Daimler Truck Posts Lower Earnings in Q3
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Profits at Daimler Truck Holding AG in the third quarter fell on the back of lower sales due to supply constraints and the absence of a tax benefit that boosted the year-ago period’s results.
The parent company of Daimler Truck North America said Nov. 7 that it posted net income of $1.022 billion in the most recent quarter compared with $1.058 billion in the same period of 2022, when a one-time extraordinary low tax rate was factored in.
Daimler Truck posted diluted earnings per share of $1.21, compared with $1.25 a year earlier. All Daimler Truck earnings are published in euros and were reported in U.S. dollars based on Nov. 7 exchange rates.
The company’s revenue totaled $14.85 billion in Q3, up 3% compared with $14.42 billion in the year-ago period.
DTNA posted $6.11 billion in revenue in the most recent three months, a 7% decrease compared with $6.58 billion in 2022.
Continuing our course towards sustainable growth and higher, more resilient profitability.
We just released our successful Q3 results: https://t.co/jsgtlhgiDT#DaimlerTruck #DTR0CK pic.twitter.com/lNCrdTH5Je — Daimler Truck AG (@DaimlerTruck) November 7, 2023
Worldwide sales for Leinfelden-Echterdingen, Germany-headquartered Daimler Truck totaled 128,861 vehicles in the most recent quarter, a 5% decrease compared with 134,972 a year earlier.
Through the first nine months of 2023, Daimler Truck sold 385,921 vehicles, up 6% compared with 365,219 in the same period a year earlier.
“Markets in North America and Europe are still strong,” CEO Martin Daum said during the company’s quarterly earnings call Nov. 7. However, bottlenecks meant the company could not deliver a significant number of trucks in the quarter, especially in North America, he said, adding “struggles with the bumpy supply chain continue.”
Markets in North America and Europe are still strong.
Daimler Truck CEO Martin Daum
Image
DTNA sold 47,249 vehicles in the most recent quarter, a decrease of 4% compared with 49,171 vehicles in 2022.
DTNA sales in the U.S. fell 6% year-over-year to 39,530, while sales in Mexico rose 10% to 3,237 units, and Canadian sales increased by 4% to 3,972.
In the first nine months, DTNA sold 146,758 vehicles, up 7% compared with 136,772 in the year-ago period.
Daimler Truck said that — alongside the supply bottlenecks and their impact on sales — Q3 at DTNA was characterized by improved manufacturing and material efficiency, a slight decrease in its aftersales business and inflation-related cost increases, especially higher personnel costs.
The unit’s return on sales in Q3 was 12.4%, compared with 12% a year earlier.
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Daimler Truck continues to expect North American heavy-duty truck sales in 2023 to total 290,000-330,000.
Through the first eight months of the year, Freightliner and Western Star held a 40.1% share of the North American Class 8 market, Daimler Truck said in a presentation to analysts.
“And we could have done so much better if not for significant supplier constraints,” Daum said on the call, noting, in particular, offerings from Western Star in the vocational segment.
Later, he said there was a possibility that Western Star capacity at manufacturing facilities could be increased, as DTNA was selling all the Western Star trucks it could produce.
DTNA manufactured 46,812 trucks in Q3, down 1% compared with 47,286 in the year-ago period, according to a quarterly factbook.
Supply bottlenecks “cost us a significant amount of trucks in the third quarter. … It’s a nuisance. It costs a lot in a factory if you sometimes have to close the factory for full days and still pay the workers,” Daum told analysts.
Orders have been pushed back; thus, the company’s order book is fuller for the first quarter and the second quarter of 2024 as a result, its top executive said.
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“We are pretty positive that we are back to normal somewhere these days and can then play catch-up. It is not a systematic issue. It is one unfortunate incident,” Daum said.
“The good news is it is limited to very, very few suppliers,” one in particular, and hopefully the situation has already been resolved since the end of Q3, he said. The company did not identify the supplier.
DTNA’s incoming orders in the quarter totaled 35,269, a 26% year-on-year decrease from 47,964, which the company said reflected demand normalizing.
Looking forward, Daum said October, November and December’s 2024 North American fleet negotiations “are going well volume-wise and pricing-wise,” adding that inflationary pressures were impacting prices.
It is too early to predict what 2024 will look like, though sales are expected to decrease as a red-hot market normalizes, Daum said.
However, he said, the outlook is bright for Daimler Trucks because customer demand seen over the past couple of years has been “going on all cylinders, everywhere.”
That said, Daum does not believe all truck manufacturers will fare so well.
“It is a market where a rising tide potentially does not lift all ships, and I am pretty confident we are one of the ships that stay very well afloat,” he said, answering a question from an analyst about Swedish and U.S. competitors.
