Cost controls, luxury sales help Daimler weather pandemic

FRANKFURT, GERMANY (AP) — Car and truck maker Daimler increased its profits by 48 per cent to EUR4 billion in 2020 thanks to extensive cost-cutting and a sales recovery in the second half for its highly profitable Mercedes-Benz luxury cars and sport-utility vehicles.

The bottom line improved on EUR2.7 billion from 2019, even as top-line revenue fell 11 per cent to EUR154.3 billion.

With net cash at year end of EUR17.9 billion, CEO Ola Kallenius said the company had the resources to develop the electric cars and digitalised products and services that are transforming the industry. “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.”

The Stuttgart-based company said its outlook for this year was for profits and sales to be “significantly above” last year, assuming continuing rollout of vaccines and absent any unexpected pandemic-related setback. Management proposed that the board of directors approve raising the dividend payout to shareholders to EUR1.35 per share from 90 cents a share.

Daimler AG faced production shutdowns early in the year along with other automakers but benefitted from recovering demand for luxury cars after the first wave of the virus outbreak. The Mercedes-Benz luxury car division saw sales down only one per cent in the last three months of the year. Luxury car sales were boosted by the rebound in China, the division’s largest market, where sales rose 12 per cent compared with 2019.

Net profit in the fourth quarter rebounded to EUR3.58 billion from a loss of EUR11 million in the same quarter of 2019.

Operating earnings fell at the company’s truck and bus division, which includes the Freightliner and Western Star brands, to EUR525 million from 2.67 billion in the year-ago quarter. The company said it plans to spin off the division to existing shareholders with a separate listing by the end of the year, and that Daimler will rename itself as Mercedes-Benz at some point in the future.

Daimler shares traded 1.1 per cent higher at EUR66.32 in morning trading in Europe.

An employee attaches a Mercedes emblem on a Mercedes-Benz S-class car at the Mercedes plant in Sindelfingen, Germany. PHOTO: AP