolio, Daimler’s total sales of passenger cars and commercial vehicles in the first quarter of 2021 were 729,000, a year-on-year increase. An increase of 13% (644,000 vehicles in the same period in 2020). 

Based on a product portfolio and appropriate pricing strategy, Daimler’s turnover increased to 41 billion euros in the first quarter of 2021 (37.2 billion euros in the same period in 2020). The operating performance in the first quarter also allowed Daimler’s EBIT to rise to 5.748 billion euros (617 million euros in the same period in 2020), reflecting the adjusted EBIT of basic business of 4.970 billion euros (719 million euros in the same period in 2020).

The total sales of Mercedes-Benz passenger cars and light commercial vehicles reached 627,000, a year-on-year increase of 15% (547,000 in the same period in 2020); turnover reached 26.9 billion euros (in the same period in 2020) 23.2 billion euros); pre-interest and tax profit reached 4.078 billion euros (510 million euros in the same period in 2020); a return on sales rate of 15.2% (2.2% in the same period in 2020); adjusted pre-interest and tax profit was 3.841 billion euros (it was 603 million euros in the same period in 2020); the adjusted return on sales was 14.3% (2.6% in the same period in 2020).

The expectation of Daimler

Daimler said that thanks to the increasing popularity of the COVID-19 vaccine, the global economy will be able to recover from the weakness affected by the epidemic in 2020. 

Based on the expected market development and the current assessment of the business unit, the Group’s sales volume, turnover, and EBIT in 2021 are expected to be significantly higher than the previous year’s levels. 

At present, there is a shortage of chip supply on a global scale, and the delivery in the first quarter is also affected by this. Daimler predicts that the shortage of chips may further affect sales in the second quarter. 

Although it is still impossible to predict accurately, Daimler believes that the situation will improve in the third and fourth quarters.

As the helmsman of the group, Ola Kallenius predicts that they will continue to achieve ambitions in a very encouraging market environment. 

Their high-tech luxury electric vehicle product line will work well and the launch of EQS is just the beginning. The systematic efforts to reduce the company’s break-even point are becoming. 

An Analysis of Daimler AG Written by Tianze Hu

Edited by Jay DevonPorsche 911 Carrera Review – Rebellion ResearchMercedes-Benz

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