(Sept 15): Daimler AG's main Mercedes-Benz division expects sales to stabilize in the fourth quarter and still aims to generate double-digit returns this year, despite disruptions from the global semiconductor shortage.
While chip supply bottlenecks have been exacerbated by recent factory shutdowns in Malaysia, underlying demand for Mercedes luxury cars remains very strong in China, Europe and North America, Daimler Chief Financial Officer Harald Wilhelm said in an interview.
"We currently anticipate a more normal sales volume in the fourth quarter, probably on the level of the first or second quarter, but still far below what we've previously planned for," Wilhelm said. The unit is still targeting an operating profit margin of between 10% and 12% for 2021.
Chief Executive Officer Ola Kallenius cautioned this month that the shortage is bound to trigger a significant sales decline in the current quarter and warned supply issues won't entirely disappear next year. While the crunch has disrupted production, it's also led automakers to prioritize their most profitable cars, helping to bolster Mercedes's margins to levels not seen in years.
The German manufacturer is pushing to retain the current profitability level, even as some costs such as travel expenses are bound to creep back up once the pandemic eases, Wilhelm said.
"Our recent results show that we made progress in lowering our break-even point," the CFO said. "We have the firm intention to keep our focus on cost discipline and prove that we can sustain the current margin level."
Maintaining strong profitability would go a long way toward achieving the desired re-rating of Daimler shares, which also may be due for a boost from the planned separation of Daimler Truck later this year. Investors are scheduled to vote on the spinoff at an extraordinary shareholder meeting on Oct 1.
Daimler has said Mercedes will retain a 35% stake in the truck company. The carmaker has pledged to keep the truck shares for three years, though the agreement does include a possible option to divest shares after one year.
While investors and analysts have praised the truck spinoff, Daimler's stock still trades at lower earnings multiples than luxury goods and technology companies.
"The current valuation doesn't fully reflect the potential of the company yet, but it should become visible once the separate listing of the truck unit has been finalized in December," Wilhelm said.
- Honda Activa Creates A New Milestone In The Indian Market: 2.5 Crore Customers In 20 Years
- 'Divorce is imminent': Kim Kardashian and Kanye West's 'marriage is OVER' after six years and four children - amid claims she has 'had enough' and they 'are in settlement talks' with high-powered lawyers
- Luxury Car Sales 2020: Mercedes-Benz Fell All The Way To Third
- Ex-Michael Jordan Mercedes SLR McLaren Has Low Mileage, High Price
- South Korea sees chip exports jumping 10% this year as remote work drives demand
- Samsung's 2020 profit logs double-digit growth amid COVID-19
- Trump administration approves $290M bomb sale to Saudis
- Brexit is DONE! Britain FINALLY breaks free of EU rules - with Dover lying deserted on the stroke of 11pm amid warnings of queues and shortages ahead
- Samsung earnings soar as smartphone sales rebound and rival Huawei struggles
- Huawei to pack less of a punch in the new year after bruising 2020, analysts say
- Huawei to pack less of a punch in the new year after bruising 2020: Analysts
- China Marks New Year with Victory Speech and Warning for US
- New Year sales: the discounts and vouchers codes you need to know about
- Adidas announces up to 50% off End of Season sale – here’s what we’re buying
- New Year 2021 around the world — Live updates
- RBI holds rates, sees shallower GDP contraction at 7.5%
- Cement industry: domestic sale forecast to increase but export to slowdown
- Year in Review: Biggest NHL trades, free agent moves of 2020
- New Year 2021 around the world — As it happened
- No children, no Red Fort: Republic Day parade 2021 to see major changes over COVID
Mercedes sees sales stabilizing at year-end amid chip turmoil have 658 words, post on www.theedgemarkets.com at September 16, 2021. This is cached page on Business News. If you want remove this page, please contact us.