Daimler Truck Q1 Profit Rises Even as Sales Fall

A Freightliner Cascadia, made by Daimler Truck North America. Daimler Truck said DTNA’s share of the U.S. Class 8 truck market for its two brands there — Freightliner and Western Star — dipped to 43.2% compared with 43.5% a year earlier. (Daimler Truck)

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Daimler Truck profits rose year-over-year in the first quarter of 2024, with executives and analysts more optimistic about the company’s North American business than its European operations.

Leinfelden-Echterdingen, Germany-based Daimler Truck reported net income of $912.8 million or $1.07 per diluted share, a 7% increase compared with a profit of $856.8 million, or 96 cents, a year earlier. Daimler Truck reports earnings in euros, and conversions are correct as of May 6.

Overall, Q1 revenue was little changed at $14.29 billion, compared with $14.01 billion a year earlier as price increases and inflation muted the expected impact of lower vehicle sales in the most recent quarter, the company said.

Daimler Truck sold 108,911 trucks and buses globally in Q1, a decrease of 13% compared with 125,172 vehicles in the year-ago period, which the company said reflected an expected normalization across truck markets.

“We had a positive start into 2024, delivering a robust profitability on lower sales volumes,” CEO Martin Daum said in a release. “Our first-quarter results clearly demonstrate [that] while markets are getting back to normal, our company delivers stable EBIT and return on sales.” He added, “While we are on track towards our financial targets for the full year, headwinds in Europe are increasing.” He noted that North America offers a much brighter outlook. “We feel much more positive for the continuation for the U.S. Orders continue to come in strong,” Daum said during a May 3 earnings call.

Martin Daum, CEO of Daimler Truck: “We had a positive start into 2024, delivering a robust profitability on lower sales volumes. Our first quarter results clearly demonstrate: While markets are getting back to normal, our company delivers stable EBIT and Return on Sales. (1/2) pic.twitter.com/sOYZWzsC7Q — Daimler Truck (@DaimlerTruck) May 3, 2024

Analysts at Deutsche Bank saw the overall Q1 results in a positive light. “We already anticipated a solid start into the year post the strong results from Daimler’s truck peers; hence, we consider the 3% earnings beat in line with expectations,” the company said in a May 6 research note.

During the call, Daum noted that the successful conclusion of union negotiations cleared the road ahead for Daimler Truck North America. “We are fully prepared to go full steam throughout the entire year,” he said. “I’m really glad that we were able to settle with the [United Auto Workers union] without any strike, so we don’t have a loss on that side. I feel much more positive about the market.”

Daum continued, “The big positive for us in the U.S. is that [in] the three big segments — on-highway, vocational and medium-duty — we have an industry-leading product and can participate wherever, whichever segment is increasing.”

DTNA posted revenue of $6.26 billion in Q1, unchanged from a year earlier. The company — which operates the Freightliner and Western Star brands in North America — sold 46,220 vehicles in the most recent quarter, a decrease of 5% compared with 48,891 vehicles a year earlier. The slight decline in unit sales was mainly due to declining catch-up effects, particularly in longhaul transport, the parent company said.

Daimler Truck Q1 2024 earnings

Sales specifically in the U.S. slid 6% to 39,263 vehicles compared with 41,655 a year earlier. Daimler Truck said DTNA’s share of the U.S. Class 8 truck market for its two brands there — Freightliner and Western Star — dipped to 43.2% compared with 43.5% a year earlier. The slide was more pronounced in Class 6 and Class 7; DTNA claimed 35.9% of Class 6-7 sales in Q1, compared with 42.2% a year earlier.

However, Daum believes the vocational and medium-duty segments are holding up well.

“When you look at the U.S., the highway business is certainly down compared with last year, and it is compensated by what we call the vocational business, and the medium-duty business,” he said. “We have an extremely flexible production network, where we can build at every plant, at least, sometimes three to four different models. So we can adjust immediately to those different markets. The on-highway market is not overheated how it was in past years, but it is not bad on the other side at all.

“We are still producing at full speed in the United States and don’t intend to let go even one notch back. At the moment, we like the balanced mix of the product … but if a customer needs some more, we can react, which is a positive, because in the past, we couldn’t.”

Plus, he noted Q1 order activity at DTNA jumped 31% to 44,530 compared with 34,068 a year earlier.

“We have extraordinary order intake,” Daum said, adding that U.S. infrastructure projects were driving demand.

Daimler Truck also is optimistic about growth of battery-electric trucks and its battery manufacturing joint venture with Paccar and Cummins, he said.

“We have very favorable conditions in the United States — fast decision-making; areas to build; government support with the [Inflation Reduction Act]; a very interesting subsidy segment, where the results get subsidized, not the initial intent; cheap energy. A lot of very good starting points,” he said.

The company teamed up with Paccar and Cummins to build a facility in Mississippi so that they could obtain economies of scale and reach a 20-gigawatt plant size, Daum said, adding that this was one of the optimal sizes for a truck battery cell manufacturing plant.