Daimler Truck achieves 2021 targets despite supply chain issues
By Julian Buckley24 March 2022
Daimler Truck has reported that it has achieved its financial targets for 2021, despite ‘significant supply chain headwinds’.
According to the related statement, the company achieved global sales of 455,400 trucks and buses, a 20% increase over 2020 (378,300 units).
This increase was due to a recovery in key markets, particularly over the first half of the year. Supply constraints affected volumes over the latter six months, with heavy-duty vehicles in North American and Europe most affected.
Adjusted EBIT for 2021 increased to €2,552 million ($2,803 million), compared to 2020 revenue of €657 million ($721 million). Adjusted RoS of the Industrial Business in 2021 was 6.1% (2020: 1.9%). Free Cash flow of the Industrial Business was €1,556 million or $1,708 million (2020: €1,781 million or $1,956 million).
The report further states that Daimler Truck delivered on targets for cost reduction and margin improvement.
Research and development
In 2021, R&D expenditure at Daimler Truck reached €1,574 million (2020: €1,530 million). The company is primarily investigating sustainable and locally emission-free transportation. Other areas of focus included autonomous transportation and the development of successor generations for existing products.
In the statement, Daimler Truck emphasized its ambition to reduce R&D and CapEx by a further 15% by 2025 (compared to the 2019 levels), despite the need for increased investment in zero-emission vehicle (ZEV) technologies.
In 2021, Daimler Truck reduced R&D and CapEx by 18%, compared to 2019. Reduction of internal combustion engine-related investments had a head start compared to the required ramp-up of ZEV investments, which should support the 15% reduction target.
Outlook for 2022
Daimler Truck is forecasting that economic conditions in the most important markets will ‘continue to normalize’ and that COVID or the war in Ukraine will not have a negative impact on general market development.
“In these dramatic weeks, our thoughts are with the people in Ukraine and we hope that this war will end soon,” said Martin Daum, chairman of the Board of Management of Daimler Truck. “Shortly after the war began, we decided to completely suspend our business in Russia until further notice. At the same time, we are supporting charitable organisations in their Ukraine aid efforts as well as numerous private initiatives by our employees, for which I would like to express my gratitude.”
Daimler Truck is assuming es that the supply chains will not be affected significantly by the war. The one-time expenses resulting from the discontinuation of the business in Russia will be considered outside the operating result in the first quarter. The currently foreseeable operational effects, such as the halted Russia business as well as the currently incurred higher raw material and energy costs, are included in the guidance for 2022.
That said, bottlenecks in the semiconductor industry and ongoing supply constraints will continue to impact sales over the first six months of the year.
Looking at North America and Europe, the OEM is forecasting vehicle sales of between 255,000 and 295,000 units, and 240,000 and 280,000 units respectively.
Revenue is forecast to reach between €45.5 billion and €47.5 billion, while EBIT is expected to see a ‘significant increase’. Return on Sales adjusted for the Industrial Business is expected to reach between 7% and 9%.