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May I now hand over to Dr. Michael Muhlbayer, Head of Daimler Investor Relations and Treasury. Thank you very much.Michael Muhlbayer Good afternoon. This is Michael Muhlbayer speaking. On behalf of Daimler, I would like to welcome you to our second quarter presentation. We are happy to have with us today, the Chairman of the Board of Management and Head of Mercedes-Benz Cars, Dr. Dieter Zetsche; the CFO, Bodo Uebber; and the Head of Daimler Trucks, Andreas Renschler. In order to give you maximum time for your questions, Dr. Zetsche will begin with a short introduction directly followed by Q&A. Now, I would like to hand over to Dieter Zetsche. Dieter Zetsche Gentlemen, welcome to our second quarter conference call. You may have expected that our second quarter numbers would be good and in fact they are. Earlier this year, we promised that Daimler would emerge from the crisis generating a lot of talk. Now, we are delivering results. Sales, revenue and EBIT are all up. Year-over-year revenue increased by 28%. We posted EBIT of 2.1 billion Euros and net profit was 1.3 billion Euros. Our free cash flow is also developing very positively, despite ongoing investments in future technologies and markets. Accordingly, Daimler’s strong industrial net liquidity position further improved. Several positive developments contributed to these results. Let me name just a few. Unit sales were up by double-digit rates in all of our divisions. Our model-mix has improved significantly. Our industrial cash flow was very strong. The same goes for our pricing. Efficiency gains and cost reductions are proving to be sustainable, and we are making substantial progress in terms of improving our regional footprint and building forward-looking corporations. Those are the headlines. Let’s now take a closer look starting with our passenger cars division. Mercedes-Benz Cars posted EBIT of 1.4 billion Euros in the second quarter. Return on sales was 9.8%. In other words, this is already very close to our financial target of 10%. And with our almost complete renewal of our product portfolio in the coming years, we are confident to post those 10% on a sustainable basis from the end of 2012 onwards.
Now, what are the reasons for a success in the second quarter of 2010? First and foremost, our products are in great demand. Our E-Class sales nearly doubled with introduction of the new model family. Across all models from April to June, unit sales increased by 19%. In fact, last month, last month was our best June ever. A key sales driver was China. In the second quarter, which tripled our sales there compared to the same period in 2009.At the same time, let me emphasize that as clearly as the importance of the Chinese market is growing, we are not putting all our axe into the Chinese baskets. In fact, we maintain a regionally-balanced sales structure. In the US, for example, we increased our vehicle sales by 16% and of course we won’t lose side of our home market. Granted the German market was weak in the second quarter from might add as expected. Still, Mercedes-Benz managed to increase its market share significantly. Now, what is the situation of our commercial vehicle business? Daimler Trucks achieved an EBIT of 300 million Euros in the second quarter and a return on sales of 5.1%. Sales rose by 55% mainly driven by growth in Latin America, Indonesia, the US, and parts of Europe. However, the absolute volume in the drive markets still remained on low level. Our structural measures clearly supported the success of our trucks division. Our global excellence strategy works. Our new generation of heavy-duty engines improves our commonality rates. And with the repositioning of Fuso and Daimler Trucks North America, we have reduced breakeven further. On the products side, our pipeline is fully loaded. In 2010 alone, we have lots of new products, including the launches of the all new Freightliner Coronado, Fuso Super Great, and Fighter. In general, our performance in the second quarter confirms the potential that Daimler Trucks can deliver in a better market environment. Next is Mercedes-Benz Vans which showed a positive earnings performance as well. EBIT rose to 127 million Euros in the second quarter. Return on sales was 6.4%. Unit sales went up by 42%, partly because of our new sales organization in the US, and partly because of the start of delivery to the Chinese market.
Daimler Buses posted EBIT of 79 million Euros in the second quarter, despite a less favorable model fix. Return on sales rose to 6.6%. The main sales driver was Latin America where teen sales were up slightly. In line with a higher sales volume of our automotive divisions, business volume at Daimler Financial Services is picking up as well. Earnings increased to 171 million Euros. This increase was primarily due to the lower cost of risk and higher interest margins. In general and throughout the financial crisis, risk management at Financial Services proved to be highly effective. Looking at the earnings development at the group level, we can state an ongoing improvement over the last quarters. Our strategy is paying off.Read the rest of this transcript for free on seekingalpha.com