Daimler Reports Earnings Ahead of Market Expectations


Sparkling results at Mercedes cars helped Germany's Daimler boost third-quarter operating profit by a better-than-expected 4 percent, sending its shares up more than 6 percent on Thursday.

Daimler earnings before interest and tax (EBIT) rose to 1.89 billion euros ($2.70 billion) as profit surged at its Mercedes-Benz Cars division amid brisk sales of its C-Class and S-Class cars and its sport utility vehicle line-up.

Mercedes C-Class

Cost-cutting at the business also helped offset the negative impact of the strong euro.

The carmaker tweaked its forecast for full-year group EBIT to "at least" 8.5 billion euros from its previous language that profit would be around that figure.

Its shares were up 4.4 percent at 77.59 euros by 1150 GMT after touching a high of 78.79 euros.

"The EBIT at Mercedes-Benz came in more than 25 percent better than expected by analysts. That is driving the share," said FrankfurtFinanz analyst Heino Ruland.

"What was especially good was Mercedes and all other operative areas," added Merck Finck analyst Robert Herberger.

"All the negatives were one-offs that can be lumped into the pain of separating from Chrysler and thus doesn't have a negative impact on my estimates."

Daimler swung to a quarterly net loss of 1.53 billion euros after writing off 2.22 billion euros of deferred tax assets in the wake of the Chrysler deal.

Third-quarter group sales rose 6 percent to 25.68 billion euros, and would have risen 9 percent at steady exchange rates.

EBIT at the flagship Mercedes-Benz Cars division jumped 57 percent to 1.33 billion euros, beating even the highest estimate in a Reuters poll of 21 analysts.

The Mercedes operating margin was 9.5 percent, keeping it on track to hit its target of a 10 percent return on sales by 2010 at the latest. It said the Mercedes margin would be "significantly more than 8 percent" this year.

Trucks Roll

EBIT at Daimler's market-leading trucks business fell 15 percent to 480 million euros, also better than expected. It stuck to its forecast that EBIT at trucks would stay roughly flat this year despite sharp market downturns in the United States and Japan.

Daimler stock trades at over 13 times consensus 2008 earnings per share, according to Reuters Estimates, versus arch-rival BMW at just over 10 times.

The sale of an 80.1 percent stake in struggling U.S. arm Chrysler to buyout firm Cerberus for 5.5 billion euros pushed Daimler out of the world's 10 biggest carmakers.

But the move also cut its exposure to volatile earnings at Chrysler by breaking up a failed $36 billion transatlantic car merger struck in 1998.

The sale also freed up liquidity that Daimler is using to buy back up to 10 percent of its shares.

Daimler said in August it would spend up to 7.5 billion euros to buy back nearly 10 percent of its shares over the next year, of which around 3.5 billion euros worth would be bought by the end of 2007.

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