April 29, 2020 - Given the continuing effects of the pandemic, Daimler believes that the original forecast for the financial year 2020, as disclosed in connection with annual report 2019, is no longer valid.
The COVID-19 pandemic has substantial effects on the global economy - and our company. We took the proactive decision to stop production in March, and moved very quickly into cash preservation and cost management mode. As a consequence, Daimler ended the first quarter with a positive result and a robust liquidity. Now we have started with a gradual ramp-up of our production. At the same time, we are continuing to invest in key technologies, including electrification and digitalization. They are non-negotiable elements of our future.
After the world economy was already burdened in the course of the first quarter, its development would continue to be dominated by the corona pandemic during the rest of the year. The decisive factors will be when the pandemic will be under control worldwide, how long economic activity is limited until then, and which pattern of recovery will occur afterwards. From today’s perspective, a significant decline in global economic output must be anticipated for the year 2020 as a whole.
Therefore as already disclosed, Daimler expects for the Group and for Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks and Daimler Buses unit sales in 2020 to be below the levels of the previous year. Daimler Mobility expects for the financial year 2020 a lower new business volume than in 2019.
Revenue and EBIT
Given the anticipated market development and the assessment of our divisions, Daimler expects Group revenue and Group EBIT for the financial year 2020 to be below the prior year. As the EBIT of the Mercedes-Benz Cars & Vans division was adversely affected by substantial special items in 2019, EBIT for this division is anticipated above the prior-year level despite the effects of the pandemic.
The adjusted return on equity of Daimler Mobility for the financial year 2020 will not reach the prior year level.
EBIT, adjusted EBIT and adjusted Return on Sales/Return on Equity are defined on pp. 64, 73 and 342 of the Daimler Annual Report 2019.
Industrial Free Cash Flow
The expected decline in the results should lead to a decrease in the Group´s industrial free cash flow for 2020.
Having implemented a comprehensive set of cash protection measures and having increased the financial flexibility, Daimler is confident being well positioned to manage the business, both during and after the pandemic.
As part of the measures already initiated to secure liquidity and reduce costs, Daimler will also reduce its spending on property, plant and equipment as well as on research and development compared with the previous year. However, Daimler will maintain upfront investments that are necessary to secure the future of company.