Daimler Industrial Cash Flow Surges 80% on Mercedes Gains

Daimler AG said cash flow from its industrial operations surged about 80 percent in the third quarter, boosted by higher earnings at Mercedes-Benz Cars. The shares jumped the most in 15 months.

The world’s third-largest maker of luxury autos and biggest producer of heavy trucks is reviewing its forecast for 2014 cash flow after its industrial operations generated about 2.9 billion euros ($3.7 billion) in the third quarter, excluding acquisitions and disposals, the Stuttgart, Germany-based company said today in a statement. Daimler had previously forecast that free cash flow from its manufacturing businesses would significantly decline this year from last year’s 3.2 billion euros.

“The results are significantly better than expected,” said Frank Biller, a Stuttgart-based analyst with LBBW. “This shows that fears of a profit warning that weighed on the stock over the last weeks were unfounded.”

Chief Executive Officer Dieter Zetsche has been investing in new models and technology for Mercedes as the brand looks to unseat BMW as the world’s biggest seller of luxury cars by the end of the decade. At the same time, Daimler is looking to rein in costs to boost margins at its biggest unit.

The shares rose as much as 4.7 percent, the most since July 2013, and were up 1.6 percent at 57.63 euros at 11:42 a.m. in Frankfurt. The stock has fallen 8.3 percent this year, valuing the company at 61.7 billion euros. Daimler is due to report full earnings figures for the third quarter on Oct. 23.

Operating profit at Mercedes climbed 29 percent to 1.61 billion euros. Helped by more than doubling sales of the flagship S-Class sedan, global deliveries increased 13 percent to 1.2 million vehicles in the first nine months of 2014.

Daimler still expects earnings before interest and taxes from the ongoing business at the car and truck divisions to rise “significantly” this year, the company said today. Third-quarter operating profit at the truck unit increased 17 percent to 618 million euros.

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