Production at Daimler Truck
The world’s largest truck manufacturer has been independent of the former parent company Daimler since 2021.
(Photo: dpa)
If you want to know how the world economy is doing, you can see a lot in the sales figures for trucks. Because little can be saved more easily in an imminent downturn than planned expenditure on capital goods such as articulated lorries.
Following this logic, orders for heavy commercial vehicles should actually collapse in view of the war in Ukraine, high inflation, rising interest rates and ongoing restrictions due to the corona pandemic.
But: The opposite is the case, at least if you believe Daimler Truck.
“We are not observing any cancellations,” emphasizes Martin Daum, CEO of Daimler Truck, during the virtual general meeting of the Dax group, according to the text of the speech. The 62-year-old manager sees the world’s largest manufacturer of heavy trucks and buses in an “exceptional situation that we can use to cushion a moderate economic downturn”.
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The reason: many forwarders have been waiting eagerly for new vehicles for months. Due to a lack of semiconductors, providers such as Daimler Truck were able to deliver far fewer articulated lorries last year than was demanded. Many of the Swabians’ customers are now “so far behind in fleet renewal that they urgently need new trucks and cannot postpone new purchases any longer,” explains Daum. Daimler Truck can hardly save itself from orders.
Daimler Truck: price surcharges of more than ten percent
The production for this year is completely sold out. “And even if some orders were to be cancelled, that would only mean that we would go from overheating to a normal state,” states Daum. “Therefore, we remain confident for the current year for good reason.”
Almost nothing seems to be able to slow down Daimler Truck’s business at the moment. The group recently even increased its prices in Europe and North America by more than ten percent. Most customers swallow this serve without much grumbling. They are lucky if they get a vehicle at all.
Martin Daum
The Daimler Truck CEO can present full order books.
(Photo: dpa)
All the same: after a rather difficult first quarter, the supply of chips is slowly improving. “We therefore see our key figures clearly in the plus for the year as a whole,” says Daum. Specifically, Daimler Truck is aiming to sell more than 500,000 vehicles by 2022. Sales are expected to increase from 40 to up to 50 billion euros, and operating profit is also expected to increase significantly.
The shareholders are very pleased with the development of the company. Not a single countermotion was submitted in the run-up to the Annual General Meeting. Nine out of ten analysts currently recommend buying the group’s shares. The Swabian paper was recently listed slightly below the issue price of 28 euros after the IPO in December 2021.
For more than a hundred years, Daimler Truck was a kind of “second business” of the car manufacturer Mercedes-Benz. Last year, however, the truck business was spun off from the dominant car division. Since then, Daimler Truck has operated as an independent company. Although Mercedes still holds 30 percent of the shares in the company, it no longer has any operational influence.
“Daimler Truck has achieved a lot and learned a lot in these first few months of independence,” explains Joe Kaeser, Chairman of the Supervisory Board of Daimler Truck. The former Siemens boss believes that those who move forward courageously and consistently can achieve major changes and have a positive effect. At the same time, what is probably the biggest restructuring of all time in the transport industry is taking place.
Truck competition creates higher margins
In fact, the powertrain turnaround in commercial vehicles – away from the dominant diesel engine and towards batteries and hydrogen-based fuel cells – is likely to lead to a significant reduction in the more than 100,000 jobs worldwide in the coming years.
The group is already trying hard to save in order to achieve its return targets and close the gap to the competition. Important competitors such as Volvo Trucks or Paccar have been doing business much more profitably than Daimler Truck for decades. Most recently, the margin of the rivals was twice as high as that of the Swabians.
That should now gradually change. The group is aiming to increase the adjusted return on sales from 5.9 percent in the first quarter to between seven and nine percent for the year as a whole. In three years, the margin in the industrial business should then be in the double digits and remain at this level permanently. The signs are good.
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First publication: 06/22/22, 10:32 am.