Daimler Management Discusses Q3 2010 Results – Earnings Call Transcript
Daimler AG (
)
Q3 2010 Earnings Conference Call
October 28, 2010 8:00 AM ET
Executives
Michael Muhlbayer – Head, IR and Treasury
Bodo Uebber – CFO and Head of Finance and Controlling, Daimler Financial Services
Analysts
Jochen Gehrke – Deutsche Bank
Christina Church – Barclays Capital
Arndt Ellinghorst – Credit Suisse
Stuart Pearson – Morgan Stanley
Horst Schneider – HSBC
Daniel Schwarz – Commerzbank
Thierry Huon – Exane BNP Paribas
Jose Asumendi – RBS
Edward Taylor
Charles Winston – Redburn Partners
Presentation
Michael Muhlbayer
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Daimler AG Q3 2009 Earnings Call Transcript
Good afternoon. This is Michael Muhlbayer speaking. On behalf of time, I would like to welcome you to our Q3 presentation. We are very happy to have with us today our CFO Bodo Uebber. In order to give you maximum time for your questions, Bodo will begin with a short introduction directly followed by Q&A. Now I would like to hand over to Bodo.
Bodo Uebber
Ladies and gentlemen, welcome to our Q3 conference call. Once again we are pleased to deliver strong results. During the Q3 Daimler built on its momentum. Sales, revenue and earnings rose significantly, unit sales and revenue increased by double digit rates compared to last year’s period, EBIDTA reached EUR2.4 billion EU and we posted a net profit of EUR1.6 billion EU. Accordingly the free cash flow developed strongly and further improved our net liquidity to EUR11.9 billion EU.
What are the reasons behind this ongoing strong performance? First, there’s our well established presence in the booming export markets of Brazil and Asia, and we continue to be very successful in the United States. The solid demand for our attractive products continued and actually exceeded our expectations in the Q3. An ongoing favorable model mix and pricing further enhanced our earnings. Cost reductions proved to be sustainable due to our ongoing disciplined cost management, and last but not least, efficiency enhancements and restructuring measures which replaced our temporary (inaudible) measures are clearly improved.
Now let’s take a closer look to each of our divisions. Mercedes Benz cars posted an EBDITA of EUR1.3 billion EU in the Q3 compared to EUR355 million one year ago. Return on sales increased to 9.5%, confirming that we are well on our way to our financial target of 10% over the cycle after 2012. All segments of the Mercedes Benz model range achieved sales increases in the Q3. Our dynamic momentum in China is unbroken. From July to September, unit sales rose by 140% and there’s no indication of a slowdown. Our sales in China as a percentage of our total unit sales increased quarter over quarter from 6% to 13%. Nevertheless, China is not the only driver for our improving sales. In other Asian countries and in the United States we also achieved a double digit increase.
The product mix remains very favorable. Unit sales of our E-Class and S-Class increased by 34%, 35% respectively. The E-Class and C-Class sedans as well as our S-Class continued to be the market leaders in their respective segments. The current strong demand for our top of the line models in the Chinese markets continues to stay at a high level. The market launch of the long wheel-base E-Class further strengthened our product mix. And finally, our success was supported by maintaining strict cost discipline.
Daimler Trucks attained an EBIDTA of EUR500 million. This compares to a loss of EUR127 million in the Q3 of last year. However, it needs to be added that the Q3 2010 EBIDTA includes positive effects of EUR178 million from the realignment of the healthcare and pension plans in North America and other special reporting items. There were opposing effects from charges relating to the revaluation of long-term warranty and service obligations as well as an increase in research and development costs.
In line with the economic recovery and the strengthening of our position in various markets, our unit sales rose 4% compared to the previous year’s Q3. In Western Europe the dynamic development of demand and the improvement of our market position led to a sales increase of 46% to 14,700 units. Sales in Latin America were also strong and increased by 45%. Further stimulus came from the Mercedes Benz Actros which has been sold in Brazil since August in order to meet the increasing demand for premium trucks.
In Asia, Daimler Trucks posted a sales increase of 42% mainly driven by a high demand in Southeast Asia, particularly in Indonesia. Our Trucks NAFTA unit increased sales by 1/3 to 20,000 vehicles. We expect the NAFTA Class 8 market in 2010 would show a moderate increase over 2009. A full recovery will not take place until 2011. Nevertheless, Daimler Trucks North America was able to strengthen its market share in the medium- and heavy-duty segments due to the favorable reception of the new EPA-10 engines. Our efficiency enhancements shows benefits above and beyond our repositioning programs in NAFTA and Asia which are on track or even ahead of schedule.
Mercedes Bens Vans reports a successful Q3 as well. EBIDTA rose to EUR122 million. The main reason for this success was a growth in unit sales with an overall rise of 34% to which all regions contributed. A significant portion of our Vans sales increase can be attributed to the US and our new joint venture in China. At the Hanover Commercial Vehicles show we presented the new generation Vito and Viano, which we are confident will create additional sales momentum.
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