Financial Data and Key Metrics Changes - The total unit sales significantly decreased to 644,000 units in Q1 2020, leading to a reduction in EBIT to €719 million [19][20] - Free cash flow of the industrial business was reported at minus €2.3 billion, with an adjusted free cash flow of minus €1.9 billion [19][20] - Net industrial liquidity decreased to €9.3 billion from €11 billion at the beginning of the year [20][22] Business Line Data and Key Metrics Changes - The automotive division experienced a significant decline in sales volume, heavily impacting EBIT [26][31] - The trucks division saw a more proportional relationship between incoming orders, unit sales, and revenue drop, resulting in a profit of around €250 million despite the downturn [31] - Daimler Mobility's new business demand decreased by 7% to €16.2 billion, with contract volume down 2% compared to 2019 [33] Market Data and Key Metrics Changes - The pandemic caused a significant decline in all markets, with expectations of a substantial decrease in global passenger vehicle demand [38][40] - The Chinese market is showing signs of recovery, with wholesale sales improving in March and expected retail recovery in April [25][66] - The North American truck market is expected to see a significant decline, alongside unfavorable developments in the EU30, Brazil, and Japan [40] Company Strategy and Development Direction - The company is focused on cash preservation and cost management while continuing to invest in future technologies such as electrification and digitization [13][14] - A joint venture with Volvo Group was announced for the development and production of fuel cells for heavy-duty trucks [14] - The company aims to maintain a robust liquidity position to weather the ongoing crisis and prepare for future opportunities [22][41] Management Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges posed by COVID-19 but expressed confidence in the company's proactive measures and financial flexibility [9][13] - The outlook for Q2 is challenging, with expectations of negative EBIT and free cash flow due to the full impact of lockdowns [40][41] - Management emphasized the importance of being prepared for a market rebound and maintaining focus on strategic projects [43] Other Important Information - The company has implemented extensive production stoppages and cost-cutting measures to manage cash flow during the pandemic [10][17] - A preliminary nonbinding agreement was signed with Volvo Group for a joint venture in fuel cell technology [14] Q&A Session Summary Question: Expectations for Q2 EBIT and free cash flow - Management indicated that Q2 is expected to be negative for both EBIT and free cash flow, with April likely being the worst month [48] Question: Ramp-up plans post-crisis - The company is prepared to ramp up production in response to market demand, with flexibility in operations to adjust shifts as needed [50][51] Question: Introduction of 48-volt technology - The company is on track with CO2 compliance in Europe and continues to execute its electrification plan despite market challenges [56] Question: Impact of COVID-19 on residual value risk - Adjustments for residual value risks are monitored, with some minor adjustments recorded in Q1 [61] Question: Demand recovery in China - Retail sales in China are expected to recover in line with wholesale sales, with cautious optimism for the future [66] Question: Cash flow statement clarifications - The cash flow statement reflects cash-outs related to provisions and adjustments for the X-Class discontinuation [68] Question: Product launch timelines - Key product launches, including the S-Class, remain on track despite the pandemic [70]
Mercedes-Benz(MBGYY) - 2020 Q1 - Earnings Call Transcript