Daimler's Management Discusses Q1 2012 Results - Earnings Call Transcript

Daimler Ag (DDAIF.PK)

Q1 2012 Earnings Call

April 27, 2012 8:00 am ET


Dr. Michael Mühlbayer – Head-Investor Relations and Treasury

Bodo Uebber – Finance & Controlling


Horst Schneider – HSBC Trinkaus & Burkhardt AG

Daniel Schwarz – Commerzbank

Arndt A. Ellinghorst – Credit Suisse

Kristina Church – Barclays Capital



Welcome to the global conference call of Daimler. At our customer’s request, this conference will be recorded. The replay of the conference call along with the presentation slides will also be available as an on-demand audio webcast in the Investor Relations section of the Daimler website. The short introduction will be directly followed by a Q&A session. (Operator Instructions)

I would like to remind you that this teleconference is governed by the Safe Harbor wording that you find in our published results documents. Please note that our presentations contain forward-looking statements that reflect management’s current views with respect to future events. These forward-looking statements can be identified by expressions such as assume, anticipate, believe, estimate, expect, intend, may, plan, project, and should. Such statements are subject to many risks and uncertainties, example which are set in the Safe Harbor wording in our disclosure documents. If the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made.

May I now hand over to Dr. Michael Mühlbayer, Head of Daimler Investor Relations and Treasury. Thank you very much.

Dr. Michael Mühlbayer

Good afternoon, this is Michael Mühlbayer speaking. On behalf of Daimler, I would like to welcome you on both the telephone and the Internet to our Q1 results conference. In order to give you maximum time for your questions, our CFO, Bodo Uebber will begin with his short introduction directly followed by Q&A,

Now, I would like to hand over to Bodo Uebber.

Bodo Uebber

Thank you, Michael. Ladies and gentlemen, we announced first quarter numbers earlier today and they are again solid numbers. In a challenging and volatile market environment and despite high investments in the future Daimler delivered the best first quarter revenues and EBIT. Post Group sales and revenues increased by 9%, at the Group level we posted EBIT of €2.2 billion from ongoing business, that’s an increase of 3% compared to the previous year. Net profits is very satisfying at €1.4 billion, which is 20% higher than Q1 2011.

Earnings per share amount to €1.25 versus €0.99 in Q1 of the previous year. Industrial free cash flow was a negative €2 billion. This is mainly caused by the seasonal development in working capital. The increase in inventory is related to the selling of the product pipeline at Mercedes-Benz Cars to prepare for the spring selling season and the market launch of new products such as the B-Class, SL or the SUVs.

Also at Daimler Trucks, we recognized higher inventories at the end of Q1. This increase relates to the order of book and the resulting stronger sales in the coming months particularly in NAFTA and Asia. We also accounted for some Euro V inventories in Brazil due to the transition phase from Euro III to Euro V.

In addition, we had a cash out flows from capital contributions to Engine Holding in connection with the integration of the Bergen business into Tognum and the investment in our Chinese Truck joint venture.

As we continue to invest in our future beyond 2012 in new products, new markets, and new technologies, free cash flow was also affected by higher spending in connection with CapEx and R&D. Our net liquidity remains high at €10.1 billion.

Now let’s discuss the performance of our divisions in the first quarter 2012. At Mercedes-Benz Cars following up on our record sales last year, we are off to a successful start in 2012. To date, we have recorded a new sales record in every month of this year with sales of 338,000 Mercedes-Benz and Smart cars. We set a new high for first quarter sales, and March was the strongest single sales months in the company’s history. Mercedes-Benz Cars posted an EBIT of €1.3 billion with a return on sales of 8.4%.

On the one hand, this quarter’s earnings were supported by higher sales and currency effects. On the other hand, we incurred a temporary less favorable net pricing in China with some selected imported vehicles. Benz also resulted from higher expenses from new technologies, new products and additional planned capacity. EBIT was also impacted by the discounting of non-current provisions with lower interest rates.

In addition to our excellent start this year so far, it is especially the overwhelming customers’ funds to the new models, which makes us very confident that we achieve our goal of posting a new all-time sales record in 2012.

In 2012, we will profit from the continuation of strong demand for our models in the C-Class segment. At the end of March, we launched a new version of our iconic SL. We anticipate further growth for our family of SUVs, preliminary due to the full availability of the new M-Class and as of September 2012 of the new GL. In addition, the new generations of the GLK compact SUV and of the G-Class will be launched in June 2012.

The new models in the high-volume compact-car segment will also contribute to growth in unit sales. The new B-Class was launched in November 2011 with the new A-Class to follow this September, plus we will bring a completely new automobile concept to the market in September, the CLS Shooting Brake. In the coming quarters we anticipate that business and earnings at Mercedes-Benz Cars will follow the regular seasonal pattern.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Neel Kashkari: The Heart of Our Financial System Is More Radioactive Than Ever

Neel Kashkari: The Heart of Our Financial System Is More Radioactive Than Ever

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain