Daimler beats estimations in its preliminary second-quarter earnings

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Mercedes-Benz parent Daimler AG has managed to exceed estimations in its preliminary second-quarter earnings. The company reported having generated revenues worth USD 6.14 billion before interest and taxes during the second quarter, surpassing Bloomberg’s estimations of USD 4.63 billion.

This was possible due to the robust pricing of its Mercedes-Benz luxury cars and strong sales, which in turn helped Daimler in overcoming lower production rates amidst the global chip shortage crisis.

The lack of semiconductors had compelled the German automotive giant to focus on larger vehicles which are known to be profitable as compared to the smaller ones that were more vulnerable to production disruptions.

Although analysts estimate 11.5% annual returns on sales, Daimler expects to record 12.8% through its vans and cars division. It is worth noting here that the car operation has failed to reach double-digit margins annually following Daimler’s sale of Chrysler in 2007.

Regardless, the Mercedes-Benz unit is likely to be more profitable as compared to the previous years, owing to recovering demand for vehicles during the global pandemic.

German automakers have managed to roar back to record levels a year after the auto industry’s worst crisis in decades. This can be attributed to growing vehicle demand in their largest market, China.

These recovering sales will play a critical role in an automaker’s efforts to finance electrification and software development, as the industry slowly shifts to battery-powered and technologically advanced vehicles.

While other automakers have shifted their focus to take on Tesla, Mercedes has accelerated its electric-car rollout by introducing the new EQS sedan, a battery-powered variant of its flagship, the S-Class. The company intends to manufacture eight fully electric vehicles on at least three continents by next year.

Meanwhile, Daimler is gearing up to spin off its expanding truck division soon. The move could help in addressing diverging technology trends in commercial and passenger car segments.

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https://auto.hindustantimes.com/auto/news/daimlers-preliminary-second-quarter-earnings-exceed-projections-41626322156262.html