Daimler AG reported strong revenue growth and substantial increase in profitability during the first quarter of 2021, prompting the company to raise the estimates on profit margins for the full year as the company unveiled its Q1 financial results.
Production jumped 13% to 728,600 vehicles and revenue increased 11% 41 billion euros, or $49.5 billion, while profits soared to 4.4 billion euros, or $5.3 billion, from 168 million euros ($202.7 million) in the first quarter of 2020.
“Deliveries, revenues and profits increased significantly, particularly thanks to tailwinds in China, a strong product mix and favorable pricing, supported by industrial performance enhancements and cost control,” said Harald Wilhelm, Daimler AG’s chief financial officer in a statement that accompanied the quarterly financial report.
“After this promising start, we are very confident that we can keep up the pace to improve our margins on a sustainable basis and at the same time expand our electric vehicle line-up.”
Sales and investments
Sales by the Mercedes-Benz Cars & Vans division increased by 15% to 627,300 vehicles in the first quarter, while unit sales by Daimler Trucks increased by 6% to 97,600 vehicles in the first quarter. Daimler Buses sold 3,700 vehicles, a decrease of 27%, reflecting the global drop in demand for mass transit of all sorts.
Daimler also said the robust results also enabled the company to maintain its ambitious investment plans and spending on research and development, which has stepped up as the company continues to emphasize its switch to electric vehicles.
Officials expect a gradual normalization of economic conditions in the important markets. The company assumes the world economy will be able to recover from the pandemic-related weakness of the year 2020, aided by the increasing availability of effective vaccines, among other things.
Revising full-year forecast
Based on the expected market development and the current assessments of the divisions, Daimler continues to anticipate Group unit sales, revenues and EBIT in 2021 to be significantly above the prior year’s level despite the ongoing shortage of semiconductors.
“The current worldwide supply shortage in certain semiconductor components affected deliveries in the first quarter. Daimler anticipates that this shortage could further impact sales in the second quarter. Although visibility is limited at present, Daimler assumes some recovery in the third and fourth quarter,” Daimler said as it raised its outlook for 2021.
Based on the performance in the first quarter, the divisions expect the following adjusted returns in the year 2021, including a 10% to 12% return by Mercedes-Benz Cars & Vans, and a 6% to 7% return on sales by Daimler Trucks & Bus. The outlook for Daimler Mobility, which includes the earnings from Daimler Financial Services anticipates a return on equity between 14% and 15%.
The spinoff of Daimler Truck remains on track, the company said.
“Daimler intends to generate value for its shareholders and to raise its profitability by creating two pure-play companies, one focused on cars and vans with the other on trucks and buses. It is intended that a significant majority stake in Daimler Truck will be distributed to Daimler shareholders. The transaction and the listing of Daimler Truck on the Frankfurt Stock Exchange are well on track and expected to be completed before year-end 2021,” the company added.