Daimler sees 2021 pandemic recovery boosting sales, profits By Reuters

By Nick Carey

LONDON (Reuters) – Daimler AG (DE:DAIGn) expects significant improvements in sales and operating profit in 2021 and will make up for lost production caused by a semiconductor chip shortage by the end of the year, the German carmaker said on Thursday.

Bottlenecks causing a shortage of semiconductor chips will hurt its sales mostly in the first quarter, added Daimler, the maker of Mercedes-Benz cars. Much of the auto industry has struggled to maintain production levels because of the chip shortage.

The automaker also confirmed its preliminary financial results for 2020 and said economic conditions in it key markets should continue to return to normal and that it expects no further setbacks as a result of the coronavirus pandemic.

Thanks to cost savings and a faster-than-expected recovery in the auto sector, Daimler said last month that its group earnings before interest and taxes (EBIT) for 2020 came to 6.60 billion euros ($7.95 billion).

“The year 2020 was a stress test for just about every company in almost every industry,” Chief Executive Ola Källenius said in a statement. “The Daimler team mastered this test very well.”

Earlier this month Daimler said it plans to spin off Daimler Truck, the world’s largest truck and bus maker, as it seeks to increase its investor appeal as a focused electric, luxury car business.

CHINA DEMAND SALVAGES YEAR

Daimler ended 2020 with adjusted free cash flow of 9.2 billion euros versus 2.7 billion a year earlier and its net liquidity improved to 17.9 billion euros from 11 billion.

Plant shutdowns in the first half of 2020 to slow the spread of the coronavirus led many in the industry to expect a disastrous year, but a market rebound spurred by China helped much of the industry recover far more quickly than expected.

Like its German rivals BMW and Volkswagen (DE:VOWG_p) AG, Daimler benefited from Chinese consumers snapping up high-margin luxury vehicles and thus saving the year for premium brands like Mercedes-Benz and Audi.

Mercedes-Benz sales jumped more than 22% in China in the fourth quarter and 11.7% in 2020 despite the pandemic.

But while Daimler said that it expects its premium car business to increase more than 7.5% in 2021, this year it expects its sales in China to grow at a slower pace of between 2% to 7.5%.

Daimler said it expects group revenue and operating profit for 2021 to rise more than 7.5%, with an adjusted margin from its Mercedes cars and van business of between 8% and 10%.

($1 = 0.8304 euros)