Daimler targets Group EBIT of €6 billion in full-year 2010

Daimler targets Group EBIT of €6 billion in full-year 2010

Stuttgart - Recovering automotive markets around the world, strong growth in major car and commercial-vehicle markets, an attractive product portfolio and the implementation of efficiency improvements had a very positive effect on Daimler AG (stock-exchange symbol DAI) in the second quarter of 2010.

“Our strategy is paying off: We have a very dynamic development of unit sales and revenue in all divisions. After what was already a very good first quarter, we achieved excellent results in the second quarter,” stated Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. Mercedes-Benz Cars and Daimler Trucks in particular posted significant improvements in their operating profit.

Zetsche remains confident for the full year: “We anticipate significant revenue growth in 2010 and we are targeting EBIT from the ongoing business of €6 billion.”

The positive development of EBIT in the second quarter led to a significant improvement in net profit to €1,312 million (Q2 2009: net loss of €1,062 million). Earnings per share amounted to €1.18 (Q2 2009: loss per share of €0.99).

Unit sales up by 27% in the second quarter

In the second quarter of 2010, Daimler sold 496,500 cars and commercial vehicles worldwide, surpassing the prior-year volume by 27%.

The Daimler Group’s second-quarter revenue increased significantly from €19.6 billion in 2009 to €25.1 billion this year (+28%); adjusted for exchange-rate effects, revenue grew by 21%.

The free cash flow of the industrial business was positive and increased substantially by €1.1 billion to €2.5 billion.

At the end of the second quarter of 2010, Daimler employed 257,658 people worldwide (June 30, 2009: 257,427). Of that total, 163,507 were employed in Germany (June 30, 2009: 162,818). Due to the current order situation and the revival of demand around the world, short-time work was terminated as of June 30, 2010, with just a few small exceptions.

Details of the divisions in the second quarter

The Mercedes-Benz Cars division increased its unit sales by 19% to 342,500 vehicles. For the Mercedes-Benz brand, this was the strongest second quarter ever; its unit sales rose by 24% to 314,400 vehicles. For lifecycle reasons, sales of the smart fortwo decreased to 27,100 units (Q2 2009: 33,500). Mercedes-Benz Cars’ revenue increased by 33% to €14.0 billion. EBIT rose by €1.7 billion to €1,376 million. The division’s return on sales was 9.8% (Q2 2009: minus 3.2%).

The very positive earnings trend was primarily the result of increased vehicle shipments, especially in China, as well as an improved product mix. The substantial improvement in profitability was also caused by better pricing, efficiency enhancements and slightly positive exchange-rate effects.

Daimler Trucks increased its unit sales by 55% to 83,800 vehicles. All of the division’s major markets contributed to this positive development, in particular Indonesia (+130%), the United States (+44%), Brazil (+50%) and Europe (+39%). Revenue of €5.9 billion was also well above the prior-year level (Q2 2009: €4.2 billion). The division also achieved a significant improvement in its operating performance, with EBIT of €300 million (Q2 2009: minus €508 million) and a return on sales of 5.1% (Q2 2009: minus 12.0%).

The key factor for the earnings trend was the good development of unit sales. There were other positive effects from the measures taken to reduce costs, in particular from the repositioning of the subsidiaries Daimler Trucks North America and Mitsubishi Fuso Truck and Bus Corporation. The ongoing implementation of those programs reduced second-quarter EBIT by €14 million (Q2 2009: €217 million).

Unit sales by Mercedes-Benz Vans increased by 42% to 59,400 vehicles. Second-quarter revenue of €2.0 billion was also well above last year’s level (Q2 2009: €1.5 billion). EBIT amounted to €127 million (Q2 2009: minus €10 million) and the return on sales improved to 6.4% (Q2 2009: minus 0.7%). The division’s earnings improvement was primarily the result of a strong increase in unit sales compared to the second quarter of last year. Negative exchange-rate effects were more than offset by sustained efficiency gains.

Daimler Buses sold a total of 10,800 buses and chassis worldwide (Q2 2009: 8,300). Revenue of €1.2 billion was higher than in the prior-year quarter (€1.1 billion). EBIT also increased, to €79 million compared to €49 million in the second quarter of last year. The return on sales was 6.6% (Q2 2009: 4.4%). The main factors behind this earnings development were positive exchange-rate effects and higher revenue resulting from increased chassis shipments in Latin America.

The contract volume of Daimler Financial Services increased to €63.8 billion at the end of the second quarter, which is 9% higher than at the end of 2009. Adjusted for exchange-rate effects, the division’s portfolio remained stable. New business amounted to €7.9 billion (Q2 2009: €6.5 billion). EBIT improved substantially to €171 million (Q2 2009: €79 million).

The earnings increase was mainly caused by lower risk expenses and higher interest margins. In addition, gains were realized in connection with the sale of non-automotive assets (€26 million). Expenses of €78 million were incurred for the repositioning of business activities in Germany.

The reconciliation of the divisions’ EBIT to Group EBIT reflects Daimler’s proportionate share in the results of its equity-method investment in EADS, other gains or losses at the corporate level, and the effects on earnings of eliminating internal transactions between the divisions.

Source: http://media.daimler.com/dcmedia/0-921-656186-1-1315856-1-0-0-0-0-0-11700-0-0-1-0-0-0-0-0.html

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Daimler targets Group EBIT of €6 billion in full-year 2010

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