Record Mercedes sales help to lift Daimler expectations

German luxury car manufacturer Daimler has raised its forecasts, predicting a significant rise in operating profit this year after a surge in sales of Mercedes-Benz luxury cars and sports utility vehicles, boosted by the launch of new models.

Daimler said it now expected significant growth in volume sales, revenue and group earnings before interest and tax (EBIT) this year after its first-quarter net profit doubled to €2.8bn.

“We are very confident for the remainder of the year to achieve our financial as well as our strategic goals,” Daimler’s chief financial officer Bodo Uebber said.

In February, Daimler had said it expected only slight growth in group EBIT, but record sales of Mercedes passenger cars in the first quarter helped the Stuttgart-based carmaker produce forecast-beating results.

Mercedes launched the new version of its E-Class saloon last year, with volume sales since gaining traction. In March sales of the new model rose 65% and Daimler said it expected a significant rise in sales of Mercedes-Benz Cars for the full year. Daimler’s group EBIT jumped 87% to €4.01bn in the first quarter, thanks in part to €690m in one-off gains.

EBIT at Mercedes-Benz Cars rose 60% to €2.23bn, delivering a return on sales of 9.8% after the division reported a 15% rise in first-quarter sales. Daimler raised its forecast for its financial services division, saying it now expects a slight increase in EBIT this year.

Daimler published key first-quarter earning figures earlier this month, revealing that profits were lifted by the revaluation of a stake in mapping company HERE, as well as by the sale of some real estate and the reversal of an impairment charge on its stake in Chinese carmaker BAIC.

A stricter interpretation of EU financial reporting guidelines has forced Daimler to start giving forecasts based on unadjusted numbers, increasing the scope for one-off gains and losses to distort consensus in the short-term.

Daimler also reiterated that recent steps taken by the US authorities to investigate diesel emissions pollution and so-called auxiliary emission control devices could lead to significant penalties and vehicle recalls.

In view of the tough penalties imposed by the US authorities on rival German carmaker Volkswagen for conspiring to cheat on diesel-emission tests, and after US authorities issued a notice of violation against Fiat Chrysler, Daimler said it could face similar risks.

“It cannot be ruled out that the authorities might reach the conclusion that Mercedes-Benz diesel vehicles have similar functionalities,” Daimler said.

Reuters