Daimler AG Disappoints, Will Truck Business Pull Down The Growth For Fiscal 2019 Too?
Daimler AG (OTCMKTS: DDAIF) posted 4th quarter and full year results recently. The company has been facing cost headwinds across its divisions resulting in a lower EBIT than the previous fiscal year. The company posted a revenue of €167.4 billion ($190.5 billion), up by 2% year on year (YOY). The sales volume was also up by 2% YOY with the company selling 3,352 thousand vehicles in the Fiscal year 2018. The EBIT and Net Profit were down due to cost headwinds in nearly all the segments.
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We have a price estimate of $66 for the company. View our interactive dashboard – Our Outlook For Daimler in FY 2019– and modify the key assumptions to arrive at your own price estimate for the company.
The company had a new sales record in the Mercedes Benz car sales volume reaching 2,383 thousand car sales with the increase led by E-class and SUVs. The EBIT of the segment was down which was attributed to weaker pricing, foreign exchange rates, Expenditure for new technologies and future products, Higher expenses for raw material and Governmental proceedings, and measures relating to diesel vehicles. The company also had a record sales volume in Mercedes Benz Vans reaching 421.4 thousand vans sold but suffered heavily on EBIT. The significant decline in EBIT is attributed to the negative effect of Sprinter model change, Higher expenses for new technologies and future products, Remeasurement of assets, and government diesel proceedings delay.
Daimler Trucks was the only silver lining for the company as it recorded a growth in EBIT and also reported its highest ever sales volume at 517 thousand units. The EBIT also went up due to Higher unit sales especially in the NAFTA region, efficiency enhancements, and fixed cost optimization. Meanwhile, Daimler Buses had a volume growth of 8% but fell slightly in EBIT due to Product mix and Inflation-related cost increases. Daimler Financial Services (to be renamed to Daimler Mobility AG from Fiscal 2019) also recorded an increase in contract volume and new business, but a significant decrease in EBIT. The decrease was attributed to Settlement of the Toll Collect arbitration proceedings, Higher interest-rate level, and risk costs in some markets.
For the next Fiscal year significant increase in volumes are expected of Mercedes Benz Vans, led by the United States and in Daimler Buses led by India and EU30 regions. Mercedes Benz Cars and Daimler Trucks are expected to be in the similar range as previous years. We expect the EBIT to not change much and only a slight improvement is expected from the Fiscal 2018 level.
The company continues to focus on growth and development of future mobility with €16.6 billion spent in Fiscal year 2018 toward capital investment and research in future mobility and €16.4 planned for the Fiscal year 2019.
Overall, the company has had a disappointing Fiscal year 2018 and is expected to remain steady in the Fiscal year 2019 with more volume but not much improvement in EBIT margins.
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