Daimler Net Profit, Revenue Seen Higher As Vehicle Sales Rise
First Published Wednesday, 25th April 2012 05:46 pm - © 2012 Dow Jones
By Christoph Rauwald
Of Dow Jones NEWSWIRES
FRANKFURT -(Dow Jones)- Daimler AG (DAI.XE) is expected Friday to post higher revenue for the first quarter on rising vehicle sales, but earnings before interest and tax are expected to decline as costs to develop new cars and trucks weigh.
Daimler's net profit is expected to benefit from lower interest charges and a favorable tax rate compared with last year, rising 9.2% to EUR1.16 billion. Revenue is seen 8.2% higher at EUR26.7 billion, according to a Dow Jones Newswires survey of 11 analysts.
Daimler's closely-watched Ebit is expected to come in 4.3% lower than last year at EUR1.94 billion due to rising development costs and spending on plant and equipment.
"Daimler has prepared the market for a weak start into the year, especially in trucks (due to) Actros launch costs," Credit Suisse analyst Arndt Ellinghorst said in a recent note to clients. "However, ... Daimler needs improved profitability for the remainder of the year" in order to meet its full-year Ebit target, he said. Ellinghorst rates Daimler stock as neutral.
Daimler's main Mercedes-Benz Cars division is expected to account for EUR1.22 billion in Ebit, 5.3% less than in the first quarter 2011, while its truck division, the world's largest by revenue, is expected to contribute EUR378 million to Ebit, down 8.9% from last year.
Daimler expects full-year vehicle sales to rise significantly and revenue to improve as well year-on-year in 2012, but Ebit is anticipated to only come in on last year's level.
"We expect management to confirm the (full-year) guidance" for 2012, said Commerzbank analyst Daniel Schwarz who rates Daimler stock at buy. He added, however, that first-quarter results at the trucks unit and the bus division might suffer from weak market demand in Europe and Brazil.
Daimler Chief Executive Dieter Zetsche has described 2012 as a transition year as part of his ambitious target to make Mercedes-Benz the world's bestselling luxury-car maker again by 2020.
Volkswagen AG's (VOW.XE) Audi brand has moved up into to second behind BMW AG (BMW.XE) and pushed Mercedes-Benz into third place in the premium car maker. Both BMW and Audi also have higher profit margins than Mercedes-Benz, which has sparked criticism from investors.
Comments on pricing in China and Europe will be in spotlight on Friday along with plans to improve profitability. Investors will also watch out for statements regarding a possible change of the shareholder structure.
German monthly Manager Magazin reported last week that Daimler's largest shareholder, Abu Dhabi's sovereign-wealth fund Aabar Investments PJS, plans to sell its stake though Daimler said it hasn't held any talks with the emirate about a possible exit.
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512; firstname.lastname@example.org