daimler-ir-interimreport-q1-2020

C | INTERIM MANAGEMENT REPORT 11
The development of earnings in the first quarter of 2020 was
strongly influenced by declining volumes. Lower unit sales,
particularly in North America and the EU30 region due to
expected market corrections and the initial effects of the
COVID-19 pandemic, had a negative impact on EBIT. Earnings
were adversely affected also by the valuation of used-vehicle
inventories. There were opposing effects from lower material
costs, partially as a result of lower commodity prices. Gross
profit in relation to revenue therefore decreased from 18.7% to
16.2%. Cost improvements in all functional areas partly related
to the COVID-19 pandemic had a positive impact on earnings.
Valuation effects, including increasing discount rates, had a
positive impact on other income/expense.
In the first quarter of 2020, the Daimler Mobility segment
achieved EBIT of €58 million (Q1 2019: €1,209 million;
adjusted: €491 million). Return on equity of 1.6% was below the
adjusted prior-year figure of 14.5%. C.02 C.04
Against the backdrop of the worsened economic outlook in
connection with the COVID-19 pandemic, increased provisions
for credit risks in the first quarter of 2020 had a negative
impact on cost of sales. Another reason for the reduced earnings
is the positive effect on other financial income/expense of
€718 million in the first quarter of 2019 from the merger of the
mobility services of the Daimler Group and the BMW Group.
Implemented cost saving measures had a positive effect on
earnings. The reconciliation of EBIT to EBIT adjusted is shown
in table C.04.
The reconciliation of the segments’ EBIT to Group EBIT comprises
gains and losses at the corporate level and the effects
on earnings of eliminating intra-Group transactions between
the segments.
Items at the corporate level resulted in expenses of €218 million
in the first quarter of 2020 (Q1 2019: €145 million). In the
first quarter of 2020, these expenses include an impairment of
Daimler’s equity investment in BAIC Motor Corporation Ltd.
The elimination of intra-Group transactions resulted in income
of €20 million in the first quarter of 2020 (Q1 2019: €38 million).