Daimler has joined its German rival Volkswagen in defying the pandemic and posting better-than-expected results for 2020, thanks to a strong recovery in the global auto market led by China.
Preliminary figures released On Thursday, the brand-maker Mercedes showed profit before interest and taxes to be over € 6.6 billion, beating analysts’ estimates of around € 5.2 billion for the year .
This compares to € 4.3 billion in 2019, although the company recorded € 5.4 billion in one-off legal liabilities during that year, including more than € 4 billion under the suspected manipulation of diesel emissions tests.
The Stuttgart-based company added that, thanks to aggressive cost cuts and “good underlying demand expected”, it expected these numbers to improve in 2021, assuming there are no more blocking Covid-19.
Daimler’s announcement comes after Volkswagen said it had made operating profits of around 10 billion euros last year, despite fears at the start of the Covid-19 crisis that 2020 would end in the red.
VW’s profits in China, its largest and most profitable market, will be largely presented separately, giving that preliminary figure a boost.
BMW based in Munich Wednesday said its free cash flow for 2020 was around 3.4 billion euros, up from 2.6 billion euros the previous year and exceeding market expectations. At the start of the pandemic, the company warned it could not make any annual profit from its automotive unit.
The three German automakers profited from an unexpected rebound in car sales towards the end of the year in part due to pent-up demand after months of lockdown and subsidies in several major economies.
Sales in Asia were particularly strong. Towards the end of last year, Ola Källenius, boss of Daimler welcomed the company’s rebound in China, saying it was almost “too good to be true”. BMW sold nearly 780,000 vehicles in the country last year, an increase of almost 7.5% from 2019.
The auto industry as a whole is expected to experience a 15% drop in worldwide sales in 2020, according to IHS Markit, much better than the 25% forecast in the middle of last year.
Daimler, which is expected to release its full annual figures on February 18, warned that a shortage of semiconductors, which has forced many major automakers to cut production in recent weeks, would “likely have an impact” on its results for the first three months of 2021.