Daimler AG was in the news this week for unfortunate reasons. In announcing its second-quarter earnings Wednesday, the European automaker told the Wall Street Journal it will soon ramp up its cost-cutting efforts as a result of its first quarterly loss in a decade.
The WSJ reported a downswing in the sales of luxury brands, such as Daimler’s Mercedes-Benz but also BMW, Volkswagen and Aston Martin, as one reason for Daimler AG’s stumble, though the quarterly loss was still unexpected. Daimler AG has produced record earnings multiple times this decade.
It makes me wonder if anyone over in Germany is questioning the decision to separate its automotive and heavy truck divisions?
Daimler AG announced in May it is targeting Nov. 1 as its formal reorganization date, with Mercedes-Benz AG responsible for the current Mercedes-Benz Cars and Mercedes-Benz Vans divisions, while Daimler Trucks and Daimler Buses will be joined in a company dubbed Daimler Truck AG.
Yet in Wednesday’s earnings report, Daimler AG also reported Daimler Trucks showed an increase in unit sales of 2 percent in the second quarter, while revenue increased by 14 percent to €10.5 billion (Q2 2018: €9.2 billion), EBIT was up 33 percent to €725 million (Q2 2018: €546 million) and return on sales was 6.9 percent (Q2 2018: 5.9 percent).
Those are strong totals.
By comparison, Mercedes-Benz car and van sales were down 3 percent and flat, respectively, with revenue decreasing by 1 percent with cars and up 4 percent with vans. (Daimler Buses, for the record, saw sales rise by 12 percent and revenue finish 9 percent higher for the quarter.)
It appears the soon to be official Daimler Truck AG is going to be introduced as a strong, stable player in the market. And while I wouldn’t bet against Mercedes-Benz, it sounds like the second-half of the year will be collective tightening of the belt.
Said Ola Källenius, chairman of the board of management, Daimler AG, and head of Mercedes-Benz Cars, “Our focus for the second half of this year is on improving our operating performance and cash-flow generation. In general, we are intensifying the Group-wide performance programs and reviewing our product portfolio in order to safeguard future success.”
