Daimler Truck Navigates Cost-Cutting Drive Amid Profit Pressures

Daimler Truck enacts austerity with job cuts while rewarding shareholders via a €2B buyback and stable dividend, as profits fall 19% due to a North American slowdown.

Facing a significant drop in earnings, Daimler Truck is implementing a stringent austerity program. The commercial vehicle manufacturer's current strategy presents a stark dichotomy: it is eliminating 5,000 positions in Germany while simultaneously committing billions to a fresh share buyback initiative. This contrast between restructuring urgency and shareholder returns defines the company's present operational landscape.

Shareholder Returns Provide a Counterbalance

Despite the operational challenges, the company's commitment to capital returns remains firm. Daimler Truck is maintaining a stable dividend of €1.90 per share. Furthermore, a new share repurchase program commences this Monday. The plan authorizes the company to acquire its own shares worth up to €2 billion from the market by March 2028, with an initial tranche valued at €400 million.

These shareholder-friendly measures are providing visible support for the stock. Closing at €42.57 on Friday, the shares have recorded a gain of over 13% since the start of the year. Another positive signal emerged from order intake, which climbed 13% higher in the fourth quarter, nudging the full-year figure into positive territory.

North American Slowdown Drives Earnings Decline

A substantial downturn in the crucial North American market was the primary driver behind the 19% decline in annual profit to €3.78 billion. In that region, unit sales collapsed by more than a quarter. Globally, the group sold 8% fewer trucks and buses. Consequently, the adjusted operating margin for the industrial business contracted to 7.8%.

Management is now taking decisive action to counter this trend. The "Cost Down Europe" program is designed to generate savings exceeding €1 billion by 2030. For the current year alone, net savings of at least €250 million are firmly budgeted, focusing on efficiency gains in both production and administration.

Analyst Views Diverge on Future Trajectory

For the newly begun 2026 financial year, management anticipates an adjusted operating result ranging between €3.2 billion and €3.7 billion. Market experts are divided on the stock's future path, reflecting the mixed signals:

• Warburg Research: Issues a "Buy" recommendation, though reduces its price target to €49 from €53.
• JPMorgan: Maintains an "Overweight" rating with a €47 price target.
• Bernstein Research: Advises "Underperform," setting a price target of €32.

This wide discrepancy in price targets underscores the company's current transitional phase. Should Daimler Truck succeed in rapidly reducing European costs and capitalize on the improving order momentum, the upper end of its earnings forecast becomes attainable. The initial effects of the share buyback program launched today are expected to lay a solid foundation for further share price development.