Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Daimler Truck Holding AG (DTRUY, Financial) achieved a 10% return on sales target in 2023, marking the highest return on sales for Mercedes Benz Trucks in many years.
- The company has launched a major push to strengthen competitiveness, focusing on cost savings and efficiency improvements.
- Daimler Truck's North American segment continues to perform strongly, with a 40.1% market share in the Class 8 market.
- The Mercedes Benz E Actros 600, a battery electric truck, has received positive feedback and over 2000 firm customer orders.
- Daimler Buses reported a strong performance with a return on sales adjusted at 11.4%, indicating successful restructuring efforts.
Negative Points
- Daimler Truck Holding AG (DTRUY) reported a 5% decline in Q3 revenues to EUR13.1 billion and a 28% decrease in group EBIT.
- The European market remains weak, with Mercedes Benz unit sales dropping by 28%, particularly in Germany where sales are down more than 50%.
- The company's industrial business recorded a negative free cash flow of EUR41 million in Q3.
- The Asian market continues to face challenges, with a 15% decrease in unit sales due to weak demand in key markets like India and Indonesia.
- Infrastructure for electric vehicles remains a significant challenge, with only 600 public charging stations for battery-powered trucks in Europe, far below the needed 35,000 by 2030.
Q & A Highlights
Q: How is Daimler Truck addressing the lack of recovery in the European truck market, and what are the plans regarding potential tariffs from the new US administration?
A: Karin Radstrom, Member of the Management Board, stated that Daimler Truck is adjusting its operations in Germany with flexibility measures and ramping up new products like the Actros L and E Actros. Eva Scherer, Member of the Management Board, mentioned that Daimler Truck has flexibility in its US and Mexico production footprint, allowing them to adapt to potential tariffs without significant dependency on any single location.
Q: What measures are being taken to meet the free cash flow guidance by year-end, and how will production levels be affected?
A: Eva Scherer explained that a significant working capital release, primarily from inventory reduction, is planned for Q4. A production stop in Europe before Christmas will aid in reducing inventories, and the company has adjusted production capacities to sell off new vehicle stock, aligning with their free cash flow targets.
Q: Can you explain the margin contraction in North America and the impact of product mix on margins?
A: Eva Scherer noted that the mix shift from heavy-duty on-highway trucks to vocational and medium-duty trucks, which have a different margin profile, is the main factor. The vocational trucks are still in the ramp-up phase, affecting costs, and medium-duty trucks have lower margins due to fewer captive engines compared to heavy-duty trucks.
Q: What are the challenges and future plans for Daimler Truck's operations in China?
A: Karin Radstrom highlighted that the Chinese market has retracted more than expected, and the growth of LNG and CNG trucks poses challenges for their diesel trucks. Daimler Truck is assessing its setup in China and will update once decisions are made regarding their operations and partnerships.
Q: How is Daimler Truck addressing the infrastructure challenges for electric vehicles, and what role does the company play in this transition?
A: Karin Radstrom emphasized the need for more public charging infrastructure to support electric trucks. Daimler Truck is investing in infrastructure through initiatives like the Myland joint venture in Europe and similar efforts in the US to kickstart the market, despite the current lack of sufficient public charging stations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
