For the car manufacturer Daimler, it seems to be getting out of the corona crisis faster than expected. He is now confident that he will be able to match last year’s result.
4.3 billion euros once marked an unprecedented crash. Now, less than a year later, they stand for the optimism that a year 2020, which has been largely hailed by the Corona crisis, could at least come to an at least reconciling end.
Earnings of 4.3 billion euros before interest and taxes are the result of the previous year, which the car and truck manufacturer Daimler now roughly believes it can achieve – driven by a strong third quarter and always under the condition that Corona does not come again impacts as violent as in spring. “This is of course increasingly difficult in view of the events of the past few days,” admitted CFO Harald Wilhelm on Friday when the detailed interim report was presented.
Daimler shares ticked the Corona low long ago
At midday, Daimler shares were up 2.2 percent at 48.95 euros. In the wake of the good news from Swabia, prices in the car sector rose across Europe before the weekend. However, Daimler has recently fared significantly better on the stock exchange than the industry, which has been in the red by more than ten percent since the beginning of the year.
Quite different are the shares of the Stuttgart-based company, which are currently not trading far below the previous year’s level. A few days ago, the share certificates had reached just under 50 euros, the highest level since January. The corona low of March at around 21 euros has long been ticked off.
Industry insiders warn against too much euphoria
Daimler had already presented preliminary figures for the third quarter, but now the prospects for the year as a whole are explained in more detail. Philippe Houchois of the Jefferies investment bank saw opportunities for higher market expectations for earnings, and the liquidity cushion should be further strengthened in the fourth quarter.
However, industry insider Tom Narayan from analyst firm RBC warned that investors shouldn’t pay too much attention to the high margins from the third quarter. Many of the now reduced expenses would be incurred again at Daimler in the future.
In view of the crisis with weeks of downtime in important markets, closed car dealerships and shutdown factories, Daimler had long assumed that all key figures would be below the previous year.
Daimler adopted a strict savings concept
In 2019, the group had again set a sales record, but billions in diesel contaminations and expensive start-up problems with new models ate up a large part of the profit and let it collapse by almost two thirds. In 2020 it should now work the other way around: sales and revenue significantly below the level of the previous year, but Daimler wants at least to keep the operating result, which is a good 4.3 billion euros, at the end.
Chief Executive Officer Ola Källenius and Chief Financial Officer Wilhelm had placed their main focus early on keeping the money together. Källenius tightened the screws of his savings concept that was presented before Corona. In connection with the unexpectedly rapid recovery of the markets and the rising sales figures, especially in China, the strict discipline in costs and efficiency is now paying off, Wilhelm emphasized on Friday.
Daimler saves large sums of money with short-time work and home office
“With this momentum we are on the right track to make our business more weatherproof,” he said. “The transformation of Daimler is, however, a long-distance race. We are keeping the pace high – focused and with a high level of discipline.” In the passenger car and van business, management is even expecting a slightly higher return on sales than at the beginning of the year, when Covid-19 was not yet a factor.
As far as costs are concerned, Corona even played into the company’s hands at short notice. The effect of short-time work, which saved a three-digit million amount in the second quarter, had already disappeared in the third. In return, you save large sums of money, among other things, in the currently almost non-incurring travel expenses, said Wilhelm.
Daimler will probably cut at least 15,000 jobs
But also in the long term, the costs should go down – also for the staff, which, according to Wilhelm, makes up almost a third. Compulsory layoffs are not an issue, but jobs are being cut in other ways. How many there will be in the end is still not clear. At least 15,000 in any case; most recently speculation was in the range of 20,000 to 30,000.
Most recently, the group had almost 292,000 employees worldwide, almost 13,000 fewer than a year ago. Above all, vacancies were not filled, said Wilhelm. The severance pay program that started a few months ago has so far not had a major impact.