Germany’s three huge automakers collected large quantities of money late final 12 months whereas the market was preoccupied with the way forward for electric-vehicle producers.
Daimler, BMW and Volkswagen Group generated 13.3 billion euros ($16.1 billion) of free money move within the fourth quarter, in accordance with Bernstein analyst Arndt Ellinghorst. He predicts incumbent automakers will play a a lot greater position in a future dominated by EVs than instructed by the unprecedented valuations assigned to Tesla and the upstarts attempting to observe in Elon Musk’s footsteps.
“The old-world auto analyst and investor would not consider within the sustainability of earnings and money flows, while the new-auto tech investor would not consider in EV/software program capabilities of conventional” automakers, Ellinghorst wrote in a report. “We consider each events can be confirmed improper.”
Daimler shares rose as a lot as 2 p.c in Frankfurt on Friday. BMW and VW traded decrease.
Daimler reported 6.6 billion euros of preliminary earnings earlier than curiosity and taxes for final 12 months and eight.3 billion euros of commercial free money move, each higher than consensus. The corporate will launch detailed outcomes and full-year steering on Feb. 18.
The upbeat figures added to proof the auto trade is sustaining a restoration from coronavirus disruptions. Daimler, BMW and VW every benefited from strong gross sales in China within the second half of 2020 and ended a tumultuous 12 months on a constructive be aware.
Whereas a semiconductor scarcity would possibly impression first-quarter outcomes, Daimler expects constructive momentum to proceed this 12 months, the corporate stated. It cautioned its outlook is predicated on the belief there can be no additional lockdowns triggered by the Covid-19 pandemic.
CEO Ola Kallenius has been working to revive investor confidence in his restructuring efforts to revive squeezed margins on the producer. Talks with labor unions over cutbacks at Daimler’s legacy operations are ongoing. On the identical time, the corporate managed to maintain strong gross sales regardless of the pandemic, with its fundamental Mercedes-Benz model sustaining management of the worldwide luxury-car phase for a fifth consecutive 12 months.
Kallenius, 51, needs Mercedes to deal with bigger luxurious autos that generate increased returns than smaller, extra reasonably priced vehicles. The marque rolled out a recent iteration of its flagship S-Class sedan that ought to assist bolster income this 12 months and in just a few months will launch the all-electric sibling EQS, the primary Mercedes constructed on a devoted expertise for EVs. Daimler managed to satisfy stricter emissions requirements in Europe final 12 months due to a late surge in plug-in hybrid gross sales.
Daimler raised its revenue steering for the 12 months in October after gross sales bounced again from the dramatic trade stoop triggered by the pandemic. It anticipated earnings earlier than curiosity and taxes to match the prior-year stage after beforehand forecasting a drop.
Score agency Customary & Poor’s raised its outlook for Daimler to steady from unfavorable on Jan. 21, saying that it expects the corporate to more and more profit from “stabilizing demand, cost-efficiency measures, and favorable shifts in its product combine.”