BERLIN, April 29 (Xinhua) -- Net profit of Daimler decreased by 92 percent year-on-year in the first quarter (Q1) of 2020, with total vehicle sales decreasing by 17 percent to 644,300 "due to the global spread of the coronavirus," the German carmaker announced on Wednesday.
"The COVID-19 pandemic has substantial effects on the global economy and our company," said Daimler CEO Ola Kaellenius. Daimler had taken a "proactive decision to stop production in March, and moved very quickly into cash preservation and cost management mode."
While revenues only "slipped slightly" by 6 percent to 37.2 billion euros, earnings before interest and tax (EBIT) of Daimler plummeted to 617 million euros (669 million U.S. dollars), significantly lower than last year's Q1 result when EBIT still amounted to 2.8 billion euros.
According to Kaellenius, Daimler had ended the first quarter with a "positive result and a robust liquidity". In Q1, however, free cash flow amounted to negative 2.3 billion euros.
Daimler stated that "the effects of the virus pandemic and the resulting decrease in unit sales led to a significant earnings downturn." Daimler announced that worldwide sales of the brand's cars division slipped by 15 percent to 470,600 vehicles and by 20 percent to 97,600 units at its trucks and busses division.
The German carmaker expects that the development of the world economy would "continue to be dominated by the coronavirus pandemic during the rest of the year" after it was "already burdened in the course of the first quarter."
According to Kaellenius, Daimler, however, had now started with a "gradual ramp-up" of its production. Daimler, like its competitors Volkswagen and BMW, had to shut down operations in factories and car dealerships due to the risk of infection and lack of supplies caused by interrupted supply chains.
Daimler expects sales in 2020 to be "below the levels of the previous year" stressing that the original forecast for the financial year 2020 would no longer be valid. "The decisive factors will be when the pandemic will be under control worldwide, how long economic activity is limited until then, and which pattern of recovery will occur afterwards," Daimler concluded.
Following the announcement, Daimler was among the winners of the German DAX index of the country's 30 largest listed companies, growing by 2.48 percent on Wednesday.
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