July 12, 2019 - Stuttgart, Germany – Due to items listed below, Daimler AG has achieved a Group EBIT for the second quarter 2019 that is significantly below market expectations. Group EBIT sums up to EUR minus 1.6 billion (Q2 2018: EUR 2.6 billion).
EBIT for the divisions amounts to:
- Mercedes-Benz Cars: EUR minus 0.7 billion (Q2 2018: EUR 1.9 billion)
- Daimler Trucks: EUR 0.7 billion (Q2 2018: EUR 0.5 billion)
- Mercedes-Benz Vans: EUR minus 2.0 billion (Q2 2018: EUR 0.2 billion)
- Daimler Buses: EUR 0.1 billion (Q2 2018: EUR 0.1 billion)
- Daimler Financial Services: EUR 0.4 billion (Q2 2018: EUR 0.1 billion)
- Reconciliation: EUR minus 0.1 billion (Q2 2018: EUR minus 0.1 billion)
All mentioned figures are preliminary and unaudited.
In addition to the facts already disclosed in our ad-hoc notification dated June 23, 2019, the following major items had an impact on EBIT:
- New information lead to a revised risk assessment with regard to provisions for an extended recall in Europe and Rest of World in connection with Takata airbags. Provisions had to be increased by around EUR 1.0 billion.
- In addition, EBIT was impacted by a reassessment made today in connection with ongoing governmental and court proceedings and measures relating to Mercedes-Benz Diesel vehicles in various regions, which lead to an increase in expected expenses by around EUR 1.6 billion.
- Finally, a decision by the Board of Management in the context of the product portfolio review and prioritization, which was taken today, will affect earnings of the Mercedes-Benz Vans division in the second quarter 2019 by around EUR 0.5 billion.
When reassessing the earnings outlook for 2019, in addition to the factors mentioned above, also adjusted sales and earnings projections resulting from the following factors had to be taken into account:
- Slower product ramp ups affecting product availability throughout 2019 and
- lower growth in automotive markets than expected.
As a result, Daimler now has the following outlook for Group EBIT and for the Return on Sales (RoS) of the divisions:
- Outlook for Group EBIT now expected to be significantly below prior year level (previously in the same magnitude)
- Mercedes-Benz Cars now expected to be 3 % to 5 % RoS (previously 6 % to 8 %)
- Daimler Trucks unchanged 7 % to 9 % RoS
- Mercedes-Benz Vans now expected to be minus 15 % to minus 17 % RoS (previously minus 2 % to minus 4 %)
- Daimler Buses unchanged 5 % to 7 % RoS
- Daimler Financial Services unchanged 17 % to 19 % Return on Equity
The free cash flow of the industrial business for the second quarter 2019 is expected to be below the respective previous year quarter.
For the financial year 2019 the free cash flow of the industrial business can no longer be expected to be slightly higher than 2018.
EBIT and Return on Sales are defined as on p. 344/345 of the Daimler Annual Report 2018.
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 and tariff regulations; 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.