Daimler lifts targets again as Q3 profit surges

AP News
Posted: Oct 28, 2010 9:22 AM
Daimler lifts targets again as Q3 profit surges

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 euro1.61 billion ($2.2 billion) for the July-September period, up from just euro56 million a year earlier. Revenue climbed to euro25.07 billion from euro19.31 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 euro7 billion this year.

In July, it had set a target of euro6 billion _ itself lifted from a previous outlook of euro4 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 euro2.42 billion from euro470 million.

That figure was boosted by euro183 million gain from the adjustment of health care and pension benefits at Daimler Trucks North America, and by a euro218 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 euro2.29 billion from last year's euro1.04 billion. U.S. revenue climbed by 37 percent to euro5.36 billion; in western Europe, Daimler saw a more modest 7 percent gain to euro9.55 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 euro4.5 billion _ up from the euro4 billion it targeted in July. It set the forecast for Daimler Trucks at more than euro1.1 billion _ up from euro1 billion.

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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 euro78.9 billion.

For the year's first nine months, Daimler reported net profit of euro3.53 billion _ compared with a loss last year of euro2.29 billion.

Revenue rose 24 percent to euro71.37 billion over the nine months, from euro57.6 billion. EBIT came in at euro5.71 billion, compared with last year's loss of euro1.96 billion.

The company said it had free cash flow from the industrial business of euro5.33 billion, up from euro2.25 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 euro48.28.