Daimler boss Ola Källenius is strictly trimming the German automaker for the future, but one thing should soon be back to the old days – the return. In the middle of the corona crisis, the German group is significantly increasing its return targets.
This year, Stuttgart is about to get back to where it has been for years – before the high costs of getting started with electromobility, the expensive diesel pollution, trade conflicts and, last but not least, Corona left their mark.
“Daimler can do more,” Källenius had promised after the extremely weak 2019. Now, in his second year at the top of the group, the Swede sees himself on the right track. It is true that the pandemic also brought Daimler into the red at times in the summer after production lines had to be stopped and car dealerships had to be closed. Thanks to a surprisingly strong recovery in the second half of the year, especially in China, the profit figures presented now look even better than in 2019. Daimler had not expected that for a long time.
In 2020, the group posted a net profit of around 3.6 billion euros attributable to shareholders. That was 1.2 billion euros or 50 percent more than in the previous year. Without the so-called deduction of minority interests, the group result was 4.0 billion euros – an increase of 48 percent. The dividend is expected to rise from 90 cents in the previous year to 1.35 euros. Major shareholders of Daimler include the Chinese automakers Geely and BAIC, as well as donors from Qatar.
Background to this:
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The fact that this worked despite lower sales and revenue is mainly due to the fact that Daimler shouldered billions in costs last year, among other things for the diesel affair and production problems – but also because Källenius and his CFO Harald Wilhelm were able to reduce costs significantly. Worldwide, Daimler only sold around 2.84 million vehicles in 2020 – 15 percent fewer than in 2019. In comparison, sales fell by 11 percent to 154.3 billion euros.
At the same time, however, Daimler benefited from a better product mix at Mercedes-Benz. This means that more expensive cars with higher profit margins tended to be sold. In addition, the short-time work was able to noticeably dampen the effects of Corona: According to Källenius, the group saved around 700 million euros.
In 2021, sales, turnover and profit are expected to increase significantly in equal measure. With this, Källenius wants to bring the passenger car and vans division to an adjusted return on sales of 8 to 10 percent. He expects an operating margin of 6 to 7 percent for the trucks and buses that have recently been badly hit.
The goals essentially correspond to what Daimler – at that time still in a slightly different corporate structure – had set itself in normal times. At the current level of 6.9 percent, this goal is already much closer to this goal for cars than for trucks, which are currently bobbing at 2.0 percent. Division boss Martin Daum is confident: “We ended the year with good momentum,” he said. The order backlog is higher than at the end of 2019.
The two divisions are to act as two independent, listed companies in the future – Mercedes-Benz for cars and vans and Daimler Truck for trucks and buses. Källenius also wants to get this off the ground this year. The two companies could thus concentrate better on their respective strengths and develop more potential, he emphasized again. The financial and mobility services, which have so far been independent under the common Daimler umbrella, are to be merged into the other areas. Daimler AG will disappear completely in the long term.
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The strategy in the automotive sector is on the right track, said Källenius. Sales of plug-in hybrids and fully electric cars have tripled to around 160,000, and the EU’s CO2 requirements have been met. “It shows that we are going in the right direction,” he said. This year Mercedes-Benz is launching a whole range of new electric models and aims to sell twice as many as in 2020.
The cash cow will initially remain the burners, and Källenius does not want to move away from it – even if other manufacturers are currently causing a sensation with big announcements of abandonment and critics are also demanding more commitment from Daimler. With the complete farewell to the combustion engine, Källenius does not want to commit to a date for the exit. “It makes no sense to cut off the combustion engine business early on, with which one makes good money,” he emphasized. But: Should the electronics business pick up speed faster than expected, they will be ready.
Current on this topic:
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It is almost inevitable that the positive development arouses desire. The group had agreed on a series of cuts with employees in the summer to cushion the consequences of the pandemic – including reducing working hours. You have to get away from that quickly, the general works council chief Michael Brecht has already called for the days. IG Metall district manager Roman Zitzelsberger hit the same line in the SWR. But Källenius also waves this away. The fundamental problem of the cost structure has not changed, he said. You have to work for years. “It’s not something you can solve overnight.” (Reuters / apa / red)