Billion-dollar risks in the diesel emissions scandal, an expensive switch to electric cars, and the corona pandemic ensured that Daimler increasingly made the headlines in recent months with slumps in sales and profit warnings. But now there was a balm for the battered car soul: In the third quarter, the German carmaker embarked on a surprisingly rapid recovery. Rising demand coupled with strict cost discipline gave earnings before interest and taxes (EBIT) a strong 14% boost to more than EUR 3 bn. According to the experts at Morningstar, this was "significantly better" than the consensus estimate.
After a disastrous second quarter, Daimler has thus returned to profitability. This should not have been a flash in the pan either. "We expect this positive momentum to continue in the fourth quarter," said Chief Financial Officer Harald Wilhelm when presenting the preliminary figures. His expectation is based on the assumption that there will be no further lockdowns.
However, the quarterly figures were not the only positive news from the Stuttgart headquarters in the past few days. Daimler also announced that it will join forces with the reinsurer Swiss Re. To this end, the two companies are founding the digital car insurer Movinx. The deal could come at just the right time, because the "car of the future" generates immense amounts of data - from driving behavior or traffic flow, for example - and this data can be exploited to great effect. In order to play a leading role in the era of the new generation of vehicles, the brand with the star is planning to expand its range of purely battery-powered electric models to more than 20 by 2030. Thanks to the resulting flood of data, Movinx will be able to develop insurance offers tailored to customers' needs. With this step, Daimler is following in Tesla's footsteps. The Californians have already entered the insurance business and offer their own motor vehicle policies for their vehicles.
On the stock exchange, all this news recently caused significant price gains and pushed the Daimler share to a new nine-month high. However, this was also preceded by a rapid rise in the share price. Not only has the DAX share now made it into positive territory on a one-year horizon, but since the corona low in mid-March, the share price has also developed significantly faster than the market and the domestic competition. Daimler has posted a solid 120% increase, while the DAX, BMW and Volkswagen only managed about half of the increase.
During the upswing, the Daimler share succeeded in breaking through numerous resistances, which subsequently transformed into supports. An important horizontal support emerged, for example, in the EUR 40 range. The 100-day line also runs at this level. The short-term upward-trend channel shows the way to the blue chip. The lower limit is at EUR 47, on the upper side the trend channel leaves room for the price to reach EUR 54.
Whether or not there will be a further increase will depend on various factors. On the one hand, how the Corona pandemic and with it the political regulations will develop in the coming weeks. On the other hand, how quickly the car markets can recover after the drastic slumps. In September, sales in the EU grew by just 3.1%. This still represents a substantial decline of 28.8% for the first nine months. In the short term, however, Daimler could once again cause a surprise. On Friday, October 23, the Group will not only publish its full quarterly report, but also issue a new forecast for the full year. So far, decreases in unit sales, revenue and earnings are expected.
For the new Softcallable Barrier Reverse Convertibles, a further acceleration of the share price is not necessary. On the contrary: The products offer a considerable yield opportunity even at sideways prices or when prices are moderately falling. The Swiss franc version has a coupon of 9.00% p.a., while its EUR counterpart even offers the prospect of a maximum interest rate of 9.3% p.a. Both products have a maximum maturity of 18 months and a low barrier at 59% of the starting price.
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