Daimler Truck is awash in orders it cannot fill for new trucks because of a shortage of semiconductors and other hard-to-get parts and components.
In its last quarter as part of the Daimler AG (OTC: DDAIF) group that includes Mercedes-Benz cars and vans, the Truck and Bus Group reported considerably lower production and sales due to the ongoing semi shortage, according to Jochen Goetz, CFO of Daimler Truck & Bus.
Like its major global competitors that reported Q3 results earlier, Daimler has a lot of unfinished trucks waiting for parts.
“We have done everything to finish the vehicles as far as possible so that we can deliver our trucks and buses to customers over the next weeks and months,” Goetz said on a conference call Friday with analysts. “The demand is still very strong, significantly stronger than what the supply side allows for production capacities at the moment.”
“September was the second-highest order intake month in the history of Daimler Truck Group and our order book is at a level we haven’t seen ever before.”
Jochen Goetz, CFO, Daimler Truck & Bus
North America and Europe were hit hardest. Supply chain visibility is low and may remain that way through the fourth quarter, Goetz said. Daimler has opened its 2022 order books to swarming demand.
“September was the second-highest order intake month in the history of Daimler Truck Group and our order book is at a level we haven’t seen ever before,” Goetz said.
Year-over-year sales increased by 7% to 106,000 units in Q3 with Asia and Latin America sales partially offsetting the declines in North America and Europe. Revenue declined 4% to 8.9 billion euros ($10.3 billion). Revenue was helped somewhat by the ability to charge higher prices.
Adjusted earnings before interest and taxes declined by 114 million euros from 603 million euros ($693 million) to 489 euros ($565.7 million).
Preparing to stand alone
Daimler Truck, which will become a stand-alone entity in Q4 and report full-year financial results for trucks and buses, has long been seen as providing most of Daimler AG’s profits. As part of the split-off, Daimler Truck CEO Martin Daum told Bloomberg that transparency of regional operations will increase.
According to Bloomberg, Daimler Trucks will measure itself against the best peers in each region.
“Our goal is to be a benchmark in every region we do business in,” Daum told Bloomberg. “We think the direct comparisons will also awaken ambition internally, by seeing what’s possible.”
Daimler is targeting double-digit returns by 2025 in favorable market conditions and an ongoing profit margin of between 6% and 7% even in difficult times.
“This is our goal, but our efforts to get better must not stop there,” Daum said. “They must turn into a permanent task.”
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