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Loaded by factory closings and customers’ reluctance to buy a car as a result of the Corona crisis, Daimler suffered a drop in earnings in the first quarter.
EBIT operating profit fell 80 percent to 617 million euros, as announced by the DAX Group. Adjusted EBIT decreased to EUR 719 million from EUR 2.31 billion. In view of the difficult environment, the Stuttgart group made a bleak forecast for the current year.
In 2020, sales as well as sales and EBIT should be below the previous year’s level, Daimler continued. Furthermore, Daimler was cautiously optimistic: “Given the fact that we have taken comprehensive measures to protect our cash reserves and increased our financial flexibility, we are confident that we are well positioned for the period during and after the crisis.”
Daimler really wanted to present the quarterly figures next Wednesday, with a wide range of market expectations and two effects apparently not taken into account by analysts.
Falling earnings at Daimler no longer surprise investors
According to current trade figures, Daimler’s shares rose 2.32 percent to 28.50 euros on Thursday afternoon. As expected, the coronavirus crisis with closed car dealerships and factory shutdowns left clear traces on the balance sheet. And the figures for the second quarter could be even worse, recalled NordLB analyst Frank Schwope.
However, by halving the share price in the pandemic crisis in four weeks in mid-March, investors have already positioned themselves accordingly. Even after the recent recovery, the crisis remains a good third fall.
“One consequence of the crisis will be a wave of consolidation in the auto industry,” said Schwope. In view of the crisis, but also in the face of “disruptive times,” Daimler may have had time to think about a merger, especially since company valuations are currently relatively low. He mentions as options a “German-German model” with BMW, a “German-French-Japanese model” with Renault / Nissan or a “German-Swedish-Chinese model” with the main shareholders of Daimler, Geely and Volvo.
FRANKFURT (Dow Jones / dpa-AFX)
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