Mercedes Star
Daimler’s loss in the second quarter was lower than expected.
Stuttgart The Car maker Daimler In the second quarter, it performed better on some indicators than it expected from experts. Earnings before interest and taxes (EBIT) across the group were minus 1.68 billion euros. Adjusted EBIT therefore came to minus 708 million euros, the automaker announced on Thursday evening.
Cited as the reason for the positive development Daimler a better-than-expected market recovery and strong business performance in June.
Analysts had expected operating profit to drop even more between April and late June, Daimler itself had already announced red numbers. In the first reaction, Daimler’s share price on the Tradegate trading platform rose by one percent in the evening.
“But there is still a lot to do,” said Daimler CEO Ola Källenius. “We have to continue our systematic efforts to further reduce the company’s break-even point by reducing costs and adapting capacity.” Källenius had a lot to do with the cost structure of the traditional group after taking over the helm from longtime Daimler boss Dietmar Zetsche.
The figures included special charges of 687 million euros in the passenger car and van division for streamlining production and cutting capacities in France, the United States and Mexico. Daimler had to spend an additional 53 million euros on legal proceedings, including the loss-making car sharing joint venture Your Now BMW required 105 million euros in special costs. Daimler also spent € 129 million on the current savings program. Adjusted for these factors, the operating loss was EUR 708 million.
The vehicle divisions with passenger cars and vans, as well as the trucks and buses, which are also under pressure, were both in red, while financial services, on the other hand, posted some profit.
Commercial vehicle construction grows
Daimler was particularly surprised by the inflow of funds from ongoing industrial business – in other words, car and commercial vehicle construction. Here, the group achieved a plus of 685 million euros, analysts had estimated billions of dollars in outflows, according to Daimler surveys. The net liquidity in the industrial business increased compared to the end of March from 9.3 to 9.5 billion euros in the middle of the year. “We have a complex quarter behind us. We made proactive decisions regarding costs and expenses and focused intensively on the management of our working capital, ”said Källenius.
Daimler has benefited from the extensive use of measures to maintain liquidity, it said. At the same time, working capital developed favorably with demand. In view of the weeks of production and sales breaks on the world markets, carmakers had also put calls to suppliers on hold and requested short-time work for tens of thousands of employees in order to save the cash registers. When demand picks up again, the stocks empty faster. Financial experts at Daimler had repeatedly criticized the high need for so-called working capital.
Analysts and shareholders keep a keen eye on so-called free cash flow, i.e. the development of freely available means of payment. Ultimately, they provide information about the current financial strength, which is important for existential security in the crisis – but also about the well-being of possible dividends.
This is one of the reasons why Källenius is currently working hard on cost cutting. In November, the Swede, who had been in office for over a year, launched an austerity program that was expected to bring in 1.4 billion euros in annual personnel costs. Personnel manager Wilfried Porth raised the bar once again at the weekend: 1.4 billion euros would not be enough, just as the up to 15,000 job cuts were not reported. Daimler has around 300,000 employees worldwide.
Daimler initially did not provide any information on sales and bottom line profit. The full quarterly results are expected to be released on July 23.
More: Restructuring with obstacles: How Daimler CEO Källenius wants to get the group on track.