Daimler's First-Quarter Earnings Surge on Mercedes SuccessBy
Result includes positive revaluation of HERE, BAIC stakes
Mercedes deliveries rise at more than triple the rate at BMW
Daimler AG’s first-quarter profit almost doubled as surging demand for Mercedes-Benz cars like the new E-Class sedan helped to widen its sales lead over rival BMW AG.
Earnings before interest and taxes climbed to 4 billion euros ($4.24 billion) from 2.15 billion euros a year earlier, Stuttgart, Germany-based Daimler said in a statement late Tuesday, citing preliminary figures. The earnings included a total of 690 million euros of special items, such as revaluation of stakes in mapping business HERE and Chinese partner BAIC Motor Corp. Daimler stock rose the most in four months.
Profit at the Mercedes-Benz Cars unit jumped 60 percent from a year earlier to 2.24 billion euros, and the maker of the S-Class sedan sold 16 percent more cars. That compared with BMW’s delivery growth of 5.3 percent for the period. Daimler has been reaping the benefits of a revamp of its product line-up with a sportier look and the addition of sport utility vehicles like the GLC coupe. That effort helped Mercedes unseat German arch-rival BMW from the top spot in luxury-car sales last year.
“Daimler is off to a strong start in 2017,” Georges Dieng, a Paris-based analyst for Natixis, wrote in a note. “The impressive performance is however mainly driven” by a number of positive one-offs, he said, adding that excluding special items the profit the company’s result was “very solid.”
The surge in earnings comes after Daimler in February gave a tepid outlook for the year amid a surge in spending on new technologies. Profit will rise only slightly in 2017, even as the revamp of its bread-and-butter E-Class sedan is popular with buyers, the company said Feb. 2. Last month, the manufacturer said it’s speeding up a planned rollout of at least 10 all-new electric cars to 2022, three years earlier than a previous target announced in September.
Daimler’s research and development costs jumped by 15 percent in 2016 to 7.6 billion euros, from a level which the company said was already “very high.” These outlays will rise to 8.1 billion euros on average this year and next, it said in February.
Daimler rose 1.3 percent to 67.47 euros at 11 a.m. in Frankfurt. The intraday gain of 2.8 percent was the steepest since Dec. 8.
Earnings at the heavy-truck unit, the world’s biggest, also advanced, as the Mitsubishi Fuso Truck & Bus unit in Japan recorded a 267 million-euro gain from selling real estate. The business struggled last year with declining demand and profits. Last week, Daimler concluded talks with worker representatives for additional cost cuts that will also reduce headcount.
The result for trucks, excluding the real estate gain, was ahead of expectations, said Goldman Sachs analyst Stefan Burgstaller. A rise in commercial vehicle orders will probably result in more improvements through the year, he said.
Daimler will report full quarterly financial figures on April 26. The preliminary earnings were released early after the company recorded a result that was “significantly above” market expectations, Daimler said.
The automaker plans to unveil at the Shanghai auto show next week a refreshed version of the Mercedes S-Class, its flagship model and one of its main profit contributors.
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