Daimler Q4 Profits Tumble; Revenue Inches Higher
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Daimler AG reported a net loss and a 1% increase in revenue in the fourth quarter as sales of cars and vans increased, while truck sales globally fell 16%.
The mounting costs of shifting to electric vehicles and a large emissions-related fine at Mercedes-Benz Cars also were factors.
For the quarter ended Dec. 31, Daimler (reporting in euros) had the equivalent net loss of $12 million, or a loss of 11 cents per diluted share, compared with net income of $1.79 billion, or $1.59, a year earlier.
Kallenius
Revenue rose to $51.4 billion compared with $50.8 billion in the 2018 period.
“I have no illusions about the next two to three years the amount of heavy lifting that we’re going to have to do to put the financial number right, to unlock cash flow so that we can finance the investments that we need to get ahead in electrification, to get ahead in digitization and software architectures for our products,” Daimler Chairman Ola Kallenius told investors after reporting full-year results.
Stuttgart, Germany-based Daimler faces mounting vehicle recall and legal costs amid allegations of diesel cheating. And the company has been slower than Volkswagen AG to electrify its fleet and now faces rising competition from Tesla Inc., which plans to build a factory outside Berlin, Bloomberg News reported.
In September, Daimler agreed to pay a $949.4 million fine German prosecutors imposed for the alleged manipulation of emissions tests of its cars, but the company denied wrongdoing.
“This company is going to change fundamentally,” Kallenius said. “We will work 24/7 to make this happen, to make this somewhat of a turning point.”
At its largest division, Daimler sold 649,826 Mercedes-Benz cars in the quarter, up 2% from 638,263 a year earlier.
Daimler Trucks saw global sales fall to 120,745 compared with 143,524 a year earlier. Declines in volume, particularly in Europe and Asia, had a negative impact on earnings. Negative effects also were due to higher upfront expenditures for new technologies and costs related to capacity adjustments.
Daimler Trucks posted lower U.S. retail sales of 40,107 in the quarter, down 9% compared with 44,105 a year earlier.
Daimler’s U.S. brands are Freightliner and Western Star. Freightliner sells in Classes 4-8, while Western Star makes a heavy-duty truck.
Net income for the full year was $2.9 billion, or $2.42, down 64% from $8.2 billion, or $7.40, a year earlier.
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Revenue rose to $188.4 billion compared with $182.5 billion a year earlier.
Daimler is committed to carbon dioxide-neutral mobility, but underscored that enormous technical and financial efforts are required in order to achieve the CO2 targets and to finance the important future fields of electric mobility and connectivity.
“The resulting costs require comprehensive measures to increase efficiency, streamline the company and increase the free cash flow. Those measures include the significant reduction of material and administrative costs and the reduction of personnel costs by more than $1.5 billion by the end of 2022. Daimler aims to cut jobs worldwide in what it called a socially responsible manner, including the reduction of management positions,” according to the release.
Daimler previously stated that by 2022 the vehicle portfolio of Daimler Trucks & Buses in its main sales regions of Europe, the United States and Japan will include series-production vehicles with battery-electric drive; by the end of the decade, it will add hydrogen-powered series-production vehicles to its product range.
Daimler expects group unit sales in 2020 to be slightly below the prior-year level. Mercedes-Benz Cars, Mercedes-Benz Vans and Daimler Trucks expect a slight decrease in unit sales compared to the previous year. Daimler Buses sees slightly higher sales numbers. At Daimler Mobility, new business should weaken slightly, while the contract volume should remain at the prior-year level, the company reported.
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