Daimler to Map Out Deeper Overhaul, EV Plans at Investor Meeting

(Bloomberg) -- Daimler AG investors are anxious to hear more about plans for Mercedes-Benz electric cars and sweeping cost cuts when the German automaker’s managers brief investors on Tuesday.

Almost one year after newly installed Chief Executive Officer Ola Kallenius warned the company has no quick fixes -- a message that underwhelmed investors -- Daimler is expected to highlight its future product plans and better-than-expected performance amid a pandemic-triggered industry slump.

“We think Mercedes’ product strategy will be in focus,” Patrick Hummel, an analyst at UBS Group AG who has a neutral rating on the stock, said in a note to clients. The main pillars could be accelerating electric-vehicle plans, expanding in high-end luxury niches and streamlining the brand’s legacy combustion-engine portfolio, he said.

The world’s bestselling luxury-car maker’s is still in talks with its powerful labor unions over management’s push for deeper cost cuts. But Kallenius closed a painful chapter for Daimler last month by settling U.S. litigation claims related to diesel cars.

“There is a low bar!” Arndt Ellinghorst, an analyst at Sanford Bernstein with an “outperform” rating on the stock, wrote in an open letter to Kallenius and Chief Financial Officer Harald Wilhelm ahead of the meeting. “You should relax, expectations are low, it can’t get much worse and this time you’re back at hosting the event from Stuttgart,” he said, referring to the management team’s debut in London last year.

The messaging to investors is expected to be more focused after Kallenius hired Max Warburton, Ellinghorst’s predecessor at Bernstein, as adviser and head of special projects earlier this year to help get his restructuring plan off the ground.

Daimler shares are down about 3.1% this year, outperforming larger German peer Volkswagen AG, which suffered a 24% slump, and archrival BMW AG, whose stock is down 13% year-to-date.

Five key issues investors are looking for clarity on at Daimler’s capital markets day:

• Update on electric and hybrid model rollouts to meet stricter emissions regulations
• Restructuring talks over job cuts and streamlining of automaker’s factory network
• Weeding out complexity across the Mercedes vehicle lineup by axing slow-selling model variants
• Expansion in China through more cooperation with top shareholder Geely and joint-venture partner BAIC Motor Corp.
• Future of alliance with Renault SA and Nissan Motor Co.

Kallenius has signaled plans last month to leverage the company’s high-end Maybach nameplate in an effort to focus more on larger luxury vehicles, which generate higher returns than compact vehicles. He also has said the industry’s tectonic shift toward electric and self-driving cars offers more opportunities than risks for Daimler.

“We have to improve the financial performance of the company,” he said.

©2020 Bloomberg L.P.