STUTTGART, Germany -Daimler Truck hosts Capital Market Day for investors and analysts, laying out ambition to lift performance and enhance profitability for each segment
Targeting double digit margins (Return on Sales Industrial Business, adjusted) by 2025 in favorable market conditionsProfitability improvement already under way: 2021
Return on Sales (Industrial Business, adjusted) expected to be 6% – 8% despite semi-conductor shortages, further profitability improvement targeted for 2022
Preparation for stock market listing on December 10th on track; DAX qualification expected in Q1 2022.
Prior to the intended stock market listing in December 2021, Daimler Truck hosts its Capital Market Day, revealing profitability ambitions for each segment and laser-focused financial discipline. In addition Daimler Truck’s management board led by CEO Martin Daum presents further strategic and technological objectives.
Daimler Truck is gaining momentum on its way to its intended stock market listing on December 10th. The world’s largest commercial vehicle manufacturer with global reach specified its financial ambitions aiming at lifting performance and enhancing profitability for each segment. Daimler Truck is strictly and constantly focusing on improving profitability. Based on its proven cash generation credentials and solid balance sheet, the Group has received solid investment grade credit ratings. Following the overwhelmingly supportive general meeting, the company is planning its listing on the Frankfurt stock exchange for December 10th. Subsequently, Daimler Truck expects to qualify for the DAX – the group of Germany’s most valuable listed companies – in the first quarter of 2022.
“We have a clear ambition for Daimler Truck: We’re committed to achieving higher profitability and to going full speed to win the race to zero emissions. We can’t wait to make our company even stronger. Ahead of the planned public listing we are ready for independence and for unlocking our full value potential”, stated Martin Daum, CEO of Daimler Truck AG.
Daimler Truck details financial ambitions for each segment:
At the Capital Markets Day, Daimler Truck CFO Jochen Goetz reiterated the Group’s commitment to improve profitability and create value for shareholders. Daimler Truck’s ambition is to achieve more than 10% Return on Sales (Industrial Business, adjusted) by 2025, assuming strong market conditions. Based on its “every segment must deliver” approach, Daimler Truck’s top management today announced margin range ambitions for its individual segments reflecting different macroeconomic conditions. In a 2025 scenario with strong market conditions, Daimler Trucks North America (DTNA) is aiming for a 12% adjusted Return on Sales, Mercedes-Benz for 10%, Truck Asia (TA) aims for an adjusted 9% Return on Sales and Daimler Buses for 7.5%. With Daimler Truck’s new Financial Services business the company is aiming for 14% adjusted Return on Equity. The company is working to improve resilience by significantly lowering the break-even point, thus to be able to achieve at least an adjusted 6% to 7% Return on Sales in the Industrial Business in 2025, even in adverse market conditions.
Daimler Truck’s focus on resetting profitability is already gaining momentum. Consequently, 2021 adjusted Return on Sales is expected to be between 6% and 8%, despite semi-conductor shortages and rising raw material prices. In the course of the Capital Markets Day, the company also announced that given the progress already made, Daimler Truck aims to achieve its target to reduce fixed cost by 15% compared to 2019 as early as 2023 – two years earlier than announced in May at the Strategy Day. For 2022 the Group assumes an adjusted Return on Sales of the Industrial Business between 7% and 9%.
“By maintaining discipline on capital expenditures, optimizing our capital allocation and improving our profitability we aim to continue generating strong free cash flows,” said Jochen Goetz. “This will be a strong basis for investments in new technologies and strengthening our balance sheet even further. At the same time we are targeting for a dividend payout ratio policy of 40%.”
New partnerships for Technology and Sustainability:
Andreas Gorbach, CTO and Head of the Truck Technology Group, further elaborated on Daimler Truck’s technology strategy which is based on three pillars. Firstly, investments for the conventional ICE combustion engine in the powertrain will be further reduced. Besides the successful partnering with Cummins for medium duty engines, Daimler Truck Group also seeks partnerships for heavy duty engines to share the required investments to implement the upcoming emission regulations. Secondly, the majority of R&D spending is to be redirected to zero-emission vehicle (ZEV) technologies by 2025. Here, the company is focusing on both battery electric vehicles (BEV) and hydrogen-based fuel cell electric vehicles (FCEV). Regarding Daimler Truck’s goal to establish a network of 150 hydrogen refueling stations and 5,000 heavy-duty hydrogen trucks by 2030, in addition to the recently announced collaboration with Shell, the company announced two additional partnerships: Together with BP, Daimler Truck strives to accelerate the H2 infrastructure development in the UK. In another partnership with Total Energies, the company is likewise aiming to enhance the H2 infrastructure in the major transport markets of France and Benelux. Thirdly, Daimler Truck will push software development with the next evolution of the mechatronic architecture and a truck-dedicated Operating System.
Benchmark profitability: Segments are accelerating performance
Karin Rådström, responsible for the regions Europe and Latin America and the brand Mercedes-Benz, explained that – despite some extraordinary challenges for the industry – Mercedes-Benz is making good progress to drive the segment’s turnaround: Personnel cost reduction programs worth €280 million are already halfway through and the organization is becoming leaner by reducing the number of management positions. In addition, Mercedes-Benz is well on track with the streamlining of the existing product portfolio and the associated reduction of the number of base models. Finally, also material costs have been lowered successfully. Further, the company is focusing on targeting the more profitable heavy-duty segment as well as on further increasing customer satisfaction and expanding its service offerings.
John O‘Leary, President and CEO of Daimler Trucks North America (DTNA), emphasized, that the North American business segment continues its successful path to grow from strong to stronger. To meet its target, DTNA plans to continue to maintain its strict cost discipline and defend its on-highway business while capturing an increased share of the vocational market. DTNA will also continue to further expand its aftermarket capabilities to safeguard customer experience, increase revenue generation and strengthen its connected vehicle services offerings.
Karl Deppen, who will take over as Head of Truck Asia (TA) on December, 1, pointed out that the Asian business is already well on its way to achieving its ambitious goal of benchmark profitability. Through continued cost optimization and service expansion the segment plans to drive profitability and strengthen the position of the FUSO brand. BharatBenz is currently experiencing very strong growth in India and TA plans to further build on this success. Moreover, TA expects that China will serve as an important game-changer for the segment’s growth as it focuses on localizing to suit the market. With Daimler Truck’s experience regarding e-mobility as well as its battery and FCEV product pipeline, the segment is well prepared to cater for these opportunities in the future.
Stephan Unger, Member of the Board, responsible for Daimler Truck Financial Services (DTFS), provided a clear roadmap for leveraging the 40+ year history of Daimler’ Financial Services Business into building a best-in-class segment focused exclusively on Commercial Vehicles. A multi-wave ramp up of the portfolio, ongoing excellence in risk management, strict cost control from day one and benefit of new IT systems will drive the segment to achieving its 14% adjusted Return on Equity ambition in 2025 under strong market conditions. DTFS will drive enduring customer relationships, support sales of Daimler trucks and buses and provide critical insight, know-how and balance sheet strength to unlock the Services ambitions of the group.
About Daimler Truck:
The Daimler Truck AG is one of the world’s largest commercial vehicle manufacturers, with more than 35 primary locations around the world and more than 100,000 employees. The company brings together seven vehicle brands under one roof: Mercedes-Benz (light, medium and heavy trucks as well as city, intercity and touring coaches) and Setra (intercity, long-distance and premium coaches) are our traditional European brands; our U.S. brands Freightliner Trucks (trucks in weight classes 5 to 8 for a wide range of commercial vehicle applications), Western Star (heavy trucks for specialized and long-haul transports) and Thomas Built Buses (light to medium-duty buses); and our Asian brands Bharat Benz, based in Chennai, India (trucks in the weight classes 10 to 55 t and medium and heavy-duty buses) and FUSO with its headquarters in Japan (trucks and buses for Asia, the Middle East, Africa, Europe and Latin America). This allows Daimler Truck AG to offer its customers around the globe a broad spectrum of commercial vehicles, ranging from minibuses to heavy-duty trucks for special-purpose transport applications – in short: products and solutions for everyone who keeps the world moving. Gottlieb Daimler and Carl Benz laid the foundation for the modern transport industry 125 years ago. Over the past decades, Daimler Truck’s divisions have consistently set standards for the entire transportation industry – in terms of safety, fuel efficiency and driver and passenger comfort. It is now time for the next evolutionary step: emission-free, automated and connected driving. Daimler Truck is working to bring these important technologies to high-volume series production, across brands, segments and regions. In this way the company intends to take a major step closer to realizing its vision of CO2-neutral transport and accident-free driving whilst also contributing to the sustainability of global goods and passenger transport. In 2020, a total of 378,290 trucks and buses were delivered. In 2020 the revenue of the individual areas of business amounted to € 36 billion for Daimler Truck AG. The adjusted EBIT was € 657 million for Daimler Truck AG. For more information visit https://www.daimler-truck.com/en/.
