Daimler Truck Holding AG announced Thursday it successfully kept its focus on working to improve its overall profitability in 2021. With its approach of a strict fixed cost discipline the company achieved its financial targets for 2021 despite significant supply chain headwinds.
Daimler Truck states it benefitted from an overall economic recovery in the most important commercial vehicle sales markets in the financial year 2021 and significantly increased its unit sales, revenue and net profit. With 455,400 units, Daimler states 20 percent more trucks and buses have been sold worldwide in 2021 compared to prior-year level (378,300 units). Daimler says it gained advantage from a recovery in its most important markets, especially in the first half of 2021. While demand remained strong across core markets during the second half, supply constraints slowed production and limited volume growth especially for heavy duty vehicles in North America and Europe.
Supported by the overall significant growth in unit sales volume, the company’s revenue increased to €39.8 billion in 2021 (up 10 percent compared to previous year: €36.0 billion). Supported by a very strong demand environment and driven by all segments Daimler Truck’s incoming orders for 2021 in the industrial business have mounted to 590,000 units, up 37 percent compared to prior year (430,500 units). Even more important, the company adds 2021 also showed a favorable development for earnings and Return on Sales (RoS) driven by strong sales, an improved net pricing and cost reduction measures.
Daimler says its adjusted EBIT (earnings before interests and taxes) significantly rose to €2,552 million (previous year: €657 million). The adjusted RoS of the Industrial Business in 2021 also was at 6.1 percent versus previous year’s RoS adjusted of 1.9 percent.
All in all, Daimler Truck states it delivered on the targets for cost reduction and margin improvement. Simultaneously Daimler Truck faced headwinds by the effect that the supply chain constrains predominantly affected the group’s highly profitable truck portfolio in North America and Europe.
Looking forward the company states it assumes the economic conditions in its most important markets continue to normalize and that neither the COVID-19 pandemic nor the war in Ukraine will have a negative impact on the general market development.
"In these dramatic weeks, our thoughts are with the people in Ukraine and we hope that this war will end soon. Shortly after the war began, we decided to completely suspend our business in Russia until further notice," ," says Martin Daum, chairman of the Board of Management of Daimler Truck. "At the same time, we are supporting charitable organizations in their Ukraine aid efforts as well as numerous private initiatives by our employees, for which I would like to express my gratitude."
Despite a strong demand, bottlenecks in the semiconductor industry and ongoing supply constraints will continue to impact sales mainly in the first half. Reflecting the two major regions North America and Europe, the company’s guidance estimates the North American market to be between 255,000 and 295,000 units and the European market to be between 240,000 and 280,000 units. The company says it expects a significant increase in its revenue on group level in 2022 to a range between € 45.5 and € 47.5 billion. Regarding its EBIT adjusted Daimler Truck is also expecting a significant increase. Regarding the Return on Sales (RoS) adjusted for the Industrial Business Daimler Truck is expecting to come out between 7 and 9 percent.
Daimler Truck also notes it assumes the supply chains for Daimler Truck will not be affected significantly by the war. The one-time expenses resulting from the discontinuation of the business in Russia will be considered outside the operating result in the first quarter. The currently foreseeable operational effects, such as the halted Russia business as well as the currently incurred higher raw material and energy costs, are included in the guidance for 2022.
"When looking back at the past year from a business perspective I can clearly say: 2021 was an extraordinary year for Daimler Truck and I am very proud of what our global team got accomplished. Despite headwinds due to COVID-19 and supply chain shortages we achieved our financial targets," says Daum. "On top of that, our spin-off from Mercedes-Benz Group AG was a historic step that we managed very successfully. Since this week we are a proud new member of the stock market index DAX. Looking at 2022, we will focus on the factors we have in our own hands to further unlock our profit potential and lead sustainable transportation. We’re fully committed to make our first year as an independent company a successful one for Daimler Truck."