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Daimler Raises Forecast After Profit Beats Estimates

October 28, 2010
3 min to read


Daimler AG, the world’s second-largest maker of luxury vehicles, raised its full-year profit forecast after net income beat analysts’ estimates on demand for top-of-the-line E- and S-Class sedans in China and the United States, Bloomberg reported.


Third-quarter net income attributable to shareholders surged to 1.53 billion euros ($2.12 billion) from 41 million euros a year earlier, the Stuttgart, Germany-based carmaker said today. Analysts predicted profit of 1.09 billion euros, according to the average of nine estimates.

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CEO Dieter Zetsche increased his target for 2010 earnings before interest and taxes to more than 7 billion euros. The average estimate of 14 analysts prior to the report was for full-year Ebit of 6.8 billion euros.


Daimler’s luxury-car sales are rebounding after the financial crisis as demand advances in China and the U.S., the world’s two largest auto markets. September marked the highest output of Mercedes cars for the month in the company’s 120-year history, as third-quarter E- and S-Class sales rose 34 percent.


Daimler predicts demand for E- and S-Class models, which start at $49,400, will boost Mercedes sales by more than 10 percent this year. Still, growth is slower than competitors. Daimler September sales worldwide gained 13 percent to 128,700 autos. Volkswagen AG’s Audi increased deliveries 16 percent to 102,650 vehicles, while sales at luxury leader Bayerische Motoren Werke AG climbed 17 percent to 142,950 cars.


Daimler traded down 13 cents, or 0.3 percent, at 47.50 euros as of 1:53 p.m. in Frankfurt. Before today’s announcement, Daimler had jumped 28 percent this year, valuing the company at 51 billion euros. The stock last week hit its highest price since May 2008.


“Investors worry about fading momentum at Mercedes and the impact of new competitor models,” such as the revamped BMW 5- Series and X3 and new Audi A7, said Adam Hull, a London-based WestLB analyst. “We expect a falling margin in 2011 and 2012.”

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Third-quarter sales climbed 30 percent to 25.1 billion euros. The manufacturer recorded a fivefold increase in operating profit in the quarter to 2.42 billion euros. Earnings were boosted by 401 million euros in gains from health-care and pension benefits in the U.S. and after winning a lawsuit.


Sales in China, which overtook the U.S. in 2009 as the world’s biggest auto market, rose 19 percent last month. Mercedes outpaced the market by doubling deliveries. U.S. auto sales in September rose to a seasonally adjusted annual rate of 11.8 million, the fastest pace since the end of the “cash for clunkers” program. Mercedes outsold BMW and Toyota Motor Corp.’s Lexus in the U.S. last month.


The revamped CLS luxury coupe and SLK hard-top roadster, as well as cleaner engines, will help Mercedes have a “successful” 2011, Joachim Schmidt, the car unit’s top sales chief, said in an interview last month. Daimler, which aims to increase Mercedes car sales to 1.5 million by 2015, didn’t comment on prospects for next year in the statement today.


The Mercedes unit, which also includes the Smart city car and the ultra-luxury Maybach nameplate, posted third-quarter Ebit of 1.3 billion euros, compared with 355 million euros a year earlier. The growth was driven by demand in China, where the unit’s sales have more than doubled this year to become its third-largest market after Germany and the U.S.


The recovering global economy has also boosted deliveries of heavy trucks at Daimler, the world leader in commercial vehicles. The division, which makes Mercedes, Freightliner, and Fuso vehicles, posted a third-quarter operating profit of 500 million euros after a loss of 127 million euros a year earlier. The unit closed factories in Asia and North America and cut jobs after posting losses in every quarter in 2009.

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