We received shares of Daimler Truck (XTER:DTG, Financial) when it was spun out of Daimler AG (XTER:DAI) in early December. Daimler Truck is the world’s largest commercial truck manufacturer, holding the top position in North American and European markets. The spin-off from Daimler represents a turning point for the business that will allow it to receive more focus, pursue its own strategy and enter into value-added partnerships. We believe that management has offered a credible plan to significantly improve margins by increasing service attachment, reducing fixed costs, and generating more customer-focused and localized products and distribution networks. In our view, the dramatic turnaround at Mercedes-Benz—combined with the significant profitability of its premium-truck peers, like Volvo and Scania—indicate Daimler Truck’s attractive potential and lend support to management’s high single-digit EBIT margin and cash flow conversion targets.
From David Herro (Trades, Portfolio)'s Oakmark Global Value Fund fourth-quarter 2021 letter.
