Daimler figures give investors hope

The bad news is on the table: 34 percent fewer vehicles were sold in the second quarter, and the year will end with a billion-dollar loss. But investors are looking to improve.

Daimler suffers from the consequences of the corona crisis.

SBad news from the auto world is standard after a six-month period in which no cars, let alone trucks, could be sold for weeks. Daimler will also need years before the resulting crisis can be dealt with, CEO Ola Källenius made clear in conference calls with analysts and journalists. Investors, however, are now confident that the course has been set correctly and have taken action: The price of Daimler shares rose by more than 6 percent on Wednesday morning, reaching prices above 41 euros. That much was last paid for the paper at the end of February, before it became clear that the corona pandemic could also take dramatic forms outside of Asia.

After the analyst conference, for example, Citigroup canceled its sales recommendation. In contrast, Goldman Sachs continues to advise selling the shares, with Goldman Sachs analyst Georger Galliers expressly praising the strong cost savings: The outlook is encouraging.

Further austerity measures necessary

Daimler boss Ola Källenius did not counter the numerous rumors and speculations about the necessary savings with concrete figures. However, he specified that, in addition to the austerity program from November, further substantial measures would be necessary to adjust the costs to the expected demand. While a savings volume of 1.4 billion euros was planned for personnel costs in the Daimler Group by 2022 in November, the horizon will be widened by 2025 due to the Corona crisis. “We will take action every year and steadily reduce fixed costs.”

Constructive talks are being held with the employee representatives. He did not find it useful to talk about individual measures before a result was achieved, said Källenius. “In such a fundamental transformation, redundancies for operational reasons would always be the last resort, even if the economic situation would allow it in principle,” he emphasized with a view to the fear that “safeguarding the future in 2030” could be up for grabs. This excludes compulsory redundancies until the end of 2029 and applies to the vast majority of Daimler employees in Germany.

Daimler closed the second quarter with a consolidated loss of 1.9 billion euros, after a loss of 1.2 billion euros in the previous year. The operational development, on the other hand, is more clearly reflected in the operating profit (EBIT) adjusted for one-off effects, which reached almost 2.5 billion euros in the same quarter of the previous year, but is now reported as minus 708 million euros. Group sales fell 29 percent to 30.2 billion in the second quarter after 34 percent fewer vehicles had been sold. Sales in the passenger car spare with 480,000 cars and vans were 30 percent below the previous year’s level, while sales in the truck sector fell by 55 percent to 61,000 units.