Daimler posts net loss in Q2 2020 but eyes coronavirus recovery

German carmaker Daimler on Thursday, July 23, posted a 2nd quarter net loss of 1.9 billion euros ($2.2 billion), but said it expected a “positive” end to the year as sales start to recover from the coronavirus hit.

The car industry has been battered by lockdowns across the world that shuttered factories, closed showrooms, and kept customers at home for weeks on end earlier this year.

Between April and June, Daimler posted a net loss of 1.9 billion euros, compared with a net loss of 1.2 billion a year earlier, it said in a statement.

It marks a rare plunge into the red for Daimler after last year’s quarterly loss, the first in a decade, was down to one-off costs to deal with the fallout from the “dieselgate” emissions cheating scandal.

Group revenues over the 2nd quarter of 2020 slumped 29% to 30.2 billion euros, while unit sales fell 34% to just over 540,000 cars and commercial vehicles sold worldwide.

But Daimler chief executive officer Ola Kallenius said he was seeing “the first signs of a sales recovery” as countries ease out of confinement, led by strong Chinese demand for Daimler’s luxury Mercedes-Benz models.

“Due to the unprecedented COVID-19 pandemic, we had to endure a challenging quarter,” said Kallenius.

He added that he was “firmly determined” to press on a with a cost-cutting drive set to slash thousands of jobs, as the group battles through a painful restructuring to fund the pivot to electric cars.

German media has reported that the coronavirus pandemic could lead to 20,000 job cuts, but Daimler has yet to confirm the figure.

Daimler also posted a positive free cash flow of 685 million euros over the 2nd quarter, beating analyst expectations. 

Kallenius said the figure, closely watched as a gauge of a company’s overall financial health, was “testament to effective cost control and cash management.”

Looking ahead, Daimler said it expects full-year operating profit, before taxes and interest, “to be positive in 2020 but lower than in the previous year.”

It cautioned however that the forecast relied on the economic recovery continuing in the 2nd half of the year “and that there is no new major wave of COVID-19 infections in our key sales markets.” – Rappler.com