(Reporting by Victoria Waldersee; Editing by Rachel Moore, Faron Hong and Alexander Smith)
Daimler Truck expects to feel the inflationary heat in 2024
BERLIN (Reuters) – Daimler Trucks said on Tuesday it expects a slight decline in the heavy-duty truck market in North America and Europe next year, as inflationary pressures continue to take their toll.
Shares of Daimler Truck (DTGGe.DE), which was spun off from Mercedes-Benz (MBGn.DE), fell 3.8% despite the German truck and bus maker reporting higher third-quarter profits.
Daimler Truck’s acting chief financial officer, Klaus Bessler, said after the results that the combination of incidental costs and high inflation meant conditions were “very difficult” and as a result prices would remain high.
Although incoming orders were down this year, Daimler’s truck order book for the first half of 2024 was strong and the “significant supplier constraints” that hampered sales were a one-off, CEO Martin Daum said by phone.
Daum said the problem is primarily limited to one supplier in North America, which he did not name.
Daimler Truck reported an adjusted return on sales for its industrial business of 9.8% in the third quarter compared with 9.4% a year ago, even as supplier bottlenecks affected its unit sales.
The company reiterated its 2023 outlook and said it expects record profits, with adjusted earnings up 34% year to date.
It raised earnings and revenue guidance in July as supply chain constraints eased, demand grew in its core markets and the aftermarket business grew.
But inbound orders fell by 27% between July and September, Daimler Trucks said, bringing the total decline in inbound orders this year so far to 17%.
Despite higher profits in Europe and Asia, lower unit sales in both regions indicate higher prices and cost-cutting to offset declines in deliveries.
Adjusted earnings rose 13% in Europe despite a 5% decline in unit sales, and 3% in Asia despite an 8% decline in sales.
In North America, Daimler Truck’s largest market, adjusted profits fell 4% due to lower sales, but the segment was still within its annual return on sales target of 11%-13%.
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