Earnings Watch: Daimler Doubles First Quarter Profit

Earnings for German truck and auto maker Daimler AG doubled in the first quarter of the year, despite lower sales of its trucks.

Net income for the parent of Freightliner, Western Star and Mercedes-Benz totaled 2.70 billion euros ($2.96 billion) from 1.35 billion euros the same time a year ago, according to MarketWatch. That performance was driven by sharply higher Mercedes-Benz sales of SUVs and E-class models. At Daimler Financial Services, earnings grew significantly mainly as a result of increased contract volume, according to the company.

Revenue rose 11% to 38.8 billion euros as unit sales rose 10% to 754,259 cars, trucks, vans and buses.

This followed the company unexpectedly reporting on Tuesday that earnings before interest and taxes (EBIT) jumped 87.1% in the first quarter from a year earlier, totaling $4.01 billion euros, or $4.25 billion.

In the first quarter of this year, sales by Daimler Trucks of 94,000 vehicles were 11% lower than in the prior-year period. Unit sales increased compared with the prior-year period in Europe by 12%. However, in North America, sales dropped significantly to 32,900 units compared to 40,400 a year earlier. In Latin America, Daimler Trucks increased its sales marginally to 6,300 while sales in Brazil decreased 15% to 2,400 units due to the country’s difficult economic situation. But there was strong growth in unit sales in Argentina, up 114%. In Asia, sales were lower than in the prior-year quarter as unit sales decreased in the Middle East by 30%.

The division’s revenue amounted to 7.9 billion euros, down from 8.2 billion euros a year earlier while EBIT of 668 million euros was higher than the prior-year figure of 516 million euros.

Daimler expects a continuation of the cyclical market slow-down when it comes to demand for trucks in North America.

“An overall decrease in the magnitude of 5% is to be expected in classes 6-8, and an even more substantial weakening of demand is anticipated in the segment of heavy-duty trucks (Class 8),” the company said. “Nonetheless, it is assumed that the market will gradually stabilize as the year progresses.”

Overall, Daimler Trucks said it assumes that its total unit sales in 2017 will be in the magnitude of the previous year, including when it comes to unit sales in North America.