DMLRY - Daimler AG
| Previous Close | 11.79 |
| Open | 11.55 |
| Bid | 0.00 x 0 |
| Ask | 0.00 x 0 |
| Day's Range | 11.38 - 11.55 |
| 52 Week Range | 11.15 - 16.70 |
| Volume | 124,373 |
| Avg. Volume | 149,744 |
| Market Cap | 49.173B |
| Beta (5Y Monthly) | 1.59 |
| PE Ratio (TTM) | 4.64 |
| EPS (TTM) | 2.47 |
| Earnings Date | N/A |
| Forward Dividend & Yield | 0.91 (7.71%) |
| Ex-Dividend Date | May 22, 2019 |
| 1y Target Est | N/A |
- Autoblog
Daimler warns of 'significant adverse effects' on its business by coronavirus
German luxury carmaker Daimler on Friday warned of risks for the economy and its own business from the outbreak of coronavirus that is spreading in China and around the world. "Risks for the Daimler Group may not only affect the development of unit sales, but may also lead to significant adverse effects on production, the procurement market and the supply chain," the Stuttgart-based company said in its annual report. It also noted that the epidemic posed a risk for economic growth in China, other Asian countries and worldwide.
- Benzinga
Mexican Carrier's Freightliner Cascadia Acquisition Bucks Otherwise Dismal Domestic Sales Figures
Daimler Commercial Vehicles México delivered 10 new Freightliner Cascadia units to cross-border carrier Grupo HG Transportaciones on Wednesday. The 53-year-old freight transport company based in Monterrey, Mexico, now has a fleet of around 460 vehicles, said company officials during a ceremony for the new trucks. The acquisition was one of the few bright spots for Mexico's domestic truck market, with truck sales declining as much as 38% over the last half of 2019.
- Reuters
Daimler warns of 'significant adverse effects' of virus outbreak
German luxury carmaker Daimler on Friday warned of risks for the economy and its own business from the outbreak of coronavirus that is spreading in China and around the world. "Risks for the Daimler Group may not only affect the development of unit sales, but may also lead to significant adverse effects on production, the procurement market and the supply chain," the Stuttgart-based company said in its annual report https://bit.ly/2SJHGOi. It also noted that the epidemic posed a risk for economic growth in China, other Asian countries and worldwide.
- Bloomberg
Daimler Braces for Higher Mercedes-Benz Diesel Costs in Germany
(Bloomberg) -- Daimler AG warned of a further crackdown on Mercedes-Benz diesel vehicles in Germany and boosted provisions for legal and regulatory costs that already crimped profit last year.The country’s motor industry watchdog, KBA, is likely to rule that other vehicles made by the luxury brand were also “equipped with impermissible defeat devices,” Daimler said Friday in its annual report, referring to banned software designed to bypass emissions tests.Daimler has temporarily halted delivery and registration of some models, according to the report. It boosted total provisions to 30.7 billion euros ($33.2 billion) from 23 billion euros, with potential liability and regulatory costs more than doubling to 4.9 billion euros. The shares fell as much as 2.3% in Frankfurt trading.The German manufacturer also said complying with stricter emissions rules in some countries will be difficult.The carmaker’s move indicates trouble ahead for its diesel cars. Daimler took a massive earnings hit in 2019 and slashed its payout to investors to the lowest level since the financial crisis, blaming an 870 million euro fine by German prosecutors and costs related to reducing diesel-car emissions. The penalty coincided with record spending to boost its electric-car lineup and expand software operations. Daimler is also putting aside 2 billion euros for restructuring costs.Facing PenaltiesChief Executive Officer Ola Kallenius has acknowledged in recent months that meeting Europe’s tougher emission targets will be a challenge in the next two years because consumers may not move away from choosing combustion engines fast enough.Under the bloc’s rules, carmakers face penalties if the average of the total passenger vehicles they sell exceeds a level of CO2 emissions. Mercedes-Benz, which makes large-cylinder gas and diesel guzzlers in addition to battery-run models, plans to make use of so-called super credit incentives on electric and plug-in hybrid models to lower its average.Daimler’s supervisory board has created a six-member special committee to focus on legal affairs “against the backdrop of the complexity of the emissions- and antitrust related proceedings,” it said in the report.CoronavirusThe automaker could face a total of more than 1.5 billion euros in fines in 2020 and 2021 for missing European CO2 limits, according to BloombergNEF estimates. To avoid such penalties, electric vehicles sales must account for about 10% of total deliveries in the region by 2021, compared with about 2.8% last year.The company’s average fleet emission in Europe was 137 grams in 2019, well above the 95 grams per kilometer stipulated by the rules that start taking effect this year and gradually get tougher by the end of 2021.Daimler also flagged potential economic disruption from the outbreak of the coronavirus in its largest market, China. Risks “may not only affect the development of unit sales, but may also lead to significant adverse effects on production, the procurement market and the supply chain,” Daimler said in the report. Last week, CEO Kallenius said it was too early to quantify the financial fallout.(Adds detail on higher provisions in third paragraph)To contact the reporters on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net;Karin Matussek in Berlin at kmatussek@bloomberg.netTo contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Tara Patel, Anne PollakFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Daimler warns of "significant adverse effects" of virus outbreak
German luxury carmaker Daimler on Friday warned of risks for the economy and its own business from the outbreak of coronavirus that is spreading in China and around the world. "Risks for the Daimler Group may not only affect the development of unit sales, but may also lead to significant adverse effects on production, the procurement market and the supply chain," the Stuttgart-based company said in its annual report https://bit.ly/2SJHGOi. It also noted that the epidemic posed a risk for economic growth in China, other Asian countries and worldwide.
- Reuters
RPT-China's Geely starts online auto sales as virus epidemic keeps buyers at home
Chinese automaker Geely has launched a service for customers to buy cars online and get them delivered directly to their homes, in a bid to drum up sales as the coronavirus outbreak prompts buyers to stay away from showrooms. Consumers can order and customize their cars on Geely's website, it said in a statement. The coronavirus has killed 2,236 people and stricken more than 75,400 in mainland China, and strict public health measures to contain its spread have severely disrupted business and consumer activity.
- PR Newswire
Daimler optimizes decision-making processes and streamlines organizational structure
The Board of Directors and the Supervisory Board of Daimler AG and Mercedes-Benz AG optimize Mercedes-Benz Cars' development, operation and finance area by realigning the Company's organizational structure. This reorganization will take effect on April 1, 2020.
- PR Newswire
Daimler AG's Supervisory Board extends Hubertus Troska's contract
Contract extended by five years until December 31, 2025
- PR Newswire
Daimler AG proposes Timotheus Höttges for election to the Supervisory Board
Daimler AG proposes Timotheus Höttges for election to the company's Supervisory Board. On the basis of a recommendation by the Nomination Committee, the Supervisory Board of Daimler AG has decided to propose to the Annual General Meeting that Timotheus Höttges be elected to the Supervisory Board as a member representing the shareholders with effect from the end of the Annual General Meeting held on April 1, 2020 until the end of the Annual General Meeting that passes a resolution on the ratification of the actions of the Supervisory Board for the fourth financial year after the beginning of his term of office.
- Bloomberg
Trump Releases Blagojevich From Prison, Pardons Financier Milken
(Bloomberg) -- President Donald Trump announced a set of clemencies and pardons on Tuesday, including for former Illinois Governor Rod Blagojevich who was convicted of public corruption and for financier Michael Milken who was convicted of securities fraud.The commutation of the 14-year prison sentence of Blagojevich brought a surprising end to one of the highest-profile public corruption cases of the 21st century.Trump’s closest confidants had urged him to pardon Milken, the 1980s “junk bond king” who has sought for decades to reverse his conviction.Trump also pardoned former New York City police Commissioner Bernard Kerik, who was sentenced to four years in prison for failure to pay taxes and lying to White House officials. The president earlier in the day pardoned Edward DeBartolo Jr., who owned the San Francisco 49ers football team for 23 years and pleaded guilty in 1998 to failing to report an alleged extortion attempt.It’s unusual for a president to announce so many controversial clemencies and pardons at once -- especially in an election year. Many of the pardons and clemencies were backed by conservatives. For instance, the White House said Milken’s pardon was supported by Treasury Secretary Steven Mnuchin and the president’s personal attorney, Rudy Giuliani, whose office prosecuted Milken in the 1980s.Democratic CriticsTrump has relished the use of his clemency power, which is virtually unchecked by the Constitution. He has issued more than two dozen pardons and commutations since becoming president, many of which were awarded to political allies.The president sought to draw a connection between Blagojevich’s case and the federal investigation into alleged ties between Trump’s 2016 campaign and Russia. Trump calls that probe a “witch hunt.”Some Democrats were quick to criticize Trump’s move on Blagojevich.“Illinoisans have endured far too much corruption, and we must send a message to politicians that corrupt practices will no longer be tolerated,” Governor J.B. Pritzker said in a statement. “President Trump has abused his pardon power in inexplicable ways to reward his friends and condone corruption, and I deeply believe this pardon sends the wrong message at the wrong time.”Read More: Trump Pardons Former 49ers Team Owner Over 1998 Felony ChargeMilken served 22 months in prison before being released to a halfway house in January 1993.In announcing his pardon, White House press secretary Stephanie Grisham said the securities fraud conviction was based on “truly novel” charges that “had never been charged before as crimes.” She also pointed to his charitable work in the years following his conviction.Milken, 73, is worth $3.7 billion, according the Bloomberg Billionaires Index.Major Republican donors Sheldon and Miriam Adelson, as well as Fox Corp. Chairman Rupert Murdoch, also backed the move, according to the White House.Also among those who backed Milken’s pardon is Nelson Peltz, the chief executive officer and founding partner of Trian Fund Management LP, according to the White House. Peltz threw a fundraiser for Trump at his Florida home on Saturday that raised more than $10 million for the president’s re-election campaign.Trump’s pardon doesn’t reverse Milken’s lifetime ban on securities dealing, which would require a separate appeal to the Securities and Exchange Commission.‘Very Unfairly’Trump’s decision on Blagojevich comes almost two years after the Democratic ex-governor formally requested a commutation and sustained public appeals for mercy from his family.Trump has repeatedly criticized Blagojevich’s prison sentence and said he would consider using his clemency power to cut it short.The president told reporters in August he was “thinking very seriously about commuting his sentence” because Blagojevich was “treated very, very unfairly.” He tweeted the following day that many saw his prison sentence that “White House staff is continuing the review of this matter.”Blagojevich, 63, was convicted in 2011 of 17 charges for what federal prosecutors said was a sweeping corruption plot that included an attempt to sell former President Barack Obama’s vacated U.S. Senate seat. The governor was impeached and removed from office in January 2009, about one month after he was arrested by FBI agents at his home.Celebrity ApprenticeTrump and Blagojevich have some personal history. Before his conviction, the former governor appeared on “The Celebrity Apprentice,” a spinoff of the long-running reality television hosted by Trump.Blagojevich’s wife, Patti, has also made numerous appearances on Fox News to ask Trump to shorten her husband’s prison term. The president referred to her comments when speaking to reporters last summer about a possible commutation.“I watched his wife, on television, saying that the young girl’s father has been in jail for now seven years, and they’ve never seen him outside of an orange uniform,” Trump said. “His wife, I think, is fantastic.”While Blagojevich is a Democrat, his wife has framed clemency as a way for the president to exact revenge for Special Counsel Robert Mueller’s Russia investigation, which Trump has repeatedly decried as a “hoax.”Comey ConnectionFormer U.S. Attorney Patrick Fitzgerald, who prosecuted Blagojevich’s case, is friends with former FBI Director James Comey and served as his personal lawyer. Mueller’s investigation into the Trump campaign’s ties to Russia stemmed from a probe begun under Comey’s watch.“This same cast of characters that did this to my family are out there trying to do it to the president,” Patti Blagojevich told the Chicago Sun-Times in an April 2018 phone interview.Fitzgerald was also the special prosecutor who led the federal investigation into I. Lewis “Scooter” Libby, whom Trump pardoned in 2018 for lying to federal agents probing the leak of a CIA officer’s identity. Libby was former Vice President Dick Cheney’s chief of staff.The White House has fielded multiple requests for Blagojevich’s clemency, including from well-known Democrats like civil rights leader Jesse Jackson, who wrote a letter to Trump last summer.Fitzgerald and other former federal prosecutors who handled Blagojevich’s case issued a statement saying: “The former governor was convicted of very serious crimes. His prosecution serves as proof that elected officials who betray those they are elected to serve will be held to account.”Safavian, KerikBut House Republicans had urged him not to offer clemency to Blagojevich. A group of GOP lawmakers representing Illinois wrote Tuesday that they were “disappointed” by the president’s move, saying Blagojevich “is the face of public corruption in Illinois, and not once has he shown any remorse for his clear and documented record of egregious crimes that undermined the trust placed in him by voters.”Also Tuesday, Trump pardoned David Safavian, the former top procurement official in George W. Bush’s administration, who was sentenced to one year in prison for lying about his association with lobbyist Jack Abramoff and helping Abramoff obtain government business. Safavian was released in 2012.Grisham said Safavian “dedicated his life to criminal justice reform” since his release and supported the bipartisan First Step Act, which Trump signed into law. His pardon was backed by former White House official Mercedes Schlapp and her husband, Matt, as well as liberal activist Van Jones, who focuses on criminal justice issues.Kerik, who served as police commissioner under Giuliani, was originally given a sentence that was longer than federal guidelines called for because the judge said he was a top police official who committed crimes as part of a bid to head the federal Homeland Security Department.”‘Operatic’ Case“The guidelines don’t fully take into account the almost operatic proportions of this case,” the judge said. “When these tax laws were being violated, they were being violated not just by anyone. They were being violated by the police commissioner of New York City.”Kerik, pleaded guilty to eight counts, including having an unidentified company make $255,000 in renovations to an apartment he purchased in the Riverdale section of New York in exchange for doing business with the city.He alsoadmitted to lying on a loan application, obstructing Internal Revenue Service laws, filing a false tax return, lying to the federal government and failing to report wages he paid to a nanny for his children.He was later charged separately in Washington with lying to the White House about the New York matter in 2004 while being considered for the top job at the U.S. Homeland Security Department. He pleaded guilty to crimes in both cases.In the case involving the former 49ers’ owner, DeBartolo never served prison time. The case began with allegations that he paid former Louisiana Governor Edwin Edwards $400,000 for a riverboat casino license, according to the Associated Press.DeBartolo agreed to testify against Edwards, helping him avoid a prison sentence. Edwards was charged with racketeering and conspiracy related to the granting of casino licenses. DeBartolo received two years probation and was fined $1 million.(Updates with DeBartolo in final three paragraphs.)\--With assistance from Patricia Hurtado and Shruti Date Singh.To contact the reporters on this story: Jordan Fabian in Washington at jfabian6@bloomberg.net;Josh Wingrove in Washington at jwingrove4@bloomberg.netTo contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Justin Blum, Bill FariesFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Benzinga
Today's Pickup: Daimler Trucks, Torc Robotics To Expand Autonomous Driving Testing
Good day, Daimler Trucks (OTC: DDAIF ) and its partner Torc Robotics plans to expand Level 4 autonomous vehicle testing in the U.S., the companies announced in a press release this morning. Level 4 vehicles ...
- MarketWatch
Shares of European automakers slide after new-car sales slump in January
European auto stocks suffered on Tuesday after new car sales fell 7.5% in January as the sector’s woes continued.
- Reuters
INSIGHT-Shades of Detroit? Germany's auto heartlands in peril as 'golden age' fades
Two months later, they learned that the tire factory where both work would be shut down early next year. A malaise in Germany's mighty automobile industry, caused by weaker demand from abroad, stricter emission rules and electrification, is starting to leave a wider mark on Europe's largest economy by pushing up unemployment, eroding job security and hitting pay. The German auto sector is expected to cut nearly a tenth of its 830,000 jobs in the next decade, according to the VDA industry association.
- Benzinga
NFI Sees Explosive Growth For Its Class 8 Electric Truck Fleet
If the everyday use of electric trucks seems decades away, come to Chino, California, where zero-emission battery-powered Class 8 semis silently arrive and depart daily from NFI Industries bound for the ports of Los Angeles and Long Beach. Any day now, the last of 10 heavy-duty plug-in eCascadias will join NFI operations as part of the Freightliner Electric Innovation Fleet from Daimler Trucks North America. NFI also will integrate electric Volvo VNR Class 8 day cabs as part of the Low Impact Green Heavy Transport Solutions (LIGHTS) test program.
- Bloomberg
French Giant Looks at Tesla With Burning Envy
(Bloomberg Opinion) -- On one side of the Atlantic, Tesla Inc. is capitalizing on its soaring share price by selling $2 billion in stock so it can build more electric vehicles. On the other, French manufacturer Renault SA has been forced to cut its dividend by 70% and announce a big reduction in fixed costs so it can afford to do the same.Dwindling profits and Renault’s drastic remedies were mirrored this week by its Japanese alliance partner Nissan Motor Co., as well at Daimler AG. (Renault has an engineering partnership with Daimler and owns a small stake in the German car and truck maker.) Their problems aren’t identical but all three had expanded their workforces in anticipation of demand that hasn’t materialized and now they have to tighten their belts to pay for expensive electric vehicles, for which demand remains uncertain. Renault’s shares are near their lowest level in eight years, which means the company is capitalized at barely 10 billion euros ($11 billion), a sum that includes the 43% stake Renault owns in Nissan. Needless to say, that’s a sliver of what Tesla is worth, even though the U.S. company’s annual output is still almost a rounding error for the Renault-Nissan alliance. This juxtaposition sends a crystal clear message: Carmakers that grew fat and happy producing combustion engine vehicles won’t get any help from the stock market now that they’ve decided to embrace an electric future. Instead the gasoline gang are going to fund these changes themselves and it’s going to be painful, for both employees and shareholders.Long-established automakers have decided that their salvation is to be found in alliances and partnerships, which spread the cost of developing expensive technology over a greater number of car sales. It’s why Renault tried to merge with Fiat Chrysler Automobiles NV, before Peugeot-owner PSA Group beat them to it. But in Renault’s case its links to other manufactures are amplifying its problems right now, not solving them. Relations with Nissan fell apart when former alliance boss Carlos Ghosn was arrested and remain fragile now that he’s free to settle scores. Both sides have since hired new CEOs but their shareholders aren’t yet ready to buy the story that harmony has been restored.With its own profits slumping, Nissan can’t afford to pay big dividends to Renault and the French are also earning less from the Daimler partnership. The upshot is that Renault is a bit squeezed for cash — net cash at the automotive unit dwindled to just 1.7 billion euros at the end of December (though gross liquidity, including available credit lines, was a more respectable 16 billion euros). One way Renault could free up some money would be to sell part of its Nissan stake, which might have the added benefit of helping to re-balance the alliance in Nissan’s favor, something the Japanese have long sought. The trouble is Nissan’s shares have halved in value over the last two years so selling now wouldn’t provide Renault with nearly as much as it once would. Interim CEO Clotilde Delbos all but ruled out such a move on Friday.So it’s no wonder that Renault has opted to drastically scale back its own dividend and will try to cut costs by 2 billion euros in the next three years. Delbos, who’s also the chief financial officer, didn’t go into much detail about how those savings will be delivered but the company plans to review its “industrial footprint,” which suggests plant closures are a possibility. (Alliance partner Nissan has already announced 12,500 job cuts, while Daimler is targeting at least 10,000.)Lowering costs won’t be straight forward. New Renault CEO Luca de Meo, a former Volkswagen AG executive, doesn’t start until July and French unions aren’t known for championing efforts to slash jobs. In the near term, restructuring costs will also put further pressure on Renault’s cash flow and the coronavirus could yet create unexpected problems. But unlike at Tesla, Renault doesn’t have a queue of wealthy supporters clamoring to help fund this epochal clean-vehicle transition. One way or other, employees and existing shareholders will end up paying.To contact the author of this story: Chris Bryant at cbryant32@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
German Economy Looks Ill-Prepared for What’s Coming in 2020
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world threatened by trade wars. Sign up here. Germany entered 2020 with a flatlining economy and manufacturers in distress, leaving it ill prepared for continued trade uncertainty and the new coronavirus threat.Europe’s largest economy has been battered by multiple forces that have turned it from a growth engine to one of the region’s weakest performers. Expansion last year was just 0.6% and 2020 may be little better. The euro-area economy grew 1.2% in 2019, though the pace was just 0.1% in the fourth quarter.On top of global factors, Germany has had to deal with domestic issues from struggling lenders to climate-related upheaval in the car industry. More recently, politics has added to the litany of negative headlines, with the resignation of Angela Merkel’s heir-apparent as chancellor.One bright spot in has been the labor market -- in Germany and the broader euro area. Figures on Friday showed employment growth in the 19-nation bloc accelerated to 0.3% at the end of 2019.If looking for more positives, Germany avoiding contraction -- which some saw as a risk -- should silence speculation for the moment that it’s getting closer to a recession.But the bad news still dominates, and is weighing on the euro, which is at the lowest against the dollar in almost three years. Yields on 10-year German debt remain stuck well below zero.In the fourth quarter, Germany saw a sharp slowdown in consumer and government spending, a significant drop in equipment investment, and a drag from trade.What Bloomberg’s Economists Say“The business surveys that give the best read on GDP suggest the outlook for 1Q is a little brighter. We don’t expect industry to weigh on growth as much as it did in 4Q and see a modest rebound in 1Q.”\-- Jamie Rush. Read the GERMANY REACT2020 was supposed to see recovery, an outlook that’s now in question amid continued weakness in industry plus fallout from the virus outbreak in China.Business is already feeling the impact of the epidemic. Volkswagen AG was among the companies forced to shut their Chinese plants, and Daimler sees weaker Mercedes Benz sales this year.In its economic outlook this week, the European Commission singled out the coronavirus, which has killed more than 1,000 people in China, as a “key downside risk.”The Asian country is a huge market for German companies. Outside the European Union, it’s second only to the U.S. in importance, with close to 100 billion euros ($108 billion) of sales a year.Manufacturer Osram Licht AG generates about 20% revenue in China and expects a hit to its bottom line because -- as with many companies -- it had to temporarily close a number of sites.“Looking ahead, the latest soft indicators and industrial data for December do not bode well for the short-term outlook,” said Carsten Brzeski, chief German economist at ING in Frankfurt. “Also, the impact from the coronavirus on the Chinese economy is likely to delay any rebound in the manufacturing.”(Updates with euro-area GDP, employment, starting in second paragraph)\--With assistance from Manus Cranny, Nejra Cehic, Kristian Siedenburg and Harumi Ichikura.To contact the reporters on this story: Fergal O'Brien in Zurich at fobrien@bloomberg.net;Richard Weiss in Frankfurt at rweiss5@bloomberg.netTo contact the editors responsible for this story: Daniel Schaefer at dschaefer36@bloomberg.net, Jana RandowFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Benzinga
Today's Pickup: Oil Demand Growth Forecast Cut Over Coronavirus Outbreak In China
In the wake of the coronavirus breakout in China, OPEC has cut its oil demand growth forecast by 230,000 barrels per day (bpd) from last month's estimate. It now expects global oil demand growth at 990,000 bpd, citing the havoc the coronavirus has had over industrial activity and people movement in China as a reason for the slowdown. The impact is expected to be particularly heavy on aviation fuels as flights have been grounded across many cities in China, with the country's flights being banned from landing in airports in several countries.
- Autoblog
Mercedes-Benz allegedly puts two-door S-Class, CLS on the chopping block
Mercedes-Benz will unveil the next-generation S-Class before the end of 2020. German newspaper Handelsblatt learned the S-Class Coupe and the S-Class Cabriolet will soon fall victim to Mercedes-Benz parent company Daimler's far-reaching cost-cutting plan. Mercedes doesn't break down S-Class sales by body style, but the sedan outsells both two-doors.
- Reuters
FOCUS-Hyundai bet big on China. Now coronavirus is twisting its supply chain
South Korean car giant Hyundai Motor has increasingly relied on China to supply auto parts to its manufacturing hub at home in recent years. One of its main suppliers, Kyungshin, which has rapidly boosted capacity in China over the past two decades to capitalise on the country's lower labour costs and proximity to South Korea, has seen its operations hit hard by the epidemic.
- FX Empire
European Equities: A Catalyst is Going to be Needed for another High…
It could be a testy day ahead. The coronavirus numbers will need to show a further easing in the rate of infection and there’s Eurozone stats in focus.
- Bloomberg
Sometimes a Billionaire Just Needs a Volvo
(Bloomberg Opinion) -- Chinese billionaire Li Shufu is bringing his cash cow in-house. Let’s hope he doesn't milk it dry.Volvo Car AB and Hong Kong-listed Geely Automobile Holdings Ltd. have said in a statement that they’re considering merging their businesses in a combined entity that would tap capital markets through Hong Kong and Stockholm. The parent company that they share, Zhejiang Geely Holding Group Co., is run by the ambitious Mr. Li, who seems to be taking a big first step toward consolidating his sprawling holdings. Other moves, such as a spinoff, had already been signaled. In a bond prospectus dated November, Geely Automobile said that Volvo and the parent intended to merge operations into a standalone business to develop “next generation combustion engines and hybrid powertrains.” Volvo Car said this would clear the way for it to focus on developing all-electric premium vehicles.Li has spent billions buying or building stakes in the likes of Mercedes Benz-maker Daimler AG, Volvo AB and Lotus Cars Ltd. through to flying-car maker Terrafugia Inc. He was recently reported to be in the running to make an investment in Aston Martin Lagonda Global Holdings Plc. Until now, he’s kept them separate but under his holding company.Bringing the Swedish and Chinese car companies under the same umbrella makes sense at first glance. Volvo Car’s stable profits ($5.5 billion in 2019) could offset the tough terrain that Geely faces in China’s shrinking car market. The two already collaborate through a joint venture on the Lynk & Co. brand. Since the parent bought Volvo in 2010, Geely’s cars have received an upgrade after it set up the joint China-Euro Vehicle Technology AB research and development center. There’s also a case for cost sharing. Volvo is focused on the higher- and greener-end of the car spectrum. Geely hasn’t quite gotten there. That will help as China pushes forward with its electric car ambitions.The pair said in their statement that the merger would “accelerate financial and technological synergies” and create a strong global group. So, let’s talk about the finances. To build up his empire, Li has piled on leverage at the Zhejiang Geely holding company level. Net debt stood at $8.1 billion at the end of September, more than double from a year prior. It needs to service that debt while feeding and funding its ambitions. S&P Global Ratings expects the company’s leverage to increase this year as volumes and margins contract.Volvo has been a cash source for its parent. In 2019, Volvo paid out dividends of 2.9 billion kronor ($306 million), with 2.8 billion kronor of that to its parent. That was higher than the first dividends paid out in 2016. Volvo injected 1.15 billion kronor into another jointly-owned Geely brand, Polestar Group, last year. Related-party transactions with the Geely sphere of companies totaled 4.1 billion kronor in 2019. Geely has held up relative to its auto-making peers, but earnings have been shrinking as sales in the world’s largest car market deteriorate. Its ability to spend and stay ahead of the technology curve are also constrained. It shelled out $423 million on capital expenditures in the 12 months to June last year, compared to Volvo’s $1.25 billion in 2019. It’s clear who will be driving once they come together.The parent company will keep its firm grip. Through connected transactions, it holds the licenses that Geely uses to manufacture the cars in China. Because of this structure, Geely can make and sell cars there while holding 99% stakes in operating subsidiaries, despite its offshore incorporation, according to Moody’s Investors Service Inc. Li needs this merger to work. With the coronavirus potentially wreaking operational havoc, the parent company has to be in financial order. A blockbuster valuation will help fund his future ambitions in a tougher global auto industry and pay down the debt he’s built up. What better way than to create an improved asset in the new entity, give it a boost with your crown jewel, Volvo, and monetize it. A more valuable asset makes for better collateral. Li will look to maximize the efficiency of his capital.Geely, with an enterprise value of around $16 billion, trades at 7.2 times earnings before interest, tax, depreciation and amortization. It’s sitting on cash of around $2 billion and very little debt. Volvo generated $3.2 billion of Ebitda in 2019. Assuming a multiple of 2.5 times earnings, around that of other European carmakers, would value the Swedish company at around $8 billion. The valuation of the combined entity will be higher. Even two years ago, Volvo was looking for a valuation of double that on the lower end to as much as $30 billion when talk of going public alone surfaced. Wherever the valuation comes out and whatever shareholders are willing to digest, let’s hope there are indeed synergies and Geely isn’t drawing too much out of Volvo Cars. That may defeat the purpose of Li’s entire exercise.To contact the author of this story: Anjani Trivedi at atrivedi39@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Lord, Don’t You Buy Me an Oil Major’s Shares
(Bloomberg Opinion) -- Cars are very important to oil producers, obviously. Not just because they drink up the stuff. They also offer a ghost-of-Christmas-future dose of foresight.Daimler AG, the epitome of luxuriously engineered combustion, just slashed its dividend by 72%. As my colleague Chris Bryant wrote here, Tuesday’s announcement capped a string of profit warnings and other setbacks. That the stock actually rose briefly on this news tells you just how desperate investors were for a strategic reset, Band-Aid rip notwithstanding.It is the cut to Daimler’s payouts that should have oil executives sweating.Coronavirus has made amateur virologists out of many an investor, with the emphasis heavily on “amateur.” Tuesday morning saw oil prices, and stocks, surge as the market made one of its habitual segues from rank fear to blithe optimism. The truth is that, whatever the current rate of new infections, the sector already has a chronic condition: cost-of-capital-itis.Like Daimler, oil majors are juggling the demands of investing during a downturn, planning for a sea change in their business, and keeping investors sweet with payouts. Royal Dutch Shell Plc and BP Plc now yield roughly 7%. Even mighty Exxon Mobil Corp. now yields close to 6%, the highest since the merger that spawned the combined company.Exxon’s valuation looks especially vulnerable. Its recent exploration success, a virtual guarantee of high multiples in years past, is now viewed as a call on cash shareholders would rather have. Its integrated model has offered little respite in this weak oil market, with fourth-quarter results from the chemicals business especially poor — even before coronavirus piled on in this quarter. As it stands, the company has been selling assets and taking on debt to meet payouts, and consensus forecasts imply earnings will struggle to cover dividends through this year and next.The underlying cause is a collapse in return on capital, due to a wave of heavy spending on the back of the last commodity supercycle (when China offered an unalloyed boost). Returns have not only dropped but also compressed in range between the majors.Analysts at Evercore ISI estimate Exxon’s return on capital employed dropped to just 4.4% in 2019, on par with 2016 — when average Brent crude prices were 30% lower. Looking at Exxon alongside Chevron Corp., BP and Shell, it is telling that average returns for the group in 2013 — the last full year of triple-digit oil prices — were roughly those of 2009, just after the financial crisis. This problem predates not just coronavirus but also the oil crash.This really becomes apparent when comparing energy’s share of the S&P 500 with oil prices. The chart below divides the annual real Brent oil price by energy’s weighting to provide a ratio that can be thought of like this: How many real dollars per barrel does it take to buy the sector one percentage point in the S&P 500?Hence, investors are demanding more. Compounding this is the issue Daimler also faces: transition.One of Daimler’s failures has been its relatively slow development of electric vehicles. From one angle, that seems like a reasonable approach for an incumbent: Let others make mistakes and lose money developing a new market, and then deploy one’s established brand and resources to clean up when the concept has been road-tested. In practice, financial markets are nonplussed.It has become a cliche to say Tesla Inc.’s supercharged market cap is now a multiple of stalwarts such as Daimler’s, despite the California upstart’s miniscule market share. Don’t get me wrong; I cannot justify Tesla’s valuation on its fundamentals or any reasonable projection (see this). But that is kind of the point. Many of Daimler’s problems — high costs, production delays and even legal tangles — are all familiar at Tesla too. Yet the latter has gotten a pass. It may not be right, but as the old saw goes, irrationality’s bank balance can be way bigger than yours.A few years back, when Tesla was worth a mere $30 billion, I wrote oil majors should fear the company. Not because it would necessarily conquer the world. Rather, because investors were falling over themselves to give it capital in the absence of domination (or profits), in marked contrast to their treatment of the cash-spewing titans of oil. Imagine the fallout if Exxon CEO Darren Woods took to Twitter (in fact, just pause on that idea for a second) and announced a fanciful take-private deal. I’m no prophet, but I’m pretty sure (a) the stock wouldn’t have almost tripled since and (b) he would no longer be CEO.Daimler’s predicament is another reason to be fearful. Like the majors, it must convince investors that, despite past failings, it has what it takes to make the right choices (and bets) in an energy-transportation complex undergoing profound change after a century of incumbency. Like them, it must somehow make the necessary investment using capital that has become scarcer, and therefore pricier. On Wednesday, BP’s new CEO (and Instagrammer) Bernard Looney is due to lay out his vision for navigating this new world. Without wishing to front-run his speech, it’s worth reading these comments made by Daimler boss Ola Kallenius on Tuesday:We understand that we are in transformation. Yes, the auto industry in the next years, next decade is going to change fundamentally. This company is going to change fundamentally. We are prepared to take the actions and the measures that we need to take to make sure that we come out as a winner of this transformationSwap in “energy” for “auto,” and Looney could repurpose those words effortlessly. Change is now a constant for this business, and it has the yields to show for it.(Corrects Daimler’s dividend yield.)To contact the author of this story: Liam Denning at ldenning1@bloomberg.netTo contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
