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China, Loaded S And E Class Sales, Boost Daimler Profits

Profit Forecast Raised For Third Time This Year

China sales aided and abetted by a strong global performance by its Mercedes S-class and E-class cars boosted Daimler in the third quarter, but despite its bravura performance, investors expected more and punished the company’s shares on the stock market.

Daimler raised its third quarter earnings before interest and tax (EBIT) more than five-times to €2.42 billion compared with the same period last year. Daimler also raised its profit target for 2010 for the third time this year, expecting that EBIT will now exceed €7 billion, one billion more than it expected three months ago and more than three times better than its first stab at a prediction for 2010.

Sales of high-specification Mercedes S and E class cars in China boosted profit margins, Daimler said.

Stock market traders had already expected the forecast for the year to exceed €7 billion, so were underwhelmed when Daimler CEO Dieter Zetsche made the announcement.

Investors liked the news, and expected the good times to continue.

“Strong demand from China and the U.S. as well as sold product mix keep margins at high levels, despite the loss-making Smart and barely profitable A/B class models,” said Commerzbank analyst Daniel Schwarz.

The Mercedes car division notched up a 9.5 per cent profit margin.

“The key messages here are that management sees no indication of any weakening of demand from China, the key source of growth and earnings and that pricing remains favourable,” Schwarz said.


Neil Winton – November 1, 2010

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