Equipment

Earnings Watch: Daimler 2016 Profit Hits Record High

February 02, 2017

By Evan Lockridge

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The parent company to names such as Freightliner, Western Star, and Mercedes posted strong profits and revenue in the fourth quarter of last year. Daimler AG reported the best year in the company’s history, with strong automotive sales more than compensating for a weaker commercial truck market, and it's expanding investment in research and development.

The Germany-based company said net profit in the three months ended Dec. 31 rose 19% from the same time a year ago to 2.15 billion euros, or $2.32 billon, according to MarketWatch, while revenues increased 1% to 41 billion euros. Despite the increase in profit, it was a little short of a consensus forecast of Wall Street analysts.

For all of 2016, net profit increased 1% from 2015 to best-ever figures of 8.8 billion euros, as revenue moved up 3% to 153.26 billion euros.

“With our very attractive products and the measures taken to enhance efficiency, we have made considerable progress and stabilized our business despite volatile market developments," said Bodo Uebber, member of the board of management of Daimler AG responsible for finance and controlling and Daimler Financial Services.

Daimler increased its total unit sales in 2016 by 5% to around 3 million vehicles, due in large part to unit sales increasing 10% at Mercedes-Benz Cars and 12% at Mercedes-Benz Vans.

In contrast, Daimler Trucks’ unit sales of 415,100 vehicles were substantially lower than the high prior-year figure of 502,500. Revenue decreased to 33.2 billion euros from 37.6 billion euros. The division’s earnings before interest and taxes of 1.95 billion euros was significantly below the high level of 2.58 billion euros achieved in the previous year.

The 17% decline in truck unit sales for 2016 was due sharply lower sales in North America, Turkey, the Middle East, Latin America and Indonesia. Daimler Trucks earnings were also reduced by intense competition in Europe, according to the company.

Unit sales at Daimler Buses were significantly lower than in the previous year, falling 7%.

Daimler officials also said the copmany has dramatically increased spending on research and development for 2017, up 15% from 2016 to more than 7.5 billion euros. That R&D will focus on new vehicle models, fuel-efficient and environmentally friendly drive systems, new safety technologies, autonomous driving and digital connectivity of its products.

"In the coming years, we want to actively shape mobility with groundbreaking innovations, and in parallel we will push forward with digitization,” said Dieter Zetsche, chairman of the board of management and head of Mercedes-Benz Cars.

Daimler believes demand for medium- and heavy-duty trucks in the regions it serves is likely to remain at the rather weak prior-year level. In the North American region, the cyclical market correction can be expected to continue, according to the company.

“In weight classes 6-8, it must be assumed that demand will decrease by approximately 5% after the significant drop in 2016. In the heavy-duty segment, the weakening of demand is likely to be rather more pronounced,” Daimler said.

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