Daimler Mobility has increased its provisions for credit risk by $487.3 million during the first quarter in anticipation of an economic downturn and rising delinquencies, the company noted during its earnings presentation today.
“In order to take early account of the deterioration in forecasts by economic institutes and anticipated rising delinquencies as a result of COVID-19, we adjusted the credit reserves according to [International Financial Reporting Standard],” Chief Financial Officer Harald Wilhelm said during the earnings call, noting that current credit losses still remain at normal levels.
In line with Wilhelm’s previous expectations, Daimler Mobility’s originations decreased by 7% year over year to $17.6 billion in the first quarter. The captive’s global outstandings fell to $173.6 billion, a 2% YoY drop.
The Stuttgart, Germany-based automaker also reported a decrease in its net liquidity to $10.1 billion at the end of the first quarter, largely due to $2.5 billion in spending related to “upfront investment for future products,” such as mobility initiatives.
Still, Daimler ramped up its financial flexibility in April with a $13 billion loan facility in addition to its existing $12 billion revolving credit facility, which has not yet been utilized. The additional loan facility can be tapped within a 12-month period with two extension options of six months, the company noted.
Daimler is also among the list of automakers that shuttered production across the globe to preserve cash amid the pandemic. Daimler noted that plants are starting to slowly reopen.
Daimler AG’s unit sales dropped 17% YoY to 644,300 units sold during Q1. The company’s net profit plummeted 92% to $217 million. Daimler AG’s stock [OTCMKTS: DMLRY] was trading up 6.62% at $8.70 per share at 4:11 p.m. ET. The company’s market cap is $37.45 billion.
