Daimler Shares Spurt After News Of Slightly Improved Profits.
“Most followers of Daimler are waiting for the meeting November 14/15, when the new team will set out their vision and plan for the company”
Investors appeared to like Daimler’s latest financial report and its small increase in operating profits, but they might have been looking ahead to an important strategy meeting next month which might announce exciting new plans.
Daimler increased its earnings in the third quarter before interest and taxes (EBIT) 8% to 2.69 billion euros ($3.0 billion) compare with the same period last year, as sales at its Mercedes division advanced. Despite that, Mercedes profit margins actually slipped to 6% from 6.3% a year earlier. Investors eyes were probably taken by the big increase in free cash flow to 2.8 billion euros ($3.1 billion) from an expected 1 billion euros $1.1 billion.
Investors were due some good news from Daimler. It had a 2nd quarter loss before interest and taxes (EBIT) of 1.6 billion euros ($1.8 billion) after a 2.6 billion euro ($2.9 billion) profit in the same period last year. Before that announcement, Daimler had cut its profit forecast for the third time in 12 months.
“Most followers of Daimler are waiting for the meeting on November 14/15, when the new team will set out their vision and plan for the company,” Bernstein Research analyst Max Warburton said.
Ola Kaellenius took over as chairman of Daimler and head of Mercedes cars earlier this year.
Daimler has promised a detailed presentation on strategy and costs at the meeting.
Analysts expect the meeting to be told about a path to restore Mercedes margins to the 8 to 10% level.
“These (latest) results are really just a piece of routine admin, ahead of the big show. But inevitably, people will be looking for indications of what we might get next month – and how the new team will run the business,” Warburton said.
Warburton liked the progress made at Mercedes in the latest quarter, although sales growth will be tough from now on as markets weaken, while costs from new EU CO2 rules which kick in next year, and electrification, are on the rise.
“What will we get on November 14/15? Daimler’s meeting has been much anticipated, but it’s still not clear quite what it will bring. Will it involve substantive restructuring, precise financial goals and even labor cost measures? Or will it be long on vision and short on detail? We will learn more soon – but not much has leaked so far, which suggests labour has yet to be consulted,” Warburton said.
Daimler shares were up more than 4% at 52.62 euros on European stock markets, after initially jumping 5.4%. Meanwhile the industry-wide Euro STOXX 600 index rose just over 1%.