Daimler pushes its sustainable business strategy forward
STUTTGART, Germany, July 8, 2020 --
- Successful crisis management of COVID-19 pandemic
- Production to be ramped up worldwide subject to demand
- Dividend proposal takes into account stakeholder interests and business situation
- Focus on increased efficiency and strategic investments in the future
Daimler AG (ticker symbol DAI) is maintaining its course in the midst of challenging economic conditions and continuing to invest in the key technologies of the future to successfully shape the transformation. "Despite all the challenges presented by the corona pandemic, we must not neglect the key tasks of the transformation. Electrification and digitization in all their forms are the main technological tasks and continue to require high funding. Not least, COVID-19 has once again made it clear that we must be more careful with our environment if we want to avoid causing enormous damage to ourselves in the long term. Daimler's goal continues to be emission-free mobility," says Manfred Bischoff, Chairman of the Supervisory Board of Daimler AG, at the company's virtual Annual Shareholders' Meeting on Wednesday.
The agenda of the Annual Meeting includes advance resolutions on capital measures and amendments to the Articles of Incorporation. Among other things, the changes are intended to make virtual meetings and electronic participation possible again in the future. The agenda also features proposed changes in the Supervisory Board's composition. Dr. Paul Achleitner's term of office as a member of the Supervisory Board representing the shareholders expires at the end of the Annual Meeting. The Supervisory Board proposes Timotheus Höttges, Chairman of the Board of Management of Deutsche Telekom AG, Bonn, for election to the Supervisory Board.
"Daimler's future will be sustainably fascinating, sustainably climate-neutral and last but not least, sustainably profitable. In view of an ever-faster changing world, we must change at a faster pace. We need a lane change towards decarbonization. That's the direction we're headed in and we're following insistently," says Ola Källenius, Chairman of the Board of Management of Daimler AG and Mercedes-Benz AG, in his speech to shareholders.
The next generation of the S-Class, which will be presented in autumn, represents the future of Mercedes-Benz. It combines the two strategic focuses of electrification and digitization. 48-volt technology is standard with all engines, and the plug-in hybrid version sets new standards in this segment in terms of electric range. The market launch of the S-Class will be followed in 2021 by the EQS, the first fully electric luxury sedan from Mercedes-Benz based on an all-electric architecture. At the same time, Mercedes-Benz is taking the next major step in terms of digitization, safety and automated driving functions with an updated version of the MBUX navigation and infotainment system.
"The S-Class is the world's best-selling luxury sedan, and with the latest generation, we want to offer our customers innovation, safety, comfort and quality like never before. We are above all a luxury brand and there is great potential for further growth, especially at the upper end of the segments in which we are operating. So we will systematically strengthen our brand portfolio and make it more attractive to a broader target group. We are focused on building the most desirable cars in the world. That is our promise and the best path towards more profitable growth," says Källenius.
After the global economy had started the year with positive indicators, the COVID-19 pandemic and the countermeasures taken brought economic activities worldwide to a temporary standstill. Daimler proactively countered the drop in demand caused by the pandemic by suspending production in March, April and May, and by introducing short-time work. At the same time, expenditure was reduced and investments were consequently focused on future-oriented projects. This safeguarded the company's financial strength. At the end of the first quarter, the net liquidity of the industrial business was at a robust level of €9.3 billion. In addition, Daimler significantly increased its financial flexibility at the beginning of April with an additional syndicated credit facility of €12 billion. "The measures we took were aimed at dealing with the situation in the short term but were also designed to support our long-term course," says Källenius.
The Board of Management and the Supervisory Board will propose to the shareholders at the Annual Meeting a dividend of €0.90 per share for the past financial year (2018: €3.25). "The dividend proposal takes into account the careful and prudent balancing of the interests of all stakeholders to which the company is responsible as well as the current business situation, in particular liquidity and the business outlook," says Bischoff. The proposed total dividend payout amounts to €1.0 billion (2018: €3.5 billion).
Earnings declined in the past financial year, mainly due to substantial extraordinary expenses, while unit sales remained at the prior-year level. Daimler sold a total of 3.34 million cars and commercial vehicles (2018: 3.35 million). Revenue increased by 3% to €172.7 billion (2018: 167.4), and the Daimler Group achieved EBIT of €4.3 billion (2018: €11.1 billion). Adjusted EBIT reflects the ongoing business and amounted to €10.3 billion. Net profit decreased to €2.7 billion (2018: €7.6 billion). Net profit attributable to the shareholders of Daimler AG amounted to €2.4 billion (2018: €7.2 billion).
As a result of the COVID-19 pandemic, global vehicle markets have suffered a massive slump in recent months. In the first half of the year, unit sales of the Mercedes-Benz brand fell by nearly 19% to the number of about 870,000 cars. "Mercedes-Benz has already made up some ground in the second quarter. In China, for example, Mercedes-Benz achieved its best second quarter ever in terms of unit sales. We are cautiously optimistic that other markets will follow this development step by step. As soon as demand picks up again, we can increase production quickly and efficiently," Källenius says.
Truck sales fell by 38% to around 150.000 vehicles in the first six months of 2020 as a result of the pandemic and the already weaker market environment, especially in Europe and North America. Order intake shows positive signs in recent weeks in almost all key markets. At Daimler Mobility, contract volume on June 30 was 2% lower at about €155 billion - compared to June 2019 and based on preliminary figures. Also in China, things are already looking up again. The negative effects of the first quarter were offset in the second quarter.
Against the backdrop of the worldwide effects of the COVID-19 pandemic, Daimler expects negative adjusted Group EBIT and a negative free cash flow in the industrial business in the second quarter. Also, as forecasted in the first quarter revenue, will decrease significantly although the development of revenue in recent weeks, particularly in the passenger car business, gives cause for cautious optimism. The early adjustment of production and the measures introduced to limit costs and expenses had a positive effect on cash flow and liquidity.
"The necessary investments in the future can no longer be generated through increased revenue and 'normal' efficiency gains. The Board of Management has therefore adopted a program to improve the cost structure. Cost discipline covers all areas of the company and is an essential prerequisite for a financially successful future," says Bischoff. In order to streamline processes and structures and to improve financial strength, Daimler launched a comprehensive initiative across all divisions and the Group at the end of 2019. The respective measures are being implemented at full speed and their positive effects are already being felt. "Our previous efficiency goals covered the upcoming transformation, but not a global recession. That is why we are further refining our course," says Källenius.
"What makes me confident: There are plenty of reasons why Daimler can emerge from the current situation stronger than before. That is why we now have to set the right priorities quickly. Daimler's business model combined with the innovative spirit, expertise and the commitment of its employees has all the prerequisites to take mobility to the next level. The Supervisory Board is fully aware of the complex tasks facing the Board of Management and supports all appropriate measures to shape the future successfully," says Bischoff.
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, pandemics, 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.
Daimler at a glance
Daimler AG is one of the world's most successful automotive companies. With its Mercedes-Benz Cars & Vans, Daimler Trucks & Buses and Daimler Mobility divisions, the Group is one of the leading global suppliers of premium cars and one of the world's largest manufacturer of commercial vehicles. Daimler Mobility offers financing, leasing, fleet management, investments, credit card and insurance brokerage as well as innovative mobility services. The company founders, Gottlieb Daimler and Carl Benz, made history by inventing the automobile in 1886. As a pioneer of automotive engineering, Daimler sees shaping the future of mobility in a safe and sustainable way as both a motivation and obligation. The company's focus therefore remains on innovative and green technologies as well as on safe and superior vehicles that both captivate and inspire. Daimler continues to invest systematically in the development of efficient powertrains – from high-tech combustion engines and hybrid vehicles to all-electric powertrains with battery or fuel cell – with the goal of making locally emission-free driving possible in the long term. The company's efforts are also focused on the intelligent connectivity of its vehicles, autonomous driving and new mobility concepts. Daimler regards it as its aspiration and obligation to live up to its responsibility to society and the environment. Daimler sells its vehicles and services in nearly every country of the world and has production facilities in Europe, North and South America, Asia and Africa. In addition to Mercedes-Benz, the world's most valuable premium automotive brand (source: Interbrand study, 17 Oct. 2019), and Mercedes-AMG, Mercedes-Maybach and Mercedes me, its brand portfolio includes smart, EQ, Freightliner, Western Star, BharatBenz, FUSO, Setra and Thomas Built Buses as well as the brands of Daimler Mobility: Mercedes-Benz Bank, Mercedes-Benz Financial Services and Daimler Truck Financial. The company is listed on the Frankfurt and Stuttgart stock exchanges (ticker symbol DAI). In 2019, the Group had a workforce of around 298,700 and sold 3.3 million vehicles. Group revenues amounted to €172.7 billion and Group EBIT to €4.3 billion.
SOURCE Daimler North America - Corporate Communications