Daimler said it expected the full-year operating revenue of its Mercedes-Benz Cars & Vans division to be above the prior-year level but cautioned that the coronavirus pandemic would push the group to an operating loss in Q2.
Anticipating a higher rate of defaults among prospects, the car manufacturer hiked risk provisions for delinquencies amongst prospects who leased or bought Mercedes-Benz cars to 448 million euros($486.71 million), even as default rates haven’t but started to spike.
“There is nothing cheering in the auto numbers we have seen to date throughout the sector, but Daimler appears to have had a decent beginning to Q1 and managed working capital better than we had feared,” Jefferies analyst Philippe Houchois stated.
Daimler reiterated it expects group revenue and earnings before interest and taxes (EBIT) to be below year-earlier levels but given substantial one-off charges in the year-earlier period, the Mercedes-Benz Automobiles & Vans division is now seen delivering EBIT above prior-year, the corporate mentioned.
Daimler is also sticking to its dividend proposal and ruled out needing to use for state-backed loans, given an adequate cash standing.
Last week Daimler pre-released results, exhibiting a plunge of nearly 70% in Q1 operating profit and warned that the cash flow it uses to pay dividends would plunge this year.
Q1 EBIT was 617 million euros, down from 2.8 billion euros in the year-earlier period, of which 510 million euros came from the Mercedes-Benz cars.