Daimler AG said in a preliminary financial report that it expects to finish 2020 with earnings before interest and taxes of $6.6 billion euros, or about $8 billion, beating analysts’ expectations.
But it also cautioned that results for the first quarter of 2021 could be hurt by the shortage of computer chips that has hampered automakers around the world.
Daimler executives said the company finished 2020 in a challenging environment with a very strong fourth quarter, in particular with regard to free cash flow as each of its divisions contributed to this success.
In addition, Mercedes-Benz Cars and Vans exceeded several important financial metrics from the previous year, officials noted.
The company’s successful development and implementation of cost-cutting and cost-control measures, especially in the fourth quarter, Daimler expects “positive business development in 2021,” officials said in the preliminary report.
However, there is a dark spot on the near-term horizon that could negatively impact the German automaker. The current semiconductor shortages and COVID-19 disruptions will probably impact the first quarter 2021, it said.
“Our strategic initiatives and our intense operational efforts are combining to deliver a significant improvement in financial performance across the company,” said Ola Källenius, chairman of the Board of Management of Daimler AG and Mercedes-Benz AG.
Källenius said last year’s success, which comes in spite of the impact of the COVID-19 pandemic, was due to the fact that Daimler managed costs and cash well as demand for its products remained strong.
“At Mercedes-Benz Cars & Vans, we were able to combine a rapid acceleration in xEV sales with a strong financial result in the fourth quarter,” Källenius said.
“At Daimler Trucks, the recovery of the U.S.-market has accelerated, and we are beginning to see a positive impact from new efficiency measures in our European operations. We intend to continue to make further progress on cost-efficiencies in 2021 and will accelerate the implementation of our strategic initiatives.”
Daimler said it industrial free cash flow for 2020 was 8.3 billion euros ($10.1 billion) and the company’s industrial liquidity stood at 17.9 billion euros, or $21.8 billion, at the end of the fourth quarter, compared with 13.1 billion euros, or $15.9 billion, at the end of the third quarter of 2020.
The EBIT for Mercedes-Benz Cars & Vans, the company’s principal unit, was 5.2 billion euros, or $6.3 billion, exceeding analysts estimates.
The preliminary results include the following adjustments, included legal proceedings, which totaled 164 billion euros and restructuring costs of 1.9 billion euros.