Daimler Posts Above-Forecast Earnings in Surprise Second-Quarter Release

The carmaker keeps its full-year guidance for a 'slight' earnings improvement intact after reporting 5.6% quarterly growth.
By Mariko Iwasaki ,

German automaker Daimler (DDAIF) led the rally for European automakers after the owner of Mercedez-Benz said late Monday that second-quarter earnings were"significantly better than market expectations." 

In an unscheduled preview of  full July 21 results, the Stuttgart-based automaker said its group earnings before interest and tax, adjusted for special items, rose 5.6% to €3.97 billion ($4.41 billion) in the three months to June from a year-earlier figure of €3.76 billion. Adjusted Ebit came to €2.2 billion for Mercedez-Benz cars, €661 million for Daimler trucks, and €462 million for Mercedez-Benz vans. The company kept its adjusted group Ebit outlook for the whole of 2016 unchanged. It  has previously said it expects a slight improvement in full-year earnings before interest and tax.

German-based analyst with Bankhaus Lampe, Christian Ludwig, had previously estimated adjusted Ebit of €3.41 billion for the second quarter.

"The whole underlying business is performing much better than I had expected so far," Ludwig said. "It's clear that Daimler is on a very good path to increase profitability. It's not easy economic times with regards to the truck market in North America, and Europe seems to be facing more troubled water going forward. But the company seems to be in very good shape to deal with all these factors."

On July 6, the company said Mercedez-Benz had delivered more than one million cars worldwide in the first six months of 2016, a record level for half year. Sales jumped 33% in China, while they renewed records in Europe, Asia Pacific, and in the U.S., Canada and Mexico combined.

Daimler shares have dropped nearly 29% over the last 12 months. They recently traded up 4.1% at €57.49.

"As of today, the market has been too pessimistic," Ludwig said. "The market has been assuming that times would get much, much tougher, earnings in the past would not be repeatable. Brexit has added another level of uncertainty. The message that the company now gave to the market is clear, at least currently, it's not as bad as it seems."

Ludwig maintained his buy stance.

In France, Peugeot said that first-half consolidated sales volume in Europe advanced 7.4%, with increases seen for both Peugot and Citroen. The company also enjoyed growth in Latin America, where it saw sales growth of 16.4% even though the overall market declined 8.2%. However, sales volume dropped 19.4% in China and southeast Asia, and 13.3% in the Middle East and Africa.

Peugeot's share price advanced 5.3% to €11.76 in morning trading.

Elsewhere in Europe, Renault's shares were up 4% at €74.02, Volkswagen (VLKAY) was up 2.9% at  €116.60, and BMW was up 4.5% at €73.17

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