UPDATE 2-Daimler shows recovery signs after bad first quarter
* Books 1.7 bln euro one-off gain in Q2 related to EADS
* Mercedes achieves 30 pct of 2013 planned cost cuts in H1
* CEO hopes for solution soon over dispute with France
(Rewrites throughout adding CEO, analyst comments)
FRANKFURT, July 24 (Reuters) - With improved margins, a focus on cost savings and a suite of new models hitting the showroom, German luxury carmaker Daimler provided evidence on Wednesday that it has turned the corner after a disastrous start to the year.
Daimler's Mercedes-Benz brand has struggled to keep up with growth rates achieved by its two larger premium rivals BMW and Audi (part of Volkswagen ), and the group was forced in April to lower profit targets for the second time in six months.
But its detailed second-quarter accounts showed signs of a recovery, even after stripping out a previously reported one-off accounting gain of 1.7 billion euros ($2.3 billion) on Daimler's stake in European planemaker EADS, which it sold in April.
Net profit after minorities doubled to 2.8 billion euros in the quarter. Analysts said the figures showed healthy cashflow and suggested Mercedes had not bought market share at the expense of offering margin-eroding incentives.
"There were no nasty surprises hiding in the results so the overall picture is encouraging and confirms the positive sentiment from the preliminary figures," said Landesbank Baden-Wuerttemberg's Frank Biller.
Bernstein's Max Warburton said the release "suggests the improvement in profitability is genuine.
"Capacity utilization was good, fixed-cost coverage excellent and ... margins went up," Warburton said, adding that inventories appeared to be under control and investors would be reassured by Daimler's more confident tone in reiterating its outlook for the rest of the year.
Shares in Daimler were up 0.9 percent at 53.15 euros by 1133 GMT, while Germany's blue-chip index DAX gained 1.2 percent.
Mercedes is just hitting the "sweet spot" of its model cycle: its new S-Class flagship limousine hit European showrooms last weekend, joining an extensively refreshed E-Class which has been rolled out in Europe and the United States and will reach China in the coming days. Early next year it follows with the next generation of its best-selling C-Class, while also entering the booming compact SUV segment.
Chief Executive Dieter Zetsche told reporters during a conference call that the new model launches would not suffice to offset the damage from the very weak first quarter, however, reaffirming that operating profit would fall this year.
He said Mercedes remained on track to achieve its full 600 million euros in slated cost cuts, even though only about 180 million in savings were booked in the first half.
A similar programme at its trucks division also only met 30 percent of its annual target during the first half.
"It's natural that the accumulated amount of savings will increase throughout the course of the year," Zetsche said. "While we still have 70 percent left to go at both cars and trucks, we are certain we will at least achieve the planned targets by the end of the year."
Asked about France's unilateral decision to block the sale of new Mercedes cars because they employ an air-conditioning refrigerant being phased out by the European Union, the Daimler CEO said talks between Germany, the EU and France to resolve the situation continued.
"We hope that we can come to a reasonable solution very soon," said Zetsche.
European Industry Commissioner Antonio Tajani recently gave provisional backing to Paris, arguing its decision may be considered legal under existing EU rules, even though Daimler believes the block by France violates laws governing the single market.
Daimler received official approval from Germany's motor vehicle department KBA to sell cars using refrigerant R134a, a global warming agent more than 1,400 times more potent than carbon dioxide. Under EU rules this normally would mean all EU member states would have to follow suit.
"We believe the regulatory framework is unambiguous," the Daimler CEO said.
($1 = 0.7565 euros)
(Additional reporting by Daniela Pegna; Editing by Mark Trevelyan)