Daimler continues its growth with increased unit sales in the second quarter – EBIT of €2.6 billion despite negative factors
- Unit sales increased to 833,000 vehicles (+1%)
- Revenue of €40.8 billion (Q2 2017: €41.2 billion)
- Group EBIT of €2.6 billion (Q2 2017: €3.7 billion)
- Net profit of €1.8 billion (Q2 2017: €2.5 billion)
- Free cash flow of the industrial business of €1.8 billion in first half of year
(Q1-2 2017: €3.0 billion) - Expectation of slight growth in unit sales and revenue and Group EBIT slightly lower than in 2017
Dieter Zetsche , Chairman of theBoard of Management ofDaimler AG and Head ofMercedes-Benz Cars : "We plan to further strengthen and expand our position with numerous new models and technologies. We are focusing on innovative technologies not only with our CASE strategy, at the same time, we are using Project Future to shape our company for a sustainable and successful future. In this way, Daimler is optimally positioning itself for the future in terms of technology, culture and structure."Bodo Uebber , Member of theBoard of Management ofDaimler AG for Finance & Controlling andDaimler Financial Services : "Our earnings and the good liquidity and financial situation enable us to continue investing in the future and in new technologies. In addition, we have made optimum use of the favorable conditions in a volatile environment and have created a long-term liquidity buffer with the early renewal of the existing credit line at attractive conditions."
The Mercedes-Benz Cars division was not able to achieve its earnings of the prior-year quarter due to a temporarily weaker pricing including tariffs. Daimler Trucks' earnings were at the level of the prior-year quarter. The
"The automotive industry and therefore we too have many challenges to overcome. That's why it's important that we systematically implement our strategy," stated
Free cash flow and liquidity
In the first six months of 2018, the free cash flow of the industrial business amounted to €1.8 billion (Q1-2 2017: €3.0 billion). This decrease resulted primarily from the development of working capital and the general business performance.
Compared with
"The second quarter featured various external factors that had a significant impact on our earnings," said
In
Workforce
At the end of the second quarter of 2018, the
Details of the divisions
Unit sales of 590,700 vehicles by
In second quarter of 2018, the division's EBIT of €1,901 million was significantly below the prior-year figure of €2,365 million. Revenue decreased by 4% to €22.6 billion. Its return on sales was 8.4% (Q2 2017: 10.0%). One of the main reasons for the decline in earnings was a temporarily weaker pricing including tariffs. Furthermore, a fire at a supplier's facility in
Daimler Trucks' unit sales of 123,900 vehicles were 6% higher than in the second quarter of last year (Q2 2017: 116,400). The sales volume in the
The division's second-quarter EBIT of €546 million was at the level of the prior-year period (Q2 2017: €548 million). Revenue amounted to €9.2 billion (Q2 2017: €9.0 billion). Its return on sales was 5.9% (Q2 2017: 6.1%). In the second quarter of the year 2018, increasing unit sales especially in the
In the second quarter of 2018,
Second-quarter unit sales by Daimler Buses of 7,500 units were at the level of the prior-year period. In the EU30 region, sales of 2,200 complete buses and bus chassis of the Mercedes-Benz and Setra brands were also in the magnitude of the second quarter of last year. Despite undisputed market leadership, sales of 700 units in
Daimler Buses' EBIT of €66 million in the second quarter of 2018 was also significantly below the prior-year level of €78 million. Primarily due to a weaker global product mix and a negative exchange-rate effect, revenue decreased significantly to €1.1 billion (Q2 2017: €1.2 billion). This resulted in a return on sales of 6.1% (Q2 2017: 6.4%). Further efficiency enhancements and positive exchange-rate effects only partially offset the negative impact on earnings from an unfavorable product mix and higher inflation-related costs.
In the second quarter of 2018, the division achieved EBIT of €66 million, which is significantly below its earnings of €522 million in the prior-year period. The determining factor was the agreement reached to conclude the Toll Collect arbitration proceedings with the
The reconciliation of the divisions' EBIT to Group EBIT comprises gains at the corporate level and the effects on earnings of eliminating intra-group transactions between the divisions. Items at the corporate level resulted in expenses of €95 million in the second quarter of 2018 (Q2 2017: €122 million). The elimination of intra-group transactions resulted in income of €4 million in the second quarter of 2018 (Q2 2017: €7 million).
Investments in the future
Outlook for the divisions
On the basis of the assumptions on the development of the markets important for the Group and of the divisions' current assessments, Daimler expects to slightly increase its total unit sales in the year 2018.
Due to challenges in the supply chain as well as a longer certification process than usual for a number of models in some international markets it will come to temporary suspensions in the availability of vehicles.
Daimler Trucks assumes that its total unit sales in the year 2018 will be significantly higher than in the previous year. This is largely due to the significant recovery of some important markets. In the
The Daimler Buses division continues to expect its total unit sales in 2018 to be significantly above the prior-year level. It is assumed that unit sales in the EU30 region will increase perceptibly. After the significant growth in unit sales in
Outlook for Daimler
Based on the generally positive development of unit sales, Daimler assumes that Group revenue will increase slightly in the year 2018. Significant revenue growth is anticipated in the
In late
As reported in the ad-hoc announcement of
Due to several factors, some temporary restrictions in the availability of vehicles of
On the basis of these effects as well as expected market developments and the current assessments of the divisions, Daimler now assumes that Group EBIT in 2018 will be slightly lower than in the previous year.
The individual divisions have the following expectations for EBIT in the year 2018:
–
– Daimler Trucks: significantly above the prior-year level,
–
– Daimler Buses: in the prior-year magnitude and
–
Despite a further increase in advance expenditure for new products and technologies, the free cash flow of the industrial business should be significantly higher than in 2017 and also higher than the dividend distribution in 2018. It must be taken into consideration, however, that the free cash flow of the industrial business in 2017 was reduced by an extraordinary contribution of €3 billion to the German pension plan assets of
In order to achieve the ambitious growth targets, the already very high investment in property, plant and equipment will be slightly increased in the year 2018 (2017: €6.7 billion). Capital expenditure in 2018 at both
With research and development activities, a total volume slightly above last year's spending of €8.7 billion is anticipated. Key projects at Mercedes-Benz Cars include successor models for the current S-Class and C-Class. In addition, the Group is investing in new, more efficient engines, alternative drive systems and vehicles, autonomous driving and connectivity. At Daimler Trucks, the main areas of investment are for improved fuel efficiency and emission reductions, as well as for tailored products and technologies for important growth markets. In addition, the future technologies of electric mobility, connectivity and automated driving continue to gain importance.
Against the backdrop of further efficiency improvements in the context of the medium- and long-term programs for the structural improvement of business processes, the
This document contains forward-looking statements that reflect our current views about future events. The words "anticipate," "assume," "believe," "estimate," "expect," "intend," "may," "can," "could," "plan," "project," "should" and similar expressions are used to identify forward-looking statements. These statements are subject to many risks and uncertainties, including an adverse development of global economic conditions, in particular a decline of demand in our most important markets; a deterioration of our refinancing possibilities on the credit and financial markets; events of force majeure including natural disasters, acts of terrorism, political unrest, armed conflicts, industrial accidents and their effects on our sales, purchasing, production or financial services activities; changes in currency exchange rates; a shift in consumer preferences towards smaller, lower-margin vehicles; a possible lack of acceptance of our products or services which limits our ability to achieve prices and adequately utilize our production capacities; price increases for fuel or raw materials; disruption of production due to shortages of materials, labor strikes or supplier insolvencies; a decline in resale prices of used vehicles; the effective implementation of cost-reduction and efficiency-optimization measures; the business outlook for companies in which we hold a significant equity interest; the successful implementation of strategic cooperations and joint ventures; changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety; the resolution of pending government investigations or of investigations requested by governments and the conclusion of pending or threatened future legal proceedings; and other risks and uncertainties, some of which we describe under the heading "Risk and Opportunity Report" in the current Annual Report. If any of these risks and uncertainties materializes or if the assumptions underlying any of our forward-looking statements prove to be incorrect, the actual results may be materially different from those we express or imply by such statements. We do not intend or assume any obligation to update these forward-looking statements since they are based solely on the circumstances at the date of publication.
Daimler at a Glance
Figures for the 2nd Quarter 2018/First Half-Year 2018 |
||||||
Daimler Group |
Q2 |
Q2 |
Change |
YTD |
YTD |
Change |
2018 |
2017 |
18/17 |
2018 |
2017 |
18/17 |
|
Revenue, in millions of EUR* |
40,756 |
41,214 |
- 1 % |
80,541 |
79,796 |
+ 1 % |
EBIT, in millions of EUR* |
2,640 |
3,747 |
- 30 % |
5,975 |
7,518 |
- 21 % |
Net profit, in millions of EUR* |
1,825 |
2,512 |
- 27 % |
4,179 |
5,164 |
- 19 % |
Earnings per share (EPS), in EUR* |
1.61 |
2.28 |
- 29 % |
3.74 |
4.67 |
- 20 % |
Employees ( |
300,777 |
290,867 |
+ 3 % |
300,777 |
290,867 |
+ 3 % |
Net liquidity (industrial business, |
14,472 |
18,382 |
- 21 % |
14,472 |
18,382 |
- 21 % |
Free cash flow (industrial business), in millions of EUR |
-18 |
1,093 |
. |
1,804 |
3,038 |
- 41 % |
EBIT by Divisions* |
Q2 |
Q2 |
Change |
YTD |
YTD |
Change |
in millions of EUR |
2018 |
2017 |
18/17 |
2018 |
2017 |
18/17 |
Mercedes-Benz Cars |
1,901 |
2,365 |
- 20 % |
3,961 |
4,363 |
- 9 % |
Daimler Trucks |
546 |
548 |
0% |
1,193 |
1,210 |
- 1 % |
Mercedes-Benz Vans |
152 |
349 |
- 56 % |
324 |
686 |
- 53 % |
Daimler Buses |
66 |
78 |
- 15 % |
103 |
150 |
- 31 % |
Daimler Financial Services |
66 |
522 |
- 87 % |
614 |
1,046 |
- 41 % |
RoS by Divisions* |
Q2 |
Q2 |
Change |
YTD |
YTD |
Change |
in % |
2018 |
2017 |
18/17 |
2018 |
2017 |
18/17 |
Mercedes-Benz Cars |
8.4 |
10.0 |
- 1.6 %pts. |
8.7 |
9.5 |
- 0.8 %pts. |
Daimler Trucks |
5.9 |
6.1 |
- 0.2 %pts. |
6.7 |
7.1 |
- 0.4 %pts. |
Mercedes-Benz Vans |
4.3 |
10.5 |
- 6.2 %pts. |
4.9 |
10.9 |
- 6.0 %pts. |
Daimler Buses |
6.1 |
6.4 |
- 0.3 %pts. |
5.4 |
7.0 |
- 1.6 %pts. |
Daimler Financial Services (RoE) |
2.1 |
18.8 |
- 16.7 %pts. |
9.9 |
19.1 |
- 9.2 %pts. |
Revenue by Divisions* |
Q2 |
Q2 |
Change |
YTD |
YTD |
Change |
in millions of EUR |
2018 |
2017 |
18/17 |
2018 |
2017 |
18/17 |
Mercedes-Benz Cars |
22,575 |
23,570 |
- 4 % |
45,573 |
46,091 |
- 1 % |
Daimler Trucks |
9,185 |
9,030 |
+ 2 % |
17,804 |
16,981 |
+ 5 % |
Mercedes-Benz Vans |
3,511 |
3,325 |
+ 6 % |
6,609 |
6,302 |
+ 5 % |
Daimler Buses |
1,075 |
1,217 |
- 12 % |
1,925 |
2,140 |
- 10 % |
Daimler Financial Services |
6,307 |
5,930 |
+ 6 % |
12,327 |
11,841 |
+ 4 % |
Sales |
Q2 |
Q2 |
Change |
YTD |
YTD |
Change |
in units |
2018 |
2017 |
18/17 |
2018 |
2017 |
18/17 |
Daimler Group |
833,005 |
822,504 |
+ 1 % |
1,639,910 |
1,576,763 |
+ 4 % |
Mercedes-Benz Cars |
590,690 |
595,178 |
- 1 % |
1,184,989 |
1,163,248 |
+ 2 % |
Daimler Trucks |
123,910 |
116,429 |
+ 6 % |
237,756 |
210,436 |
+ 13 % |
Mercedes-Benz Vans |
110,883 |
103,393 |
+ 7 % |
203,899 |
190,171 |
+ 7 % |
Daimler Buses |
7,522 |
7,504 |
0% |
13,266 |
12,908 |
+ 3 % |
* The comparative figures for 2017 have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. |
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