German carmaker Daimler posted strong profits in the second quarter as demand for luxury Mercedes cars continued to recover from the depths of the pandemic, generating money the company could invest in its switch to electric vehicles.
Profit margins hit double-digits for the third consecutive quarter at 12.8% thanks to higher sales numbers and higher-earning cars dominating the sales mix, the Stuttgart-based company said on Wednesday. That helped boost the company’s cash pile to 20.9 billion euros ($24.6 billion) at the end of the quarter, from 20.1 billion euros at the beginning.
CEO Ola Kallenius said the company will use its money to invest in electric vehicle technology and develop a more software-focused company. These are the main areas where the industry will be disrupted by the regulatory demands of zero-emission cars in the next few years, and by the long-term development of partially or fully self-driving vehicles as well as software-based services that allow people to use cars only when they need to, for example from through smart phone applications.
“Our shift toward zero-emissions, software-based mobility is underpinned by a high level of free cash flow in the industrial business,” Kallenius said in a statement. “We are implementing our strategy at full speed.”
Kallenius said that auto production continues to be hampered by a shortage of semiconductor components that has hit the auto industry worldwide. The company said the shortage will continue to affect business in the second half of the year.
The company is introducing new electric cars and has said it aims to have a CO2-neutral range by 2039 although it has not set a date for exiting production of internal combustion vehicles – which pay dividends for the transition to zero-emissions domestic vehicles in any case. The company is set to overhaul its strategy for Mercedes-Benz on Thursday.
The update comes on the heels of ambitious new targets proposed by the European Union’s Executive Committee to cut emissions of carbon dioxide, a major greenhouse gas that scientists blame for global warming and climate change. The commission called for a 100% reduction in carbon dioxide emissions from cars by 2035, which would mean a virtual end to petrol and diesel engines in Europe.
The company plans to separate its truck division later this year, in part because cars and trucks are moving toward different technologies, with cars expected to use batteries while long-distance trucks in some cases will rely on hydrogen fuel cells to achieve zero-emissions local transportation in years. coming.
For the second quarter, Daimler’s net profit was 3.7 billion euros, up from a loss of 1.9 billion euros in the April-June period in 2020 when the company was forced to close factories during the early stage of the COVID-19 pandemic. Revenue rose 44 percent to 43.5 billion euros.
Cost controls and sales of luxury goods help Daimler cope with the pandemic
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