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Daimler Truck Plans To Keep Pricing High In 2023

Daimler Truck Plans To Keep Pricing High In 2023
Daimler Truck will maintain high prices even if certain costs begin to decline in order to compensate for reduced profits since last year, the truckmaker said on Thursday, anticipating solid demand into 2023 despite recession fears.
Energy prices, supply chain bottlenecks in China, and chip shortages will continue to weigh on the company in the second half of this year, according to CEO Martin Daum, even if the company expects some supply chain issues to alleviate.
"Even if some costs are easing, we have to catch up for the fourth quarter of 2021 ... we will definitely keep our pricing to go back to normal margins," Daum said on a call with analysts.
"We expect a strong 2023 - demand will outpace the supply side," he added on a media call, saying the truckmaker was not seeing any impact on demand from rising inflation globally.
The truck and bus manufacturer has stated numerous times this year that it is confident that strong demand will allow it to continue passing on higher energy and raw material prices to clients.
Nonetheless, chief financial officer Jochen Goetz stated in May that price hikes were necessary and would be reversed if raw material prices returned to pre-pandemic levels.
Daimler Truck reported a 15 per cent increase in earnings before interest and taxes to 1.01 billion euros ($1.04 billion) in the second quarter, well above analysts' estimates; however, adjusted returns were somewhat lower than last year, at 8 per cent, down from 8.1 per cent.
Despite increasing revenues and profitability, first-quarter margins were also lower than previous year.
Trucks in Europe and North America are sold out for 2022, and the company is reallocating limited chips from places like as Japan and India to serve orders in better margin markets, according to the company.
Goetz was optimistic that further Russian gas supply cuts to Germany would not cause companies to shut down, but he was concerned about suppliers' ability to provide.
Due to supply chain challenges, competitors Traton and Iveco reported lower second-quarter earnings despite higher revenues.

Christopher J. Mitchell

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