“We are not yet at the level that we aim to reach in the medium to long term,” said Zetsche of the cut forecast.
The Eurozone crisis expanded into Germany in Q3 as Daimler AG (DAI) posted Group earnings of €1,921 million, off from €1,968 million in Q3 of 2011. Net profits for the period were €1,205 million (Q3 2011: €1,360 million), leading to declining earnings per share of €1.03 (Q3 2011: €1.21). Daimler sold 528,600 cars and commercial vehicles worldwide in Q3, surpassing the prior-year total by 1%. Revenue of €28.6 billion was 8% above the prior-year level. Adjusted for changes in currency exchange rates, the increase amounted to only 3%.
As a result of the weakened Q3 results and dimmer prospects for Q4, Daimler said that it will not match 2011’s earnings. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars tried to be optimistic: “Considering the significantly more difficult market conditions, Daimler achieved good earnings in the third quarter.” The earnings release was sent out ahead of schedule because of the accidental issuing of an e-mail.
No matter what the timing, the fact is the 2012 Daimler forecast has been revised downward by -€1billion to €8 billion in earnings. Daimler also abandoned previously issued divisional profit forecasts for 2013, as well as saying a €2 billion cost-cutting program was now being implemented.
The flagship Mercedes-Benz brand is now projected to post a full year earnings before interest and taxes of €4.4billion compared to €5.2bn in 2011. The previously stated Mercedes-Benz goal of making a 10% return on sales – ROS – next year is also on hold. ROS dropped from 8% last year to 6.4% in the third quarter. Audi, BMW, and Porsche all have significantly higher returns.
Daimler said it expects its total unit sales for 2012 to be higher than the 2.1 million vehicles sold in 2011. Mercedes-Benz Cars will be up because of demand for its cars in the C-Class segment and anticipated growth in SUVs, primarily due to the full availability of the new M-Class, as well as the new GL.
Daimler Trucks also anticipates an increase in unit sales in 2012, with the NAFTA region and Asia as the main reasons. The division anticipates stable unit sales in the European market, although country results will vary widely. In Western Europe, about as many trucks will be sold as in the prior year, due to continued demand in Germany. Sales in Latin America are expected to be significantly lower than in what was a record year 2011, due to the sharp drop in demand in the first three quarters of this year.
Daimler issued projected earnings – EBIT – from the ongoing divisional businesses as follows:
- Mercedes-Benz Cars: approximately €4.4 billion
- Daimler Trucks: approximately €1.7 billion
- Mercedes-Benz Vans: approximately €650 million
- Daimler Buses: approximately minus €80 million
- Daimler Financial Services: approximately €1.3 billion
