German automaker Daimler (DMLR.Y 2.81%) said it expects to report a steep drop in first-quarter earnings as worldwide sales of Mercedes-Benz luxury vehicles and profit from new-mobility ventures both plummeted amid the coronavirus pandemic.
In a preliminary release of its first-quarter results, Daimler said its earnings before interest and tax (EBIT) fell 78% from a year ago, to 617 million euros ($668 million), after Mercedes-Benz sales slumped 15% in the first quarter.
Daimler's preliminary earnings: Everything was down
Daimler won't release its full first-quarter results until April 29. These numbers are preliminary, meaning they could change a bit as final totals are calculated, and incomplete, as Daimler hasn't yet finished calculating its tax liabilities.
But we can get a rough sense of how the company performed from what it released on April 23. (Spoiler: It wasn't good.)
- At the overall corporate level, Daimler generated EBIT of 617 million euros, down 78% from a year ago. Adjusted EBIT, excluding one-time charges, was 719 million euros, down 69% from a year ago.
- Daimler's overall EBIT margin was positive, it said, but it didn't release revenue totals.
Within each of Daimler's business units:
- Mercedes-Benz Cars and Vans' EBIT of 510 million euros was down 55.4% from the first quarter of 2019. Its EBIT margin was positive.
- Daimler Trucks and Buses' EBIT of 247 million euros was down 55.3% from a year ago. Its EBIT margin was positive.
- Daimler Mobility's EBIT fell 95.2% from a year ago to just 58 million euros. The company said the unit's EBIT margin was positive, if "credit risk provisions" weren't counted.
Daimler said it had net liquidity (cash and available credit lines, minus debt) available to its auto business of 9.3 billion euros, down from about 11 billion euros at the end of 2019.
Looking ahead: It's grim, but Daimler has the cash to survive
Daimler withdrew its original guidance for the full year on March 17, when it announced it would close its European factories. In its revised guidance on April 23, it said auto investors should now expect:
- Lower unit sales (versus 2019) at each of its vehicle business units
- Lower new-business volume for Daimler Mobility than in 2019
- Group revenue below 2019 levels
- Group EBIT below 2019 levels
- A year-over-year decline in industrial free cash flow
However, Daimler said, it has implemented "a comprehensive set of cash protection measures," and having added a new 12-billion-euro line of credit earlier this month, it is confident that it's well-positioned to mange the business through and after the COVID-19 pandemic.