Create a free account to continue

Daimler Lifts Targets Again As 3Q Profit Surges

Car maker's net earnings surged as strong sales in China and U.S. helped push revenue 30 percent higher, prompting a raise in its full-year forecast again.

BERLIN (AP) -- Car maker Daimler AG's third-quarter net earnings surged as strong sales in China and the U.S. helped push revenue 30 percent higher, prompting the company to raise its full-year forecast again on Thursday.

Daimler reported net profit of €1.61 billion ($2.2 billion) for the July-September period, up from just €56 million a year earlier. Revenue climbed to €25.07 billion from €19.31 billion.

The company said it "assumes it will be able to continue along this successful path also in the fourth quarter" and now expects earnings before interest and taxes from its ongoing business of more than €7 billion this year.

In July, it had set a target of €6 billion -- itself lifted from a previous outlook of €4 billion.

"Of course, the world economy is not yet as stable as it was before the recession, but we are confident that we will continue to operate successfully in our markets," CEO Dieter Zetsche said in a statement.

Daimler's third-quarter earnings before interest and taxes increased to €2.42 billion from €470 million.

That figure was boosted by €183 million gain from the adjustment of health care and pension benefits at Daimler Trucks North America, and by a €218 million gain from a win in a lawsuit involving Daimler, the company said.

However, Daimler mainly credited the recovery of global auto markets and efficiency improvements for the gain.

The company saw its strongest revenue gain in China, where the figure more than doubled to €2.29 billion from last year's €1.04 billion. U.S. revenue climbed by 37 percent to €5.36 billion; in western Europe, Daimler saw a more modest 7 percent gain to €9.55 billion.

Chief financial officer Bodo Uebber voiced confidence that the Chinese market will continue to grow, and said that "there's no indication of a slowdown."

"Demand for our top-of-the-line models in the Chinese market continues to stay at a high level," Uebber said in a conference call.

The company sold 475,110 vehicles worldwide, up 23 percent compared with last year's third quarter. The core Mercedes-Benz Cars division sold 317,496 cars worldwide, a climb of 17 percent, but the Daimler Trucks division also contributed a healthy increase -- its sales climbed 44 percent to 94,813.

For the full year, Daimler said it now expects Mercedes-Benz Cars to produce EBIT from ongoing business of about €4.5 billion -- up from the €4 billion it targeted in July. It set the forecast for Daimler Trucks at more than €1.1 billion -- up from €1 billion.

Daimler said it expects full-year unit sales and group revenue both to increase "significantly." In 2009, unit sales totaled 1.6 million and revenue came in at €78.9 billion.

For the year's first nine months, Daimler reported net profit of €3.53 billion -- compared with a loss last year of €2.29 billion.

Revenue rose 24 percent to €71.37 billion over the nine months, from €57.6 billion. EBIT came in at €5.71 billion, compared with last year's loss of €1.96 billion.

The company said it had free cash flow from the industrial business of €5.33 billion, up from €2.25 billion a year earlier.

Uebber was cautious as to what Daimler might do with that, other than holding out the prospect of an "attractive dividend payment" for 2010.

"I'm happy to have this high net liquidity, it is from the risk management point of view the right thing to have currently," he said, pointing to uncertainties over global economic events.

Daimler shares were up 1.4 percent in Frankfurt trading at €48.28.
More in Supply Chain