Salem Radio Network News Saturday, December 4, 2021

Business

Daimler Truck to list on Dec. 10, cuts costs to boost margins

BERLIN (Reuters) – Daimler Truck will spin off from Daimler on Dec. 10, the commercial vehicle maker said on Thursday, as it outlined cost-cutting measures which it hopes will boost profit margins to a double-digit percentage by 2025.

While some of the desired margin gains will come from growing sales volume, long-term financial success relies on making the business more efficient, board member Karin Radstrom said in a presentation on the truck maker’s capital markets day.

The aim is to reach 9% profit margins in Europe, 10% in Asia and 12% in its strongest market, North America, by 2025, according to a statement released ahead of the presentation.

Daimler’s shareholders voted in October to spin off the truck and bus division, set to become the world’s largest truck maker but with lower profit margins than rivals such as Traton’s Scania and Volvo Group’s Volvo Trucks.

Improving market share and performance in Europe has long been a priority for the commercial vehicle maker. Its adjusted return on sales so far this year is 10.8% in North America, 7.2% in Asia and 4.5% in Europe, according to the presentation.

The bus division has reported a 2.6% loss so far this year, but will remain integrated into the business, CEO Martin Daum said when asked about the disparity in performance.

A planned fixed cost reduction across the business of 15% from 2019 levels by 2025 is progressing faster than planned and will likely be achieved by 2023, the heavy vehicle maker said.

Alongside an already announced 300 million euro ($344 million) cut in personnel costs by 2025, which included reducing management positions by around 20%, Daimler Truck is reducing non-personnel costs by 200 million euros, Radstrom said.

“We have a clear goal … we are determined to reach higher profitability and win the race to zero-emissions,” Daum said.

($1 = 0.8724 euros)

(Reporting by Victoria Waldersee; Editing by Zuzanna Szymanska and Mark Potter)

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