Daimler is expected tomorrow (February 18) to post a further improvement in earnings with its fourth quarter results.

“We expect that Daimler – which turned profitable again in the third quarter of 2009 – will report further improvements in group profits at all levels in the fourth quarter,” said Creative Global Investments analyst Sabine Blümel.

Blümel expects to see Daimler post an 18.5% quarter-on-quarter improvement in EBIT to EUR557m (from EUR470m in Q309), a 37% qoq increase in pre-tax profit to EUR393m and a net income of EUR350m.

Mercedes-Benz Cars is set for higher profit in the fourth quarter on the back of favourable model cycles.

“The sales improvement at the Mercedes-Benz brand throughout last year was attributable to a rapidly improving model momentum, reflecting the roll-out of the new E-Class family,” Blümel says.

She expects M-B Cars to post an EBIT of EUR 389m in the fourth quarter and a negative EBIT of EUR-719m for the year. That fourth quarter estimate implies a 10% increase from the Q3 EBIT of EUR355m, as positives that in 3Q09 returned the division to profitability gained momentum: cost-cuts, a better model-mix, better pricing and higher production.

However, Blümel foresees a deeper Q4 loss at  Daimler Trucks of EUR-143m due to ‘ongoing business and restructuring charges of an estimated EUR 91m’. An earnings recovery is forecast for 2010 and 2011 as the truck cycle turns positive, led by an expected recovery in the US truck market.

“There should also be large cost benefits from comprehensive restructuring at the truck operations in North America and Asia,” Blümel says.

Some analysts also believe that the recent appointment of Wolfgang Bernhard to a management board post at Daimler augurs well for the company. Bernhard is seen as an expert in manufacturing efficiency who also possesses a good understanding of end-product.

Max Warburton, of Bernstein Research, believes Bernhard’s appointment reinforces the positive position of Daimler. “We think Daimler just became the best restructuring story in the global sector – having already been one of the most promising top-line and earnings momentum stories for 2010,” he said.

“We still think Mercedes has a labour productivity problem and large fixed cost reduction potential. The company also now has a man well placed to make those cuts – if Bernhard is able to do even half of what he achieved at VW, then we can expect a structural lift in Mercedes margins,” Warburton recently told clients in a note.

Despite the improved fortunes of late, many analysts nevertheless expect Daimler to post a net loss for the year of over EUR1.5bn which compares with net income of EUR1.4bn in 2008.

Dave Leggett