Satisfactory, But Not As Good As BMW, Audi
Mercedes is the least favoured of the big three German premium car manufacturers by investors, perhaps unfairly, and its latest results didn’t change that, as the company reiterated its projection that earnings will be flat for all of 2012.
Mercedes earnings before interest and taxes (EBIT) in the second quarter fell 16 per cent to €1.31 billion compared with the same period of 2011, weakened by falling car prices and new-model launch costs. Mercedes profit margin fell to 8.6 per cent from 10.7 per cent. Mercedes profit goal is a margin of 10 per cent next year, compared with nine per cent in 2011.
Commerzbank favours Mercedes parent Daimler as an investment, and recommends investors buy its shares.
“We see upside potential for margins and multiples and sentiment and reiterate our “Buy” rating,” said Commerzbank analyst Daniel Schwarz.
J.P.Morgan isn’t impressed by Mercedes and gives Daimler a neutral rating.
“We remain fundamentally concerned about China and price/mix developments given the fading product cycle of high-end sedans,” said J.P.Morgan analyst Bernard Donges.
Reports from China have indicated Mercedes is having difficulty selling top-of-the-range S-class models without hefty inducements.
Chicago-based Morningstar echoed the conventional wisdom.
“We continue to expect Daimler to generate solid results but not as well as its compatriot rivals Audi and BMW, which have a better share position in China. While Europe’s anaemic economy will cloud the picture for the stock over the next 12-18 months, we think Daimler shares have been unfairly punished,” said Morningstar analyst Richard Hilgert.
Neil Winton – August 15, 2012