Daimler is in good shape to face global economic challenges ahead, according to an analyst who spoke to just-auto ahead of the company’s Q3 results.
The company will post its third quarter results later this week (tomorrow, October 27) and Sabine Blümel of Creative Global Investments LLC forecasts that the group will post a third quarter EBIT of EUR2.26bn (11.7% up on last year) and net profit of EUR1.39bn.
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Blümel expects the positive result overall to be spearheaded by surging volume at Daimler Trucks, with a worsening trend at Mercedes-Benz cars ‘due to headwinds such as launch costs, R&D costs, raw material costs and currency’.
A sharp profit and margin improvement for Daimler Trucks is forecast for the third quarter on the back of still strong growth in global truck markets and on the assumption of a lower cost structure and growing benefits from restructuring efforts in North America and Asia. Truck orders are reported as strong enough to keep the company’s truck operations at full capacity into 2012.
Blümel also believes that Daimler is in generally good shape to weather a deterioration to global vehicle markets.
“Even a full-blown financial crisis is already priced into the current Daimler share price,” she maintains. Daimler’s share price fell 40% during the market turmoil in August and hit a 12-month low of EUR 30.97 on October 4th, 50% off its 12-month high of 58.46 (January 18th).
“We are of the opinion that Daimler is now in a much better shape than in late 2008. At Mercedes-Benz Cars, we believe that the single most important structural improvement is a better country mix with the share of emerging markets of 30% in the first half of this year versus 18% in the second half of 2008.”
She also points out that in the trucks division there have been important structural changes.
“At Daimler Trucks, the two aspects of the restructuring and re-organisation that have in our view improved resilience in case of a recession are the global and integrated management approach in combination with restructuring of the operations in North America and Asia.”
However, Daimler’s financial performance is forecast by Blümel to deteriorate in 2012. After an expected 23% growth in Earnings Per Share (EPS) to EUR5.27 in 2011, she expects EPS to decline 5.1% to EUR5.00 in 2012 before growing again to EUR6.12 in 2013.
Blümel assumes a baseline scenario for 2012 of a macroeconomic slowdown in most mature Western economies, but no recession. “With the global truck market considerably more cyclical than the global premium car market, the cuts in our estimates for trucks are deeper than those for cars,” she says.
