Analyst Note| Richard Hilgert |
No-moat-rated Daimler reported third-quarter EPS before special items of EUR 2.30, well above the EUR 1.52 CapIQ consensus estimate by 0.78 and EUR 0.69 higher than the EUR 1.61 EPS reported a year ago. Consolidated revenue was down 7% on a 20% decline in commercial truck and buses but jumped 41% from the COVID-hit second quarter. Mercedes-Benz car and van group, or MBCV, and Daimler Mobility Services (includes financial services) revenue each declined 3% from 2019. Unit volume declined 8% compared with last year but skyrocketed 43% sequentially. Even so, MBCV revenue outperformed the 6% decline in MBCV unit volume by 3 percentage points due to a favorable mix of high-end luxury vehicles. Industrial adjusted EBIT margin, excluding Chinese joint ventures, was 8.0% versus negative 5.9% in the second quarter and 240 basis points above the 5.6% reported last year. At Sept. 30, industrial net liquidity was a solid EUR 13.1 billion, sequentially up EUR 3.6 billion. Liquidity was supported by surprisingly strong free cash flow generation of EUR 5.1 billion, attributable to cash conservation measures, a EUR 1.2 billion dividend from China JV BBAC, and EUR 0.6 million from working capital.