German carmaker Daimler posted a net loss of 1.9 billion euros (2.2 billion U.S. dollars) in the second quarter (Q2) of 2020, and said on Thursday that the overall result was "strongly influenced by the coronavirus pandemic and the resulting decline in demand."
"Due to the unprecedented COVID-19 pandemic, we had to endure a challenging quarter," explained Ola Kaellenius, chairman of the Board of Management of Daimler, adding that the company was "firmly determined" to continue its cost-cutting drive.
While revenues fell by 12.5 billion euros year-on-year to 30.2 billion euros in Q2, industrial net liquidity increased slightly to 9.5 billion euros. According to Kaellenius, Daimler's industrial net liquidity was a "testament to effective cost control and cash management," which the carmaker would need to "continue to enforce."
In Q2, sales of Daimler's core brand Mercedes-Benz decreased by 30 percent to 480,800 vehicles. While a "favorable model mix," driven particularly by the success of the newest products, had contributed positively to profitability, restructuring expenses for capacity adjustments in the global production network and the initiated personnel cost reduction program had a negative impact.
Sales of Daimler Trucks & Buses decreased by 55 percent year-on-year to just 61,000 vehicles in Q2. According to Daimler, the drop was due to declining volumes, while restructuring measures, which would improve long-term competitiveness, still helped reduce fixed costs "significantly."
The German carmaker projected that the coronavirus pandemic would "continue to have a strong impact on developments during the rest of the year," and that a "considerable decline in global economic output" would have to be expected at least until the end of 2020.
However, Kaellenius stressed that Daimler was now seeing "first signs of a sales recovery, especially at Mercedes-Benz passenger cars," where the company was experiencing strong demand for its top-end models and electrified vehicles.
Recently, Daimler has announced that Mercedes-Benz achieved its "best second quarter ever in terms of unit sales" in China, where car sales increased by 21.6 percent year-on-year. In contrast to other markets where sales declined strongly due to the impact of COVID-19, sales in China grew by 35 percent for commercial vans during the period, according to Daimler.
Assuming that economic recovery continues in the second half of the year and that there would be no new major wave of COVID-19 infections in its key sales markets, Daimler expects both its earnings before interest and taxes (EBIT) and the free cash flow of its industrial business to be positive in 2020, albeit lower than in the previous year.
Following the announcement, Daimler was among the biggest winners of the DAX, the index of Germany's top 30 listed companies, with its shares increasing by more than five percent at the start of trading on Thursday.