Profit Soars as the Business Prepares IPO for Daimler Truck
The German car company said it made a net profit of €4 billion ($4.83 billion) in the last year after its business witnessed high demand for premium and luxury vehicles. Still, the depressed Due to the pandemic, Q2 of 2020 resulted in lower full-year sales of €154.3 billion ($186.2 billion), a decrease of about 11% compared to the €172.7 billion ($208.5 billion) the business generated in 2019.
"The year 2020 was a stress test for just about every company in almost every industry. The Daimler team mastered this test very well. Our products continue to be in great demand across all major markets and divisions. With rapid growth in our xEV sales and the introduction of new products and technologies, we have also taken important steps in terms of electrification and digitalization,” Ola Källenius, chairman of the company, said.
The pandemic has also forced the car business to slash costs and implement cash preservation measures, resulting in the earnings before interest and taxes (EBIT) soaring 53% to €6.6 billion ($7.97 billion) year-over-year (YOY).
“Our financial results are significantly above market expectations reflecting substantial progress on cost-efficiencies. In addition, we have achieved a significant margin improvement based on strong product mix and pricing - especially in the second half of the year. We proved our ability to generate substantial cash flow and to drive the ongoing transformation on our own - even under the adverse circumstances of a pandemic," Källenius added.
In separate news, the German car company reiterated plans to spin-off its business division Daimler Truck and then have it go through the initial public offering (IPO). The company announced IPO plans for Daimler Truck two weeks ago, sending shares of Mercedes-Benz parent company higher.
“The intended separation of our industrial businesses is designed to unlock the full potential for Mercedes-Benz as the world's pre-eminent luxury car business, committed to leading in electric drive and car software, and Daimler Truck as the world's largest truck and bus producer and technology leader," added Källenius.
Daimler also announced it proposed a dividend payout of €1.35 per share ($1.63) that will cost the company €1.4 billion ($1.69 billion) overall.
Mercedes-Benz parent company Daimler AG reported strong earnings results for 2020 and IPO plans for its Daimler Truck business division.
About the Author
Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.