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Earnings Watch: Daimler Profit Rises 3%, Dana Earnings Fall

Car and truck maker Daimler AG reported a slight increase in its second quarter profit, but it expects significantly lower truck sales for this year. Meanwhile, one supplier is feeling the effects of the slowing North American commercial vehicle market.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
July 21, 2016
Earnings Watch: Daimler Profit Rises 3%, Dana Earnings Fall

 

4 min to read


Car and truck maker Daimler AG (OTC: DDAIF) on Thursday reported a slight increase in its second quarter profit, but it expects significantly lower truck sales for this year. Meanwhile, one supplier is feeling the effects of the slowing North American commercial vehicle market.

The German parent to Mercedes-Benz, Freightliner and others says net income rose 3% to 2.4 billion euros, equivalent to $2.6 billion. It posted record overall second quarter sales of 761,000 autos and commercial vehicles, beating the year ago level by 7%.

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Revenue also moved higher by 3% to 38.6 billion euros due to increases in its cars, van, buses and financial services divisions.

“We are starting the second half of the year with record unit sales and will systematically continue along our path. The development of earnings once again shows that our company is extremely well positioned in all areas and that our long-term strategy is paying off on a sustained basis,” said Dr. Dieter Zetsche, chairman of the board of management of Daimler AG and head of Mercedes-Benz Cars.

This follows Daimler announcing earlier this month it achieved 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. This figures excluded 400 million euros in legal costs, which at the time, Daimler did not say more about. However, earlier this week, it was learned the company set the money aside to pay a European Union fine following charges of a price-fixing scheme that includes other truck makers.

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Daimler Trucks’ unit sales, however, fell to 108,300 vehicles in the second quarter compared to 125,100 a year earlier. Despite seeing growth of 13% in the number of trucks sold in Europe, weakening demand in North America saw sales fall to 40,600 vehicles during the quarter versus 49.400 sold in the second quarter of last year. Nevertheless, in the Class 6-8 category the company achieved a North America market share of more than 40%.

The division’s revenue amounted to 8.7 billion euros compared to 9.4 billion a year earlier, while EBIT of 621 million euros was lower than the high level of the prior-year period when it hit 682 billion euros.

For the year 2016, Daimler Trucks now expects significantly lower unit sales than in 2015. In the North America region, the division anticipates a considerable decrease in unit sales due to generally weak demand. Sales are also expected to be lower in the Middle East, Turkey and Brazil, but should increase in Eurpoe, Asia and Africa.

Overall, Daimler expects a significant increase in total unit sales once again this year, however, the rate of growth is likely to be rather lower than in 2015, while total company revenue and adjusted EBIT are expected to increase slightly.

Dana Profit Slips Just Over 10%, Changing Name

Also on Tuesday, component manufacturer Dana Holding Corp. (NYSE: DAN) reported along with lower earnings for the second quarter it's changing its name.

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Net income fell 10.2% from a year earlier to $53 million while revenue moved lower to $1.55 billion from $1.61 billion a year earlier, as lower commercial-vehicle and off-highway sales were partially offset by stronger light-vehicle market demand and new business. The company also said its bottom line included a loss on getting rid of debt totaling $17 million that was related to the completion of bond refinancing.

Earnings per share in both the current and year-ago quarters totaled 36 cents, while adjusted earnings improved from 48 cents a year earlier to 53 cents in the most recent quarter, 6 cents better than a consensus estimate by analysts.

Dana’s Commercial Vehicle Driveline Technologies segment reported sales of $349 million for 2016 second quarter, compared with $431 million a year earlier. It attributed the drop to lower volume with a key customer and weaker Class 8 truck production in North America and Brazil. Segment EBITDA for the second quarter of 2016 was $32 million, $4 million lower than 2015.

For all of 2016, Dana affirmed earlier financial targets for the entire company of sales between $5.8 billion and $6 billion with adjusted EBITDA of $640 to $670 million.

The company also announced effective Aug. 1, it will change the company name from Dana Holding Corp. to Dana Inc.

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"Dana operates as a unified global manufacturer and supplier of goods and services to the vehicular industry,” said James Kamsickas, Dana president and CEO. “Our new name connects with the cohesiveness of the Dana team members and our united commitment to provide exceptional performance to our stakeholders."

Dana says it continue to operate four business segments focused on power conveyance and energy management solutions for three key end markets. The company logo, the Dana Diamond, will remain as the corporate mark. The New York Stock Exchange ticker symbol DAN, the organizational structure, and leadership team will continue as they are.

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