Daimler Q3 profit increases 14% year on year raises profit forecast for 2020

SMM: although sales and revenue are low, the group and various departments have performed well due to market improvement, strong product mix and strict cost control.

Industrial net liquidity was 13.1 billion ou yuan (9.5 billion ou yuan at the end of the second quarter).

The positive momentum of market and cost-cutting in the third quarter will continue into the fourth quarter.

Daimler expects earnings before interest and tax in fiscal 2020 to be the same as last year.

Industrial free cash flow is expected to increase significantly in fiscal year 2020 compared with fiscal year 2019.

On October 23, local time, Daimler announced its third-quarter results. Of this total, the group's total sales of passenger and commercial vehicles fell 7 per cent year-on-year to 772700 vehicles; revenue fell 7 per cent to 40.3 billion ou yuan; profit before interest and tax increased 14 per cent to 3.07 billion ou yuan; adjusted profit before interest and tax for basic business was 3.479 billion ou yuan; net profit was 2.158 billion ou yuan, compared with 1.813 billion ou yuan in the same period last year. At the end of the third quarter, Daimler's industrial business had net liquidity of 13.1 billion ou yuan and free cash flow of 5.139 billion ou yuan, reflecting the company's continued efforts to cut costs and retain cash, as well as good operating results for all its divisions. In addition, Daimler's Beijing Mercedes-Benz joint venture in China also contributed $1.2 billion in dividends.

Harald Wilhelm, who is in charge of the financial control and mobile travel division of the Daimler Group Management Committee, said, "the recovery of the market and our strong product portfolio have driven us to achieve good results. Under this positive momentum, our business will be more able to withstand the wind and rain. However, Daimler's transformation is a long-distance race and we will focus on keeping pace. "

In terms of division, sales of Mercedes-Benz's car and truck division fell 4 per cent year-on-year to 673400 vehicles in the third quarter, with adjusted earnings before interest and tax rising to 2.417 billion ou, with an adjusted return on sales of 9.4 per cent. Improved pricing and a significant reduction in fixed costs had a positive impact on earnings, but profits were adversely affected by restructuring charges of $297 million, this includes a cost optimization project of $229 million and adjustment and redeployment costs of the global production network ($68 million). Both measures will reduce fixed costs in the medium to long term.

Daimler's truck and bus division sales fell 26 per cent year-on-year to 99300 vehicles, with adjusted profit before interest and tax of 603 million ou and an adjusted return on sales of 6.5 per cent. As a result of the market contraction caused by the pandemic, profits were negatively affected by the decline in sales, but the significant reduction in fixed costs had a positive impact. Compared with the previous quarter, the department recorded a significant increase in orders in most key areas.

Revenue from Daimler's travel business unit rose 2 per cent year-on-year to 18.7 billion ou yuan, with adjusted profit before interest and tax of 601 million ou yuan and adjusted return on equity of 16.5 per cent.

Expected 2020

Based on Daimler's assumption that economic conditions in its most important markets continue to normalize and that the pandemic will not cause further setbacks, Daimler made its full-year performance forecast for 2020. Daimler expects that the sharp decline in sales due to the pandemic in the first nine months of this year will only be partially offset by the end of the year. As a result, the group's annual sales and revenue will be significantly lower than the previous year. Based on expected market developments and current assessments of sectors, Daimler expects group earnings before interest and tax to remain at the previous year's level in 2020. Compared with the previous year, the free cash flow of industrial business will increase significantly.

The adjusted earnings of various departments in 2020 are expected to be as follows:

Mercedes-Benz car and truck division: the adjusted return on sales is 4.5% and 5.5%, and the adjusted cash conversion rate (the ratio of cash flow to profit before interest and tax) is 1;

Daimler truck and bus division: adjusted return on sales of 1% Murray 2%, adjusted cash conversion rate of 2;

Daimler mobile travel division: adjusted return on equity of 9% Mel 10%.