The truck manufacturer Daimler Truck intends to continue its cost-cutting course in view of the persistent market weakness in Europe.

The new Daimler CEO Karin Radström explained on Thursday that a new push for greater competitiveness will review both the cost and revenue side. In a weak market environment, sales are falling more sharply than desired. In the third quarter, sales of the European brand Mercedes-Benz in Germany fell by 50 percent. “We are turning over every stone, it is too early to talk about exact measures,” said Radström, who has been in charge of the DAX-listed company since October.

Due to the poor order situation, half of the employees at the main plant in Wörth in Rhineland-Palatinate have had to go on short-time working for a few days in each of the past two months. This was not necessary in November, but cannot be ruled out for the coming year, explained Radström. In December, Daimler will pause production for over two weeks, longer than usual. Daimler’s competitors Volvo and MAN are also struggling with the slump in Europe in the cyclical commercial vehicle business.

There are no signs of a recovery in order intake in the European market, explained CFO Eva Scherer. Daimler is hoping for a turnaround following the break-up of the traffic light coalition. “We are confident that the necessary impetus will be provided quickly,” she added. Investments and employment in Germany must be secured. In the short term, the political crisis is causing volatility, which is not helpful. The traffic light coalition of SPD, Greens and FDP collapsed on Wednesday evening after almost three years.

NO WORRIES ABOUT US BUSINESS

The political turnaround in the USA with the election of Donald Trump as president also affects the global market leader for heavy-duty trucks with its large US business. Radström was confident that he would be able to work well with the new administration. Scherer pointed out that Daimler has almost 18,000 employees at US production sites as well as traditional brands with the truck manufacturer Freightliner or Thomas Built Buses. “We believe we are well positioned to maintain our strong position as market leader in the North American market.”

Due to the slump in Europe, the Group’s operating result fell in the third quarter: with sales down eleven percent, turnover shrank by five percent year-on-year to 13.1 billion euros. Adjusted operating profit fell by twelve percent to 1.18 billion euros. At the European brand Mercedes-Benz, earnings fell by almost half to 283 million euros (return: 6.4 percent), while Daimler achieved slight growth in North America. Global order intake continued to fall in the third quarter, with 293,000 vehicles ordered over the course of the year, eight percent fewer orders in the order books.

“We are well on track to achieve another solid year for Daimler Truck,” said Radström, confirming the forecast for the year that was lowered in August. The adjusted return on sales is expected to be between eight and 9.5 percent with lower unit sales and revenue – after nine months it is 9.3 percent.

On the stock market, Daimler Truck got off to a good start after initial losses. The shares rose by six percent to 40.31 euros, making them one of the biggest winners in the leading Dax index. According to traders, the fact that the adjusted operating profit in the third quarter was slightly above expectations put investors in a buying mood.

(Report by Ilona Wissenbach, edited by Ralf Banser. If you have any queries, please contact the editorial team at frankfurt.newsroom@thomsonreuters.com)