Rising raw material prices and ongoing parts shortages continue to put pressure on Daimler Truck Holding AG’s operations, CFO Jochen Goetz said this week, and are leading to “intense dialogs” with customers about supply and price. But, he added, buyers are remaining positive, and demand for the company’s trucks is staying strong. The company reiterated its guidance for 2022 North American sales and said its supply of semiconductors is expected to improve significantly in the second half.
Speaking to analysts and investors after Daimler Truck reported first-quarter results, Goetz said that, given the still-tight supply chain, there is “basically zero chance” that trucks not yet ordered will be manufactured and delivered before the calendar turns to 2023. After a quarter in which it booked orders for 139,000 units, the company’s backlog has risen to a new record.
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Daimler’s teams are shuffling their supply of chips between regions to most efficiently meet the demand for its vehicles and Goetz added that, between suppliers’ greater commitments and Daimler engineers’ work to redesign some systems to use fewer chips, production should run more smoothly later this year.
Daimler Truck North America's division had revenues of about $4.8 billion in the first quarter, an increase of 31% from the same period of 2021 that was helped by an 18% rise in unit sales to nearly 43,000. Adjusted EBITDA was about $406 million, a year-over-year drop of about 7% because of higher raw material prices. Globally, Daimler Truck’s adjusted EBITDA rose 11% from early 2021 to about $685 million on revenues of more than $11 billion, which were up 17% from early 2021.
Speaking about price hikes, Goetz said Daimler began to see the benefits of an increase during the first quarter but will raise prices further in the coming weeks, a move that will begin to impact its results starting in Q3. In North America, the moves will result in a double-digit increase year over year.
“We are not increasing prices just for the sake of profit,” Goetz said. Customers “don’t like price increases for obvious reasons, but they understand and accept it.”
Goetz added that Daimler would lower its prices when the extraordinary increases in raw materials reverse.
The Daimler team still expects to produce 500,000 to 520,000 vehicles globally this year, up from about 455,000 in 2021. In North America, where the company markets the Freightliner and Western Star brands, the forecast remains for 175,000 to 195,000 units versus 162,000 last year.
Shares of Daimler Truck (Ticker: DTG) rose more than 6% May 17 and added nearly 3% more on May 18, climbing to about $29.50. Year to date, they’re still down nearly 10%.
