Daimler Truck Shares Drop 6.5% as Weakness in European Market Dampens First-Quarter Results

Shares of Daimler Truck (DTGGe.DE) experienced a sharp decline of up to 6.5% on Friday following the release of its first-quarter results, which highlighted weakness in the European market.

While the company's overall performance beat forecasts, concerns over declining order intake in Europe weighed heavily on investor sentiment.

Daimler Truck's Mercedes-Benz business, which primarily operates in Europe, reported a concerning 15% drop in order intake for the quarter. Conversely, its North American truck business saw a notable 30% increase in orders during the same period. Despite this, Daimler Truck's shares were down by 5.4% by 0848 GMT.

Warburg Research analyst Fabio Hoelscher expressed disappointment with Daimler Truck's order intake for Europe, noting that management appeared to be more cautious than before. He highlighted concerns that the company's guidance might lean towards the lower end due to the lower-than-expected order intake in the first quarter.

CEO Martin Daum attributed the challenges in Europe to "depressive sentiment" in Germany, which significantly impacts Daimler Truck due to its substantial market share in the country. Analysts, such as Oliver Wojahn of MWB research, expressed doubts about the recovery of European markets, particularly in Germany, suggesting that investors may adopt a wait-and-see approach to monitor developments. Despite these challenges, Daimler Truck reported core profits of 1.21 billion euros for the quarter, surpassing consensus estimates, and reiterated its guidance for the year.

Key Takeaways

1. Daimler Truck's first-quarter results showed a mixed performance, with significant weakness in the European market overshadowing growth in North America.
2. Analysts expressed concern over the European outlook, particularly in Germany, citing management's caution and doubts about market recovery.
3. Despite challenges in Europe, Daimler Truck exceeded profit expectations for the quarter, signalling resilience amid market uncertainties.
4. Investors may adopt a cautious approach as they monitor developments in European markets and evaluate the company's ability to navigate challenges and meet its yearly guidance.