Daimler Truck Q3 Results

Investing.com reports that Daimler Truck (ETR:DTGGe) has delivered solid third-quarter results, with adjusted EBIT exceeding market expectations. Key contributors include standout performances from Mercedes-Benz (OTC:MBGAF), Trucks Asia, and Buses.

However, concerns over margins at Daimler Trucks North America (DTNA) persist, posing potential challenges for fourth-quarter results.

Financial Highlights

• Industrial Adjusted EBIT: €1.15 billion (9.3% margin), up 5.6% compared to Visible Alpha (VA) consensus.
• Industrial Revenue: €12.31 billion, matching market forecasts.
• Profitability Guidance: The company confirmed its full-year guidance, yet a cautious sentiment regarding DTNA's profitability tempered the otherwise robust results.

Mercedes-Benz Segment

Mercedes-Benz, under close scrutiny this quarter, reported:
– Revenues: €4.4 billion, surpassing VA consensus by 4.7%.
– Adjusted EBIT: €283 million (6.4% margin), comfortably above investor benchmarks of over 6%.

The division also saw a sharp rise in research and development capitalization, reaching 32% in Q3 from approximately 11% in the same quarter last year, suggesting a shift in cost structures that will need monitoring moving forward.

DTNA Performance

DTNA faced a mixed performance:
– Revenue was as expected, but adjusted EBIT missed consensus by around 6%.
– The margin of 12.1% fell short of 12.7% projections, largely due to a less favorable product mix leaning toward medium-duty and vocational vehicles instead of profitable heavy-duty and on-highway models.

Analysts at Stifel noted that as the company heads into Q4 2024, the product mix could remain a headwind, especially with Hurricane Helene impacting its Carolina operations.
This situation hints at possible negative revisions to DTNA's Q4 margin forecast, currently set at 12.3%.

Orders and Cash Flow

Daimler Truck reported total orders of 94,709 units, slightly below VA consensus of 95,569. Industrial free cash flow also missed expectations, landing at negative €41 million versus the expected €118 million. The company attributes this dip to heightened working capital requirements, citing supply chain issues with Japanese body-builders and elevated inventory levels.

Despite the cash flow shortfall, DTG reaffirmed its full-year free cash flow guidance, estimating it to remain similar to last year.