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Daimler's 2Q Earnings Soar

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Daimler AG’s (DDAIF - Free Report) second quarter 2013 earnings nearly tripled to €4.6 billion ($6.1 billion) or €2.65 ($3.5) per share from €1.6 billion or €1.39 per share in the prior-year quarter. The sale of the remaining EADS shares had a positive impact on earnings. Adjusting for the EADS effect, the company reported adjusted earnings per share of €1.25 ($1.7) in the quarter.  

The company’s revenues for the quarter increased 2.8% to $29.7 billion ($39.2 billion) from $28.9 billion in the year-ago quarter. Unit sales went up 6% to 605,823 vehicles. The company benefited from the launch of new S-Class in May and modification of Mercedes-Benz trucks in Europe, which are now available with Euro VI emission technology.
Segment Detail

Revenues from Mercedes-Benz Cars segment went up 6% to €16.3 billion ($21.5 billion) in the quarter. Unit sales augmented 9% to 404,711 cars. However, the segment EBIT declined 22.1% to €1.0 billion ($1.4 billion) compared with €1.3 billion in the second quarter of 2012. The decline in earnings was due to changed model mix and increased costs associated with the product launch and increased production capacities.

Revenues from Daimler Trucks decreased 2% to €8.0 billion ($10.6 billion). Unit sales improved to 123,763 units from 122,217 trucks a year ago owing to the recovery in Brazil. EBIT went down 17.2% to €434 million ($572.7 million) from €524 million in the second quarter of 2012. The year-over-year decline in earnings was driven by sluggish demand in Asia and Western Europe, higher warranty costs and exchange rate effects.

Revenues from Mercedes-Benz Vans were flat at €2.4 billion ($3.2 billion). Unit sales went up to 69,436 vehicles from 69,324 vehicles a year ago. Sluggish demand and intense competition in Europe adversely affected the results of the company. EBIT increased to €204 million ($269.2 million) from €200 million in the second quarter of 2012 owing to changes in product mix and higher expenditure related to the launch of new products, including Sprinter Classic in Russia.

Revenues from Daimler Buses fell 8% to €0.9 billion ($1.2 billion). Unit sales dropped to 7,913 buses from 8,418 units. EBIT was €27 million ($35.6 million) compared with a loss of €59 million in the corresponding quarter of 2012. Improvement in earnings was due to higher unit sales in European business and better efficiency.

Revenues from Daimler Financial Services increased 9% to €3.5 billion ($4.6 billion). EBIT declined 6% to €319 million ($421.0 million) from €338 million year ago. The company recorded a 10% increase in new leasing and financing contracts to 298,000, which were valued at €10.3 billion ($13.6 billion).


For 2013, the company expects worldwide demand for cars to improve by 2% to 4%, driven by rising demand in the U.S and expansion in the Chinese market. Global demand for medium and heavy-duty trucks is expected to improve marginally in 2013 owing to the moderate economic dynamism. With this, Daimler expects total unit sales to augment in 2013.

Product launches and numerous model changes may boost the revenues in 2013. Emerging markets and the North American market are also expected to record above-average growth in the year. Earnings are expected to improve significantly in the second half of 2013. However, the company expects 2013 EBIT to be lower than 2012.

Our Take

Daimler is a leading auto and truck producer and has it’s headquarter in Stuttgart, Germany. The company develops, manufactures, distributes and sells passenger cars, light trucks and commercial vehicles. It also provides financial and other services relating to its automotive business. Currently, it retains a Zacks Rank #2 (Buy).

Some other stocks that are performing well in the industry where Daimler operates include Nissan Motor Co. Ltd. (NSANY - Free Report) , Fuji Heavy Industries Ltd. (FUJHY - Free Report) and Volkswagen AG (VLKAY - Free Report) . They are Zacks Rank # 1 (Strong Buy) stocks.

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