Daimler is poised to post strong full-year financial results later this week (February 9) boosted by strong performances in its heavy trucks and financial services divisions.
Creative Global Investments analyst Sabine Blümel told just-auto that she expects the company to report 2011 earnings of EUR5.49bn.
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For the fourth quarter she expects to see a 30% increase to Daimler Group EBIT driven by a strong performance at the Daimler Trucks and Financial Services units, despite some headwinds.
Blümel says that the benefits of a 12% y-o-y sales increase will more than outweigh challenges that Daimler came up against in the fourth quarter.
“We are assuming a worse product and country mix, unhelpful pricing and headwinds such as higher product development and launch costs due to model cycles, as well as external areas such as raw materials and currency,” she said.
Blümel estimates that the Trucks division was the main earnings driver for Daimler last year, contributing EUR0.87bn to a projected EUR1.92bn increase in group EBIT, ahead of Mercedes-Benz Cars and Financial Services with estimated contributions of EUR 0.51bn and EUR 0.44bn respectively.
“Daimler Trucks saw a sharp profit and margin improvement in the fourth quarter based on the 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,” Blümel says.
But Mercedes-Benz Cars also managed a hefty increase to sales in the fourth quarter. Mercedes-Benz Cars reported an 8.8% y-o-y increase in fourth quarter retail sales to 366,100 units, leading to a 7.7% increase to 1.36m units in the year.
Mercedes-Benz car sales in China are particularly important for Daimler. “We estimate that in 2011 wholesales in China increased 36% to 218,000 units, increasing their share in group sales to some 16%, compared to 12.5% in 2010. However, we estimate that China’s contribution to divisional EBIT in 2011 was some EUR1.6bn, or some 30% of divisional EBIT, thus twice the size of China’s share in sales,” she points out.
The equity markets’ concern regarding a renewed recession led to a 40% collapse in the Daimler share price during the market turmoil in August of last year. It has since recovered strongly.
“During the past two months, Daimler shares have gained 50% versus its 12-month low at the end of November and 30% since January 1,” Blümel says. “However, at around EUR45, the Daimler share price remains 25% below the post-crisis high of EUR58.46 seen in at the end of January last year.”
