The second quarter earnings season got underway on Monday, with Daimler AG (OTC: DDAIF) unexpectedly releasing numbers showing its adjusted earnings in the second quarter of the year are “significantly above market expectations” – but the news did not carry over into its truck operations.
The parent of brands such as Freightliner, Western Star and Detroit Diesel reported adjusted earnings before interest and taxes (EBIT) of 3.97 billion euros ($4.39 billion), an increase of 5.6% from a year earlier. The performance is also 17% better than its earlier forecast, according to Reuters.
According to Bloomberg News, the German company benefited from gains in vans and buses while earnings dropped for its trucks and Mercedes cars divisions. The results also exclude almost 500 million euros in Takata Corp. air-bag recalls as well as 400 million euros for legal costs that Daimler didn’t explain.
Daimler Trucks was also pulled down by the cost of 34 million euros in workforce adjustments and another 6 million euros due to restructuring of its dealer network, but still reported a profit of 661 million euros compared to 717 euros in the second quarter of 2015.
For all of 2016 Daimler says its outlook for adjusted EBIT for special reporting items remains unchanged. Its trucks division is expected to be significantly below the prior year level, but overall the company expects to see it “slightly increase in 2016 as expected earlier.” All other divisions (Mercedes-Benz cars, Mercedes-Benz vans, Daimler buses and Daimler Financial Services) are expected to be either slightly better or significantly better than the prior year levels.
The Wall Street Journal reported the release of the results was likely due to the company beating expectations.
Daimler is scheduled to report its full second quarter earnings on July 21.
The release of the numbers also came as the second quarter earnings season unofficially opened on Monday, with aluminum powerhouse Alcoa Inc. ((NYSE:AA) being the first to report its performance, as usual.
It reported second quarter 2016 net income of $135 million, or 9 cents per share, including $78 million in special items, compared to net income of $140 million, 10 cents per share a year earlier. Revenue declined 10% to $5.3 billion.
The company said in a news release, “Growth in the heavy duty truck, trailer and bus market in Europe and China is expected to be offset by continued production declines in North America, setting the global production outlook for the commercial transportation market at negative 4 to negative 1 percent for the year.”
Later this year, the company is set to spin off its traditional smelting operations under the Alcoa name, while its value-added business focused predominantly on the aerospace and automotive industries will operate under the name Arconic, according to Reuters.