Daimler raises earnings outlook after Q2 profit

[July 27, 2010]  BERLIN (AP) -- Daimler AG raised its full-year earnings forecast substantially on Tuesday after a strong recovery in global car sales pushed it to a second-quarter net profit of euro1.3 billion (nearly $1.7 billion).

The April-June earnings figure contrasted with a net loss of nearly euro1.1 billion a year earlier.

Daimler confirmed its report earlier this month that quarterly earnings before interest and taxes, or EBIT, came in at euro2.1 billion -- a turnaround from last year's euro1 billion loss, and a figure that had exceeded analysts' expectations.

Second-quarter revenue was up 28 percent to euro25.1 billion from euro19.6 billion. Unit sales of cars and commercial vehicles climbed 27 percent to 496,500.

Daimler, which had already announced that it would raise its full-year outlook by an unspecified amount, said it is now targeting full-year EBIT from ongoing business of euro6 billion. It previously had forecast more than euro4 billion.

The core Mercedes-Benz Cars unit alone is now expected to produce EBIT of euro4 billion, while the Daimler Trucks division should bring in euro1 billion, the company said. It was the second outlook upgrade this year.

The company also said it expects "significant revenue growth" in 2010, along with a significant increase in unit sales.

"Our strategy is paying off: we have a very dynamic development of unit sales and revenue in all divisions," CEO Dieter Zetsche said in a statement. "After what was already a very good first quarter, we achieved excellent results in the second quarter."

Strong sales in China in particular have helped Daimler and its German peers this year.

Total revenue in China was up 182 percent to nearly euro2.8 billion; Asia as a whole saw an 85 percent increase to nearly euro5.5 billion. U.S. revenue rose 21 percent to euro4.98 billion; and even in western Europe, where car sales have been less dynamic this year, there was a 4 percent increase to euro9.6 billion.

Unit sales at Mercedes-Benz Cars, which includes the premium Mercedes brand and the ultracompact Smart car, were up 19 percent in the second quarter at 342,500. The division's revenue soared by 33 percent to euro14 billion, and its EBIT was nearly euro1.38 billion.

In the year's second half, Mercedes-Benz Cars "expects the positive trend of the first two quarters to continue, but no longer with the same dynamism," Daimler said.

"Although a continuation of stable global sales markets and an improving economic environment is anticipated, there are still risks of a growth slowdown in some regions," it added.

Daimler shares were lower both before and after the announcement, with the company already having issued second-quarter pretax figures and alerted investors that it would raise its forecast.

They were down nearly 1.9 percent in midday Frankfurt trading at euro42.35.

[Associated Press; By GEIR MOULSON]

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