Daimler Powers Ahead With Strong Mercedes Sales

The car maker takes a hit to earnings from vehicle recalls related to Takata airbags, but Chinese sales continue in top gear.
By Jonathan Braude ,

German car maker Daimler (DDAIY) motored ahead on Thursday, rising nearly 1.8% to €59.79 ($65.69), on record second-quarter vehicle sales, as management board chairman Dieter Zetsche claimed the company's long-term strategy was "paying off on a sustained basis."

However, the company also reported weaker second-quarter earnings before interest and tax, because of one-off items including the cost of recalling vehicles to replace faulty airbags made by Japan's Takata (TKTDY) as well as developing new models.

While revenue in the second quarter was up 3% to €38.6 billion, Ebit was €3.26 billion, down from €3.72 billion for the same three months last year. However, adjusted for exceptional items, Ebit was €3.97 billion, up 5.6% on April to June 2015.

Unveiling the results at the company's Stuttgart, Germany headquarters, Zetsche said: ""We are starting the second half of the year with record unit sales and will systematically continue along our path. The development of earnings once again shows that our company is extremely well positioned in all areas."

The company also looked forward to a strong second half, with worldwide demand for cars likely to increase by about 3% during the whole of 2016, although the mood is less positive for the trucks division.

"Daimler assumes that group revenue will increase slightly in full-year 2016," the company said. "In regional terms, the strongest revenue growth is anticipated in Asia and Western Europe, but business volumes should grow also in the other regions."

The company added, "On the basis of the market development and the assessments of the divisions, Daimler assumes that it will slightly increase its Ebit adjusted for special items in 2016."

Daimler said it invested heavily in property, plant and equipment in the first six months of the year, particularly in developing new models in the cars division, especially the new E-Class and C-Class ranges.

The company said overall vehicle sales were up 7% in the second quarter compared with last year, at 761,000 units, with particularly strong sales in China, its biggest market for Mercedes Benz cars.

The car division alone saw sales rise 9% to 546,500 vehicles worldwide. Numbers were up 13% in Europe, 29% in China, but slightly lower in the U.S.

But the picture was bleaker in the trucks division, where worldwide sales fell to 108,300 in April to June from 125,000 in the year-earlier period, despite strong growth in Europe. There were big falls in Brazil and other emerging markets as well as in the North American Free Trade Area. Vans and light trucks were up, because of increased demand in Daimler's core European market, while buses were down worldwide.

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