Daimler Truck shares down on lower earnings despite positive outlook

© Reuters. FILE PHOTO: Members of the media stand beside an electric driven Actros truck at the booth of German truckmaker Daimler Truck at the IAA Transportation fair, which will open its doors to the public on September 20, 2022, in Hanover, Germany, September 19,

By Victoria Waldersee

BERLIN (Reuters) -Daimler Truck said an improving Chinese market, easing chip shortages and a stabilising supply chain would lift its profit this year, adding it will continue to pass on rising costs to customers by increasing prices.

But in Europe, the coach market had yet to fully recover from the pandemic's effect on travel, executives said on a press call on Friday following the truck and bus maker's annual results.

Shares in the company fell 6%, the second-biggest drop in the German benchmark DAX index, after the company reported fourth-quarter sales and profits below expectations.

Analysts at Jefferies pointed to Daimler Truck's Mercedes-Benz brand, "where cost inflation and supplier payments weighed on the margins".

Shares underperformed a 1.9% drop in the German DAX index, which was down along with the broader European market on concerns about the U.S. financial sector.

"We are not satisfied with our progress," Chief Executive Martin Daum said in regard to reducing its fixed costs, which it aims to cut by 15% from 2019 levels by 2025.

Daimler Truck's margins for 2022 were close to their 2025 targets of 12% in North America and 9% in Europe, at 10.8% and 8.1% respectively.

But in Asia, where the company struggled in 2022 with lockdowns in China and restrictions on price increases in Japan, its margin was just 2.6% - some way from the 10% target for 2025.

Still, the truck and bus maker expects global revenues to rise to 55 billion euros to 57 billion euros ($58.3-$60.4 billion) and an adjusted return on sales of 7.5%-9%, indicating it will carry on raising prices. In 2022, revenues rose 28% to 50.9 billion euros, with returns of 7.7%.

It will also pay a dividend of 1.30 euros per share, the first since it was spun off and listed separately from the carmaker now known as Mercedes-Benz.

"Our outlook shows that we will continue our self-help measures to improve our financials," Chief Financial Officer Jochen Goetz said.

Fourth-quarter earnings before interest and tax (EBIT) came in at 876 million euros on sales of 14.78 billion. According to Refinitiv estimates, EBIT was seen at 1.2 billion euros on sales of 14.92 billion.

Daimler Truck raised its earnings and revenue outlook for the year in October on a stronger-than-expected third quarter, having previously said that it felt less impact from the war in Ukraine on its supply chains than some competitors.($1 = 0.9446 euros)

($1 = 0.9438 euros)