Daimler is maintaining its course in the midst of challenging economic conditions and continuing to invest in the technologies of the future to shape its transformation.

“Despite all the challenges presented by the corona pandemic, we must not neglect the key tasks of the transformation. Electrification and digitization in all their forms are the main technological tasks and continue to require high funding,” Manfred Bischoff, chairman of the supervisory board of Daimler, said at the company’s virtual annual shareholders’ meeting on Wednesday. “Not least, COVID-19 has once again made it clear that we must be more careful with our environment if we want to avoid causing enormous damage to ourselves in the long term. Daimler’s goal continues to be emission-free mobility.”

The agenda of the annual meeting included advanced resolutions on capital measures and amendments to the articles of incorporation. Among other things, the changes are intended to make virtual meetings and electronic participation possible again in the future. The agenda also featured proposed changes in the supervisory board’s composition. Dr. Paul Achleitner’s term of office as a member of the supervisory board representing the shareholders expired at the end of the annual meeting. The supervisory board proposed Timotheus Höttges, chairman of the board of management of Deutsche Telekom AG, Bonn, for election to the supervisory board.

“Daimler’s future will be sustainably fascinating, sustainably climate-neutral and last but not least, sustainably profitable. In view of an ever-faster changing world, we must change at a faster pace. We need a lane change towards decarbonization. That’s the direction we’re headed in and we’re following insistently,” Ola Källenius, chairman of the board of management of Daimler and Mercedes-Benz, said in his speech to shareholders.

After the global economy started the year with positive indicators, the COVID-19 pandemic and the countermeasures taken brought economic activities worldwide to a temporary standstill. Daimler countered the drop in demand caused by the pandemic by suspending production in March, April and May, and by introducing short-time work. At the same time, expenditure was reduced and investments were consequently focused on future-oriented projects. At the end of Q1/20, the net liquidity of the industrial business was at €9.3 billion ($10.53 billion). In addition, Daimler increased its financial flexibility at the beginning of April with an additional syndicated credit facility of €12 billion ($13.59 billion).

“The measures we took were aimed at dealing with the situation in the short term but were also designed to support our long-term course,” Källenius said.

The board of management and the supervisory board proposed a dividend of €0.90 ($1.02) per share for the past financial year, which falls below fiscal 2018’s dividend of €3.25 ($3.68) per share.

“The dividend proposal takes into account the careful and prudent balancing of the interests of all stakeholders to which the company is responsible as well as the current business situation, in particular liquidity and the business outlook,” Bischoff said.

The proposed total dividend payout amounts to €1.0 billion ($1.13 billion) were below the mark of €3.5 billion ($3.96 billion) in fiscal 2018.

Daimler reported that earnings declined in the past financial year, mainly due to substantial extraordinary expenses, while unit sales remained at the prior-year level. Daimler sold a total of 3.34 million cars and commercial vehicles, down slightly from fiscal 2018’s mark of 3.35 million. Revenue increased by 3% to €172.7 billion ($195.6 billion) from the fiscal 2018 mark of €167.4 billion ($189.6 billion), and the Daimler Group achieved EBIT of €4.3 billion ($4.87 billion) compared with a fiscal 2018 mark of €11.1 billion ($12.57 billion). Adjusted EBIT reflects the ongoing business and amounted to €10.3 billion ($11.67 billion). Net profit decreased to €2.7 billion ($3.06 billion), down from the fiscal 2018 mark of €7.6 billion ($8.61 billion). Net profit attributable to the shareholders of Daimler amounted to €2.4 billion ($2.72 billion), down from the fiscal 2018 mark of €7.2 billion ($8.15 billion).

As a result of the COVID-19 pandemic, global vehicle markets have suffered a massive slump in recent months. According to Daimler, truck sales fell by 38% to around 150.000 vehicles in the first six months of 2020 as a result of the COVID-19 pandemic and the already weaker market environment, especially in Europe and North America. However, Daimler noted that order intake showed positive signs in recent weeks in almost all key markets. At Daimler Mobility, contract volume on June 30 was 2% lower at about €155 billion ($175.56 billion) compared with June 2019 and based on preliminary figures. Also in China, things are already looking up again, Daimler noted, adding that the negative effects of the first quarter were offset in the second quarter.

Against the backdrop of the worldwide effects of the COVID-19 pandemic, Daimler expects negative adjusted group EBIT and a negative free cash flow in the industrial business in the second quarter. Also, as forecasted in the first quarter, revenue will decrease significantly although the development of revenue in recent weeks, particularly in the passenger car business, gives cause for cautious optimism. The early adjustment of production and the measures introduced to limit costs and expenses had a positive effect on cash flow and liquidity.

“The necessary investments in the future can no longer be generated through increased revenue and ‘normal’ efficiency gains. The board of management has therefore adopted a program to improve the cost structure. Cost discipline covers all areas of the company and is an essential prerequisite for a financially successful future,” Bischoff said.

In order to streamline processes and structures and to improve financial strength, Daimler launched a comprehensive initiative across all divisions and the group at the end of 2019.

“Our previous efficiency goals covered the upcoming transformation, but not a global recession. That is why we are further refining our course,” Källenius said.

“What makes me confident: There are plenty of reasons why Daimler can emerge from the current situation stronger than before. That is why we now have to set the right priorities quickly. Daimler’s business model combined with the innovative spirit, expertise and the commitment of its employees has all the prerequisites to take mobility to the next level. The supervisory board is fully aware of the complex tasks facing the board of management and supports all appropriate measures to shape the future successfully,” Bischoff said.

Daimler is a global supplier of cars and a manufacturer of commercial vehicles.