Stuttgart.With a radical restructuring of the entire group, the car and truck manufacturer Daimler wants to prepare itself for the future and concentrate more strongly on its core competencies again. "Project Focus" is the name of the plan by which CEO Ola Källenius will split up the Group and make Daimler AG disappear in the long term.
In the future, there will be Mercedes-Benz and Daimler Truck
In the future, there will be only two independent companies, each listed on the stock exchange – Mercedes-Benz for cars and vans and Daimler Truck for trucks and buses.
"This is a historic moment for Daimler and the beginning of a profound transformation of the company," Källenius said Wednesday. Not yet two years in office, this is already the second corporate restructuring for the Swede. After Källenius took office in May 2019, Daimler had given itself the current structure: three independent divisions under the umbrella and fully owned by Daimler AG.
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This is now to come to an end. Daimler Mobility AG to disappear, with financial and mobility services to be merged into the other two divisions. And the holding company will also no longer be needed in the long term. But Daimler is likely to float its truck division on the stock market this year and is also targeting the leading Dax index. The majority of the shares are to be given to the current shareholders – on what terms has not yet been determined. Daimler itself retains only a minority.
Investors cheered the plans for the IPO. The price of the Daimler share shot up yesterday afternoon (Wednesday). The stock closed 8.9 percent higher and was the clear Dax leader. Stock analysts were full of praise for the unexpectedly clear plans to split up the company.
The two future companies are in completely different industries, each with very specific customers, technologies and capital requirements, Källenius said. And both are active in industries that are undergoing extensive change. "They can manage this change much more effectively if they act as independent units in the process," he stressed.
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New truck division is a heavyweight
Greater flexibility had already been the main argument for the new three-pillar structure introduced in 2019. Even then, investors had vehemently called for the truck business to be floated on the stock exchange. For a long time, however, the management, especially under the long-serving former CEO Dieter Zetsche, had refused to do so. "The question is not why now, but: Why wait when you have decided on a path to take?" Said Källenius now.
Daimler Truck says it is the world's largest manufacturer of trucks and buses with seven brands, more than 100.000 employees and sales of just under 45 billion euros at last count. A total of around 300 employees work for Daimler worldwide.000 people.
Solid initial figures for 2020
Only last week, the Group had presented its first figures for the past year. With a profit from operations of around 6.6 billion euros, Daimler performed significantly better than expected due to the Corona crisis. However, the positive development in the second half of the year was mainly due to a strong performance in the car business. Trucks fell short of expectations – with trucking companies reluctant to buy during the Corona crisis, the entire trucking industry had fallen into a deep hole.
"We have clear strategies to improve our financial performance and implement our roadmap more quickly," promised Truck CEO Martin Daum. The company will leverage the strength of its brands, economies of scale and technological expertise to become a future leader in terms of profitability.
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Cost-cutting measures continue
Källenius announced that cost-cutting efforts would continue in the coming years. "We believe in the financial and operational strength of our two industrial businesses," he said. "And we are convinced: with an independent management and governance structure, both units will be able to act even faster in the future, invest more ambitiously and drive growth and cooperations in a more targeted way – all of which will make them much stronger and more competitive."
For industry expert Ferdinand Dudenhöffer, the move is only logical. "It fits the times," he said, referring to similar trends in other major auto groups. The businesses of the various divisions had little to do with each other, and it had also been recognized that it was better to focus on the core business and not to strive for the all-encompassing mobility group.
Costly projects recently put on hold
Indeed, Daimler had also recently put some costly projects on hold, for example in autonomous driving, or teamed up with partners – not least because of the enormous cost pressure and cost-cutting targets with which Källenius wants to manage the transformation. In the course of the "Project Focus", the services will now lose their independence. Tied directly to either the car or truck business.
"Mercedes-Benz and Daimler Truck are entering this transformation with enormous strength," said Supervisory Board Chairman Manfred Bischoff, who will hand over his post to Bernd Pischetsrieder in the spring. "We are convinced that they will be even stronger as independent companies and will be able to serve their respective customers even better."
As usual, the shareholders have the final say. They are to give their placet at an Extraordinary General Meeting in the third quarter of this year. The Stuttgart-based company's plans also aim to create more transparency for the stock market and become more attractive to investors. In both future parts, management expects a recovery in market valuations, said CFO Harald Wilhelm.