Daimler has reported a near doubling in first quarter profit, helped by healthy sales of new Mercedes-Benz models.
Net profit increased 83% to EUR1.03bn from EUR564m, partly reflecting a jump in sales for the recently introduced high margin Mercedes S-Class.
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Worldwide, Daimler sold 565,800 cars and commercial vehicles in the first quarter, 13% up on the same period last year.
Daimler revenue rose 13% to EUR29.46bn from EUR26.2bn, Daimler said.
“Our strategy is paying off; our investments are bearing fruit,” said Dieter Zetsche, Daimler CEO and Chairman. “We made a good start to this year, as expected. As the year progresses, we will continue working systematically on our profitable growth path.”
Profitability in Daimler’s car business rose in the first quarter. The unit’s operating margin rose to 7.0% from 3.3%. However, that is still below the company’s medium-term goal of 10% operating margin and some analysts said it was disappointing.
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By GlobalDataThe total sales of the Mercedes car division increased by 14% to 389,500 units in the first quarter, a record. Due to a more favourable model mix, revenue increased at a higher rate of 21% to EUR17bn. The division achieved EBIT of EUR1,183m, which was significantly higher than the earnings of the prior-year period (Q1 2013: EUR460m).
The company said that Mercedes car earnings growth in the first quarter primarily reflects the ongoing growth in unit sales, especially in China and the United States. This growth was driven in particular by the S-Class and the E-Class, as well as by the expanded range of compact cars. There were, however, negative effects on earnings from “expenses for the enhancement of products’ attractiveness, capacity expansions and advance expenditure for new technologies and vehicles”.
On the basis of expected market development, Daimler expects its EBIT from ongoing business to “increase significantly” in 2014.
China is expected to deliver the biggest contribution to global growth this year; further expansion of the country’s car market of approximately 10% should be possible, Daimler said. The US market is also likely to continue its growth, “although only at a relatively moderate rate, the market volume will probably increase to approximately 16m cars and light trucks”.
Daimler said it continues to anticipate a rather hesitant recovery of the Western European car market. “The region’s recent quite significant growth rates were primarily a reflection of the weak prior-year level and are likely to decrease perceptibly as the year progresses,” Daimler said.
