FRANCFORT – Daimler said an increase in demand at the end of the quarter had prevented the automaker from wasting as much as analysts expected.
The company reported an initial second quarter loss of 1.68 trillion euros ($1.9 trillion) before interest and taxes on a Thursday.
Daimler said this was an improvement over the consensus estimate of 2.1 billion euros ($2.4 billion), and that the loss of money and liquidity also remained longer than expected.
Daimler and his companions were decimated through the coronavirus pandemic, with measures to involve the disease, which reduced production by degrees last noticed after World War II.
Although factories and showrooms have now largely reopened, business is picking up unevenly, with car sales in Europe picking up more slowly than in North America or China.
The effects are “consistent with sometimes better observation of German brands in recent weeks,” Jefferies analyst Philippe Houchois said on a note.
The Volkswagen Group said Wednesday that orders had increased in Germany, but warned that the recovery remained fragile and that long-term progress was difficult to predict.
Analysts say German automakers are well placed to deal with the consequences of the coronavirus pandemic due to its varied global footprint.
Bouncing back
Mercedes-Benz’s deliveries to China, the brand’s largest market, reached a record in the quarter and retail sales of their cars increased in June.
To drive, the company is preparing to launch new versions of its flagship S-Class sedan, a key profit engine that continues to outperform its competitors, adding the BMW 7 Series.
The S-Class will be flanked by an all-electric brother, nicknamed EQS, the first car on a platform of electric cars committed to a diversity of more than 435 miles.
CEO Ola Kallenius said Mercedes planned to consolidate its offerings, especially in the lucrative luxury vehicles.
Don’t let go
It remains to be seen whether demand is improving fast enough to make a meaningful difference in Daimler’s outlook for the full year. The world’s top seller of luxury cars and commercial vehicles has said it expects vehicle deliveries, revenue and profit to decline from 2019, when results were dragged down by legal woes and production miscues.
Kallenius, 51, said at Daimler’s annual general assembly last week that the automaker needed to step up its cost-cutting efforts to spice up yields.
By reviewing its global production network to get rid of overcapacity, you can sell a plant in France and have already stopped plans to expand one in Hungary.
The company can also eliminate a small meetinghouse in Brazil and is discussing plant characteristics in South Africa and Mexico, Handelsblatt reported.
Wilfried Porth’s Daimler leader said this month that the automaker wants to cut more than 15,000 jobs, a more drastic relief than the company announced in November. Its extensive restructuring plan drawn up last year has become inadequate due to the virus crisis.
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