Daimler is expected to post a sharp earnings improvement when it announces its fourth quarter 2010 results next week (February 16), according to an analyst who spoke to just-auto.
Creative Global Investments analyst Sabine Blümel forecasts that Daimler will post a fourth quarter EBIT (earnings before interest and tax) of EUR2.1bn (compares with EUR448m in Q4 2009). She also expects Daimler to post 2010 earnings of EUR4.74bn (versus a 2009 EUR2.64bn loss) or EUR4.51/share and a dividend of EUR1.80/share.
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The investment analyst expects that Daimler will post a 24.6% increase in group revenue in 2010 to EUR98.33bn, resulting in a group EBIT (ongoing business) of EUR 7.52bn. This meets Daimler management guidance (of October 2010) of ‘more than EUR7bn’.
Daimler’s upbeat financial figures will be underpinned by sharp increases in volumes at its Mercedes-Benz Car and Daimler Truck divisions. Like its arch-rival BMW, the company has been benefiting from rising demand for premium brand cars around the world, but especially in emerging markets.
The fourth quarter of last year was the best quarter for Mercedes-Benz car sales in the company’s history, with deliveries of 313,700 units, an increase of 14% on the previous year. Worldwide sales of Mercedes-Benz passenger cars rose 15% in 2010, to 1.12m units.
“The year was marked by the success of the E- and S-Class in particular, as well as high growth rates in China and the other BRIC countries,” said Blümel.
Mercedes car sales in China more than doubled to 148,400 units in 2010, helped by the introduction of a long-wheelbase version of the E-Class that is just for the Chinese market. But Blümel emphasises the broad base behind Mercedes’ volume growth last year. The Mercedes-Benz Cars division (which includes the Smart brand) is estimated by Blümel to have seen a whopping 30% increase in revenues to EUR53.7bn last year.
“In the third quarter, Mercedes-Benz assembly plants in Germany, US and South Africa were running at full capacity, there were additional shifts at three plants and Mercedes said that September 2010 was the September with the highest level of production output in the company’s history,” she says. “Last year was a story of improved product and country mix and better pricing as well as some positive currency effects.”
However, she also warned that costs for R&D, labour and raw materials increased through the year and are something to watch. “We estimate a quarter-on-quarter costs increase in Q4,” Blümel said, “which points to the need for management to continue to pay attention to cost developments.”
Another big plus for Daimler in 2010 was the performance of Daimler Trucks which saw wholesale volumes rise by 41% to 104,000 units as markets recovered. The trucks division was helped by a stronger than expected recovery in some truck markets, most notably Germany – estimated to be Daimler’s most profitable truck market. It is also seeing improved profitability as a result of extensive restructuring actions.
In 2011 Blümel expects Daimler EBIT to increase by 16% to EUR8.73bn. While she anticipates that the earnings momentum at Mercedes-Benz Cars is set to turn moderately negative, she also expects that the recovery at Daimler Trucks will gain momentum and the division will become the main earnings driver.
