Daimler Truck AG reported higher revenue and income for the second quarter. But it expressed concerns for full-year results because of Russia’s ongoing war in Ukraine.
If Russia restricts gas imports to Germany, some of Daimler’s plants there could face production constraints. Supply constraints inhibited finished truck deliveries, leading to negative free cash flow of 756 million euros ($781 million) in Q2.
In a statement Thursday, the Stuttgart, Germany-based truck maker — the parent of Daimler Truck North America — pointed to multiple threats. In addition to the war in Ukraine. It also pointed to a driver shortage, inflation and interest rate increases. The German Central Bank raised rates in July for the first time in 11 years.
Improved results for Daimler Truck
Daimler Truck, reporting its results as a stand-alone company split off from Daimler AG for only the second time, posted improved results as supply chain pressures eased.
Daimler delivered 120,691 units across its brands in Q2, up 4% compared to 116,845 a year ago. Revenue increased 18% to 12.1 billion euros ($13.22 billion) from 10.2 billion euros ($10.53 billion) in Q2 2021. Adjusted earnings before interest and taxes of 1.010 euros beat the 878 million euros in the same period of 2021 by 15%.
Demand remains strong and order backlogs remain high, the company said.
“With EBIT of 1 billion Euros in the second quarter, our results and achievements are a strong foundation to build on,” CEO Martin Daum said in a statement. “Now, we want to keep this positive momentum for the second half of the year.”
That might prove a challenge, CFO Jochen Goetz said.
“Given the ongoing challenges with the supply chain, raw materials and energy prices, we can be satisfied with our Q2 results,” he said. “Our financial targets for 2022 remain unchanged. However, the current year will continue to be demanding, especially on the cost side.”
Daimler Truck passing along price increases
Truck manufacturers, like all businesses depending on parts and components arriving as needed, are paying premium airfreight to get what they need to make their products. That increases the cost of sales. The adjusted 8% return on sales compared to 8.1% a year ago. Daimler recovered some of its additional expense through higher prices.
Trucks North America, better known as DTNA, achieved adjusted EBIT of 523 million euros ($540 million) and a 10.2% return on sales.
Daimler Truck assumes overall macroeconomic conditions for commercial vehicles will continue to be comparatively favorable in the second half of 2022. Supply, not demand, is the limiting factor, the company said.
Daimler reiterated return-on-sales projections for Mercedes-Benz, Trucks North America and Daimler Buses. It dropped the estimate for the Trucks Asia segment to 1% to 3% from 3% to 5%.
“Trucks Asia was heavily impacted by considerable supply chain constraints and negative effects from our Chinese joint venture due to the depressed Chinese market,” Daimler said.
The Daimler Truck Financial Services segment full-year return on equity is now expected to fall in a range of 9% to 11% versus the previous range of 5% to 7%.
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