Strong Mercedes sales power Daimler profits

16th July 2010, Comments 0 comments

German automotive giant Daimler posted strong quarterly figures Friday on the back of soaring demand for its Mercedes cars and trucks, a weaker euro boosting exports and cost cutting measures.

Daimler reported a second quarter operating profit of 2.1 billion euros (2.7 billion dollars), reversing a year-earlier loss of one billion euros and exceeding market expectations.

The group said its sales in the three months to June jumped to 25.1 billion euros from 19.6 billion euros a year earlier.

The results were led by Mercedes-Benz Cars, Daimler's auto division, a statement said.

The unit posted sales of 14 billion euros and earnings before interest and taxes (EBIT) of 1.38 billion euros, owing to stronger demand, "especially in China and the United States," it said.

Other factors given were "an advantageous product mix as well as better price penetration and positive exchange effects" as the euro declined in value against other major currencies.

"A lot of positive things are coming together," Metzler Bank auto analyst Juergen Pieper told AFP. "It is almost a boom in premium cars this year, double-digit growth for these products.

"We had very positive comments from BMW this week and we have the same now from Daimler," he noted, with makers of high-end cars almost back at levels of profitability seen before the global economic crisis.

BMW, the leading maker of luxury cars, said Tuesday it expected to sell more than 1.4 million this year, around 10 percent more than its previous forecast.

Daimler Trucks, the world's leading maker of heavy vehicles, turned in a stronger performance, benefitting in particular from cost-reduction measures, the company statement said.

Daimler shares slipped 0.21 percent to 43.19 euros in afternoon trading on the Frankfurt stock exchange, outperforming the broader market, which was down 1.72 percent overall on gloomy US economic news.

Daimler said it would raise its EBIT outlook for 2010 when it reports full second quarter results on July 27.

"We can expect a very nice upward revision," BHF Bank analyst Aleksej Wunrau told AFP.

He said the figures on Friday surpassed his own forecasts "by 10 to 15 percent."

Earlier in the day, Daimler and Foton Motor of China signed a joint-venture deal to produce heavy trucks in China, a first for the German group.

China, now the world's largest auto market, has been good to premium car companies this year, Pieper noted.

Growth in China "has to come down from 100 percent in the first half for premium cars to maybe 50 percent in the second half but this is still enormous growth," he said.

A two-year global shift towards smaller cars appeared to have come to an end, the auto analyst added.

"Especially in Asia, we are coming back to a trend towards bigger cars and bigger engines," Pieper said.

© 2010 AFP

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