Daimler accelerates ahead of BMW as quarterly profit soars
Daimler’s first-quarter profit almost doubled as surging demand for Mercedes-Benz cars such as the new E-Class saloon helped to widen its sales lead over rival BMW.
Earnings before interest and taxes climbed to €4 billion (Dh15.57bn) from €2.15bn a year earlier, Daimler said late Tuesday, citing preliminary figures. The earnings included a total of €690 million of special items, such as revaluation of stakes in the mapping business HERE and its Chinese partner BAIC Motor.
Profit at the Mercedes-Benz Cars unit jumped 60 per cent from a year earlier to €2.24bn, and the maker of the S-Class saloon sold 16 per cent more cars. That compared with BMW’s delivery growth of 5.3 per cent 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 4x4s such as 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,” said Georges Dieng, a Paris-based analyst for Natixis. “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 rise in spending on new technologies. Profit will increase only slightly in 2017, even as the revamp of its bread-and-butter E-Class saloon is popular with buyers, the company said. Last month, the manufacturer said it was speeding up a planned roll-out 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 per cent in 2016 to €7.6bn, from a level which the company said was already “very high”. These outlays will rise to €8.1bn on average this year and next, it said in February.
Earnings at the heavy-lorry unit, the world’s biggest, also advanced, as the Mitsubishi Fuso Truck & Bus unit in Japan recorded a €267 million 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 lorries, excluding the real estate gain, was ahead of expectations, said the 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 car maker plans to unveil at the Shanghai car 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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Updated: April 12, 2017 04:00 AM