Mercedes-Benz Profits Help Daimler Offset Truck Slump
Daimler’s operating profit for the third quarter was up by 23%. The higher earnings received from passenger cars was able to offset the drop in demand for its trucks, helping the vehicle makers to keep its most recent forecast for a higher profit for the full year.
Earnings before interest and tax or EBIT, adjusted due to special items, reached €4.01 billion for the three months that ended September 30. That figure was higher than the €3.8 billion forecast by analysts thanks to improvement at the cars division of Mercedes-Benz.
However, a drop in demand for its trucks across North America and falling sales in markets such as Brazil, forced Daimler to drop its forecast for the full year on revenue.
Rather than expecting revenue to slightly increase, the company, based in Stuttgart, Germany, said it was now expecting revenue to come in flat for the year. That news sent Daimler’s shares down by over 2.5% in early trading on Friday.
An analyst in the car industry said that the turnaround of Daimler’s Mercedes brand is exceptional but left very little room for more positive surprises or unrecognized momentum for earnings. This came from the analyst in a note to his clients across Europe.
Volvo, the Swedish car and truck makers announced on Friday a drop in its forecast for heavy-duty trucks for next year in both Europe and North America.
Daimler announced that the return on sales for Mercedes Benz division of cars increased to just over 11.4% from last year during the same period when it was 10.4%. This came thanks to its sales of its new E-class as well as demand for its popular, luxury SUVs.
Mercedes is attempting to overtake BMW is German rival to claim the top spot for biggest selling carmaker of luxury vehicles.
Mercedes Benz car division profitability was up 23% helped from an increase of 11% in its car sales that was boosted by big demand for the new E-class and sports utility vehicles.
Nevertheless, Daimler Buses and Daimler Trucks did not match the quarterly earnings from the same period in 2015 in part because of a sharp drop in the demand in important markets for the vehicle maker such as Brazil.
Daimler however has kept its forecast for the group for its full-year adjusted group profit that is slightly higher that levels from 2015.