July 23, 2020 - Daimler today reported its results for the second quarter 2020. The key figures were strongly influenced by the corona pandemic and the resulting decline in demand for cars, vans, trucks and buses.
Relevant financial figures at a glance
Group Unit Sales
Q2 2019: 821,700 units
€ 30,184 million
Q2 2019: €42,650 million
€ -1,682 million
Q2 2019: €-1,558 million
€ -1,906 million
Group Net Profit
Q2 2019: €-1,242 million
€ 685 million
Free Cash Flow Industrial Bus.
Q2 2019: €-1,302 million
€ 9,481 million
Net Liquidity Industrial Bus.
End of Q1 2020: €9,262 million
Following a positive start to the year, the covid-19 pandemic and the related countermeasures brought economic activity worldwide to a temporary standstill. Daimler countered the drop in demand by quickly suspending production in March, April and May, and by introducing short-time work. To safeguard the company’s financial strength, expenditure was reduced and investments were focused on the most critical future projects. Working capital was managed carefully with a focus on inventory reduction.
These measures were successful: At the end of the second quarter, the net liquidity of the industrial business was €9.5 billion (end of Q1 2020: €9.3 billion). The free cash flow of the industrial business was €685 million (Q2 2019: minus €1,302 million). The adjusted free cash flow of the industrial business, which was still influenced by high upfront investments in future products, was €778 million (Q2 2019: minus €1,208 million).
While the worldwide effects of the pandemic led to a significant decrease in earnings at Mercedes-Benz Cars & Vans, Daimler Trucks & Buses and Daimler Mobility, implemented cost-cutting measures countered the negative effects.
Sales of the Mercedes-Benz Cars & Vans division decreased by 30% to 480,800 vehicles in the second quarter (Q2 2019: 686,800). Adjusted EBIT, reflecting the underlying business, was minus €284 million (Q2 2019: plus €1,148 million) and adjusted return on sales was minus 1.5% (Q2 2019: plus 4.5%). A favorable model mix, driven particularly by the success of the newest products, contributed positively to profitability. Restructuring expenses for capacity adjustments in the global production network, e.g. in Hambach, Tuscaloosa and Aguascalientes (€687 million), and the initiated personnel cost reduction program (€101 million), had a negative impact. Both initiatives will reduce fixed costs in the medium and long term.
The Daimler Trucks & Buses division showed a decrease in unit sales of 55% to 61,000 vehicles in the second quarter (Q2 2019: 134,900). Adjusted EBIT amounted to minus €747 million (Q2 2019: plus €834 million) and adjusted return on sales was minus 12.0% (Q2 2019: plus 7.2%). Declining volumes had a strong impact on earnings while restructuring activities, which will improve long-term competitiveness, helped reduce fixed costs significantly. Encouragingly, order intake is now developing positively in nearly all core regions.
At Daimler Mobility, new business decreased by 24% to €14.0 billion in the second quarter (Q2 2019: €18.4 billion). Adjusted EBIT amounted to €313 million (Q2 2019: €483 million) and adjusted return on equity was 8.6% (Q2 2019: 14.0%). Due to the economic slowdown in connection with the covid-19 pandemic, higher credit loss expenses had a negative impact on EBIT. Furthermore, EBIT was reduced by expenses (€105 million) in connection with the adjustment of the YOUR NOW Group.
The page Key-Figures-Group shows numerous other key figures in line charts, thus providing a quick overview of the development of relevant quarterly figures over a period of three years (e.g. Capital Expenditure on Industrial Business, Earnings per Share or Net Liquidity, Sales by Divisions).
Due to the unprecedented COVID-19 pandemic, we had to endure a challenging quarter. But our net industrial liquidity is a testament to effective cost control and cash management, which we must continue to enforce. We are now seeing the first signs of a sales recovery – especially at Mercedes-Benz passenger cars, where we are experiencing strong demand for our top end models and our electrified vehicles. Going forward, we are firmly determined to continue to improve the cost base of our company. At the same time, we are committed to our key strategic objectives: to lead in electrification and digitalization.