Daimler AG (ticker symbol DAI) is pressing ahead with its structural realignment and the acceleration of a shift to electric mobility. “The year 2020 was the most challenging for Daimler during my term as Chairman of the Supervisory Board. We passed the pandemic stress test with flying colors, defined the necessary cost-cutting measures, and initiated their consistent implementation to make the company more crisis-proof. We also refocused our strategy on sustainability and climate protection. Our sustainable business strategy must strike a responsible balance between environmental, social and financial goals,” said Manfred Bischoff, Chairman of the Supervisory Board of Daimler AG, on Wednesday at the company’s virtual regular Annual Meeting. Bischoff has been Chairman of the Supervisory Board since 2007 and is stepping down after the Annual Meeting. This year Mercedes-Benz Cars is significantly expanding its offering of fully electric vehicles: The compact electric model EQA will be followed shortly by the EQS and the EQB as well as the EQE later this year. Also, Mercedes-Benz Vans will enrich the portfolio with electric vehicles: before the end of the year concepts for an electrified Citan and the T-Class will be presented. Daimler Trucks & Buses is also focusing on CO2-neutral passenger and goods transportation: Series production of the eActros, which has a range of well over 200 kilometers and is suitable for urban heavy goods and distribution transport, will start in fall this year. For longer distances with a range of about 500 kilometers, the eActros LongHaul is being developed for market launch as of 2024. In addition, fuel-cell trucks are scheduled to go into series production in the second half of the decade. With the buses, the eCitaro and the articulated eCitaro are two vehicles already available for CO2-neutral urban transport.
“Today, Daimler has the broadest electric range in the automotive industry – from city cars to heavy-duty trucks. But that’s not enough for us. We want to accelerate the electrification of our product portfolio. Almost two years ago, we presented our Ambition2039. We want a CO2-neutral fleet of new cars. It’s our goal to reach this target sooner,” said Ola Källenius, Chairman of the Board of Management of Daimler AG and of Mercedes-Benz AG.
A prerequisite for the breakthrough of electric mobility is an efficient public charging infrastructure which expands to keep pace with the electric ramp-up of manufacturers. To meet the European Commission’s CO2 targets, Europe needs three million public charging points by the end of the decade. “Today, we don’t even have a tenth of this. We need to speed this up. Daimler, as part of the auto industry, will play its part. For example, we will further expand the Ionity charging network. I am convinced: When industry and politics work hand in hand, we move forward together. We should not focus our efforts only on banning the status quo. We should make possible the new, this is key,” said Källenius.
Project Focus offers potential
In order to utilize the full potential of the two industrial divisions during the industrial transformation and to create sustainable value, the Board of Management and Supervisory Board decided in February 2021 to initiate a fundamental change to the Group’s structure: Daimler intends to spin off Daimler Truck and list it on the stock exchange. It is planned to transfer a significant majority stake in Daimler Truck to the Daimler shareholders. “With a clear focus on commercial vehicles on one side, premium cars and vans on the other, we are creating the preconditions for more financially successful companies and thus also offer enhanced long-term job security. It is a matter of fact that the transformation of the automotive industry more than ever requires speed and an undivided focus on innovation,” said Bischoff. The transaction and the listing of Daimler Truck on the Frankfurt Stock Exchange are expected to be completed by the end of 2021. It is also intended to rename Daimler as Mercedes-Benz in due course. The planned spin-off will be under voting at an Extraordinary Shareholder’s Meeting which is planned to take place in fall of 2021.
“We want to shape the future. We are on the right track financially. Now we are keeping up the pace in order to achieve our profitability targets on a sustainable basis. Under strong market conditions, we strive for a double-digit margin at Mercedes-Benz Cars,” said Källenius. Daimler’s Board of Management was aware of its great responsibility towards employees, also with the targeted restructuring of sites. “In the long run, it benefits no one to work in a plant with a great tradition. It’s more important to work in plants with a great future. We do not wait for change – we are the ones who are changing. We will continue growing profitably and at the same time help make this world climate neutral with the aid of exceptional engineering and with a deep sense of conviction.”
For the challenging 2020 financial year, marked by the COVID-19 pandemic, the Board of Management and the Supervisory Board propose distributing a dividend of €1.35 per share (2019: €0.90), in line with the company’s long-term dividend policy. As a result of strict cost discipline and extensive measures to preserve liquidity, as well as a strong performance in the divisions, EBIT increased by 53% to €6.6 billion. Adjusted EBIT reflects the ongoing business and amounted to €8.6 billion (2019: €10.3 billion). Net profit increased to €4.0 billion from €2.7 billion. Net profit attributable to the shareholders of Daimler AG amounted to €3.6 billion (2019: €2.4 billion). The Group’s unit sales fell by 15% to 2.84 million cars and commercial vehicles. Revenue decreased by 11% to €154.3 billion. The free cash flow of the industrial business amounted to €8.3 billion (2019: €1.4 billion). The adjusted free cash flow of the industrial business was €9.2 billion (2019: €2.7 billion). The net liquidity of the industrial business improved to €17.9 billion (end of 2019: €11.0 billion).
Outlook first quarter 2021
After a good start with a tailwind from last year, Daimler is confident about the current financial year. Based on the anticipated market development and the current assessments of the divisions, unit sales, revenue and EBIT in 2021 are still expected to be significantly above prior-year levels. In the first quarter of 2021 the positive trend seen in previous quarters continues. Despite temporary bottlenecks for semiconductors, unit sales and revenues at Mercedes-Benz Cars & Vans should be higher than in the prior year’s quarter, thanks to the Chinese market and a strong product mix. Due to strong pricing and continued stringent cost control, Mercedes-Benz is confident about profitability in the first quarter. Incoming orders at Daimler Trucks are very promising, especially in Europe and the US. Unit sales in the first quarter are expected to remain at year-earlier levels, despite the impact from the pandemic on the Indonesian market and on the bus chassis business. Thanks to stringent cost management, strong product mix and disciplined pricing, profitability is seen higher than in the first quarter last year. Furthermore, semiconductor bottlenecks are affecting the supply chain of Daimler Trucks & Buses. The division monitors the situation closely and is in constant contact with the suppliers.
Changes in the Supervisory Board
Petraea Heynicke, Jürgen Hambrecht and Manfred Bischoff are stepping down from the Supervisory Board at the end of the Annual Meeting. Elizabeth Centoni, Chief Strategy Officer and General Manager of Applications at Cisco Systems, Inc., Ben van Beurden, CEO of Royal Dutch Shell plc, and Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, are proposed for election at the Annual Meeting. Bischoff’s departure after 14 years as Chairman of the Supervisory Board marks the end of an era. “It is fair to say that Manfred Bischoff has left his mark on a piece of German industrial history. This company is extremely well positioned for the future, and that is largely thanks to him,” said Källenius. In December 2020, the Supervisory Board proposed as Bischoff’s successor Bernd Pischetsrieder, who will stand for election as Supervisory Board Chairman at the constituent meeting of the new Supervisory Board after the end of the Annual Meeting.