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Daimler expects to recover production lost to chip shortage amid bullish outlook for 2021

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Daimler said bottlenecks causing a shortage of semiconductor chips will hurt its sales mostly in the first quarter, but it will make up for lost production by the end of 2021.

Much of the auto industry has struggled to maintain production levels because of the chip shortage.

The automaker also confirmed its preliminary financial results for 2020 and said economic conditions in it key markets should continue to return to normal and that it expects no further setbacks as a result of the coronavirus pandemic.

The global economy is expected to recover strongly as vaccinations combating the spread of corona virus take effect, Daimler said Thursday in a statement.

It plans to lift its dividend to 1.35 euros ($1.63) from 0.90 euros last year, when the pandemic shuttered factories and automakers battled the most challenging times in decades.

“We are confident that we can maintain positive momentum if current market conditions prevail,” CEO Ola Kallenius said in the statement.

Group sales, revenue and operating profit will be “significantly higher,” the company said.

Thanks to cost savings and a faster-than-expected recovery in the auto sector, Daimler said last month that its group earnings before interest and taxes (EBIT) for 2020 came to 6.60 billion euros ($7.95 billion).

“The year 2020 was a stress test for just about every company in almost every industry,” Kallenius said. “The Daimler team mastered this test very well.”

Like its German rivals BMW and Volkswagen, Daimler benefited from a rebound in China following COVID-19 lockdowns. Consumers snapped up luxury vehicles and helped save the year for premium brands like Mercedes and Audi.

“China had a remarkable recovery,” Kallenius said in an online video conference.

Daimler said it expects group revenue and operating profit for 2021 to rise more than 7.5 percent, with an adjusted margin from its Mercedes cars and van business of between 8 percent and 10 percent.

Kallenius said sales of EVs in 2021 could double as a percentage of Daimler’s overall sales.

Sales of plug-in hybrids and fully-electric vehicles made up 7.4 percent of Mercedes-Benz car sales in 2020, up from 2 percent  in 2019.

Daimler said this month it planned to spin off Daimler Truck, the world’s largest truck and bus maker, in what’s set to be one of Europe’s largest listings this year, as the company seeks to increase its investor appeal as a focused electric, luxury car business.

While the worst of the pandemic disruptions have passed, obstacles remain for the automaker. Demand in Europe fell to a record low in January and a global shortage of semiconductor chips is throttling output.

Traditional automakers have missed out on the boom in valuations for the likes of Tesla or Nio. Despite a growing lineup of battery vehicles and a slew of gadgetry, many investors remain doubtful they will be able to compete in the new era of battery vehicles constructed around powerful software stacks.

Mercedes plans to keep rivals such as BMW at bay with new models like the latest iteration of its flagship S-Class sedan. The car will be flanked with an all electric counterpart dubbed EQS with a battery range of about 700 km (435 miles).

Apart from adding four full-electric models this year, the automaker will unveil a fresh version of its C-Class sedan and station wagon on Feb. 23.

Mercedes said it expects European CO2 emissions to be “significantly below” the level of last year.

Daimler shares have gained 58 percent over the past year, valuing the company at $84.5 billion. Sanford C. Bernstein analyst Arndt Ellinghorst expects that after the spin-off investors will value the Mercedes cars unit at as much as $78 billion and the trucks division at as much as $42 billion.

Bloomberg contributed to this report