Daimler has today reported its results for the first quarter ended March 31, 2021 and raised its outlook for the full year. Profit was boosted, in particular, by strong sales in China. However, it also warned that the global shortage of critical semiconductor components affected deliveries in the first quarter and anticipates a further impact on sales in the second quarter.
Daimler’s first quarter total unit sales increased by 13% to 728,600 cars and commercial vehicles (Q1 2020: 644,300) due to the recovery of the global economy.
Revenue rose to €41.0 billion (Q1 2020: €37.2 billion) supported by favourable product mix and pricing, it said. The strong operating performance in the first-quarter translated into an EBIT bounce to €5,748 million (Q1 2020: €617 million). Adjusted EBIT, reflecting the underlying business, also multiplied to €4,970 million (Q1 2020: €719 million).
Harald Wilhelm, Chief Financial Officer of Daimler AG said: “Deliveries, revenues and profits increased significantly, particularly thanks to tailwinds in China, a strong product mix and favourable pricing, supported by industrial performance enhancements and cost control. After this promising start, we are very confident that we can keep up the pace to improve our margins on a sustainable basis and at the same time expand our electric vehicle line-up.”
In the first quarter of 2021, net profit was €4,373 million (Q1 2020: €168 million). Net profit attributable to the shareholders of Daimler AG amounted to €4,290 million (Q1 2020: €94 million), leading to an increase in earnings per share to €4.01 (Q1 2020: €0.09).
Sales by the Mercedes-Benz Cars & Vans division increased by 15% to 627,300 vehicles in the first quarter (Q1 2020: 546,700). Revenue was €26.9 billion (Q1 2020: €23.2 billion). EBIT amounted to €4,078 million (Q1 2020: €510 million) and the return on sales was 15.2% (Q1 2020: 2.2%). Adjusted EBIT reached €3,841 million (Q1 2020: €603 million) with the adjusted return on sales at 14.3% (Q1 2020: 2.6%). Cash flow before interest and taxes (CFBIT) was an inflow of €1,968 million (Q1 2020: outflow of €1,729 million). Adjusted CFBIT amounted to an inflow of €3,129 million (Q1 2020: outflow of €1,281 million). The adjusted cash conversion rate (CCR) was plus 0.8 (Q1 2020: minus 2.1).
Sales by Mercedes-Benz Cars rose by 15% to 538,900 vehicles in the first quarter (Q1 2020: 470,600). Mercedes-Benz Vans’ sales were up 16% to 88,400 vehicles (Q1 2020: 76,200).
The Daimler Trucks & Buses division showed an increase in unit sales of 4% to 101,300 vehicles in the first quarter (Q1 2020: 97,600). Revenue was €8.7 billion (Q1 2020: €8.7 billion). EBIT amounted to €1,041 million (Q1 2020: €247 million) and the return on sales was 12.0% (Q1 2020: 2.8%). Adjusted EBIT was €518 million (Q1 2020: €247 million) and adjusted return on sales was 6.0% (Q1 2020: 2.8%). Cash flow before interest and taxes (CFBIT) soared to an inflow of €621 million (Q1 2020: outflow of €85 million). Adjusted CFBIT amounted to an inflow of €435 million (Q1 2020: outflow of €85 million). The adjusted cash conversion rate (CCR) was plus 0.8 (Q1 2020: minus 0.3).
Unit sales by Daimler Trucks increased by 6% to 97,600 vehicles in the first quarter (Q1 2020: 92,500). Daimler Buses sold 3,700 vehicles, a decrease of 27% (Q1 2020: 5,100).
Daimler Truck spin-off ‘well on track’
Daimler said its Truck spin-off is well on track to be completed by the end of this year. It intends to generate value for its shareholders and to raise its profitability by creating two pure-play companies, one focused on cars and vans with the other on trucks and buses. It is intended that a significant majority stake in Daimler Truck will be distributed to Daimler shareholders. The transaction and the listing of Daimler Truck on the Frankfurt Stock Exchange are well on track and expected to be completed before year-end 2021. The project is currently in the preparatory and auditing phase. At an extraordinary general meeting in autumn, Daimler shareholders will have to approve this major strategic step.
Daimler said it expects a gradual normalization of economic conditions in the important markets. The company assumes that the world economy will be able to recover from the pandemic-related weakness of the year 2020, aided by the increasing availability of effective vaccines. Based on the expected market development and the current assessments of the divisions, Daimler continues to anticipate group unit sales, revenues and EBIT in 2021 to be significantly above the prior year’s level.
The current worldwide supply shortage in certain semiconductor components affected deliveries in the first quarter and Daimler said it anticipates that this shortage could further impact sales in the second quarter. Although ‘visibility is limited at present’, Daimler assumes some recovery in the third and fourth quarter.
Based on the performance in the first quarter, the divisions expect the following adjusted returns in the year 2021:
- Mercedes-Benz Cars & Vans: adjusted return on sales of 10 – 12%
- Daimler Trucks & Buses: adjusted return on sales of 6 – 7%
- Daimler Mobility: adjusted return on equity of 14 – 15%
Daimler’s business plan covers the full year 2021 and is based on the existing group structure, including Daimler Trucks & Buses. The spin-off of Daimler Truck, including significant parts of the related financial services business, will be examined before the end of 2021, it said. Before the spin-off, Daimler will reclassify Daimler Truck as discontinued operations. The expected considerable positive effects in the second half of the year cannot be reliably determined at present.
The adjusted cash conversion rate (ratio of cash flow to EBIT) for the Mercedes-Benz Cars & Vans division in 2021 is expected to be between 0.7 and 0.9 and for Daimler Trucks & Buses between 0.8 and 1.0. Daimler expects the reported free cash flow of the industrial business for 2021 to be below 2020’s figure, due to the payments in the context of the settlement with the US-regulators in civil-law proceedings relating to diesel emissions. The adjusted free cash flow of the industrial business is now expected to be in the vicinity of the prior-year level despite higher cash taxes.