Daimler share: News on dividends, the Corona crisis, and profits or losses

The Daimler share (WKN: 710000) has been particularly infected by the corona virus. Production is at a standstill in any case in large parts. Automobiles currently have few distribution channels. Accordingly, operational standstill has come to the DAX company.

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But how badly will the DAX automaker be affected? At least some numbers regarding dividends, corona crisis and the impact on the numbers have now been revealed.

The dividend stands … but has folded in advance

For now, a first water status report concerns the dividend that Daimler intends to pay out for the likewise mediocre fiscal year 2019. As the DAX-listed group has announced for some time and even before the outbreak of the coronavirus, they plan to pay 0.90 euros per share. A proposal to stick to despite coronavirus.

With a current share price level of 28.60 euros (08.04.2020, relevant for all share prices), this would mean a dividend yield of 3.14%, which seems quite attractive. However, investors should not forget two things here: First, the dividend has already been neatly shaved from last year's level of 3.25 euros in advance. On the other hand, the significant drop in price leads to this comparatively high yield.

So to talk about dividends being safe now is a significant misjudgement. Safer though than some other corporations that are now unceremoniously suspending distributions altogether. Daimler, however, is cutting its own payout for the second year in a row.

Black figures in the first quarter

However, as Daimler CFO Harald Wilhelm has also announced these days, the core business is expected to be in the black. This forecast concerns first of all the first quarter and here you do not see any red figures coming. Positive margins are therefore available in both the car and van and truck businesses, he said.

And yet, the fact that positive margins are left on the bottom line leaves a lot of room to maneuver. After all: it will not be a loss. However, the coronavirus has only developed significantly during the first quarter and the first few weeks have initially been marked by normality, particularly in the European and US markets.

Therefore, to conclude from this statement to the further course seems to be premature. Whereas a solid first quarter without a loss is possibly more than what investors have been expecting in recent days or weeks.

Solid liquidity cushion

Last but not least, Daimler has a solid liquidity cushion and will probably be able to cope well with the Corona period. Accordingly, they feel comfortable, as Wilhelm has expressed in this context. An assessment that could calm the nerves of many investors.

In the process, the DAX carmaker has recently secured a credit line of 12 billion. Euro secured, which could basically be a comfortable buffer. In addition, the short-time work has been extended until the end of April. Considering the largely dormant production, this is a good measure to save costs.

Daimler has taken many measures these days to increase its financial stability. Important steps to take to sit out this time.

No question: crisis mode!

It is accordingly undoubted that Daimler is currently in crisis mode. As I said, however, you're not alone here; the other global automakers and DAX peers also have the same market conditions.

Daimler will nevertheless pay its reduced dividend. However, it is much more important that there is sufficient liquidity and that investors do not have to worry about the financial stability of the Group for the time being. This probably eliminates one of the bigger concerns for now.

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Vincent does not own any of the shares mentioned. The Motley Fool does not own any of the stocks mentioned above.