Luxury cars and van sales shore up Daimler profits

Time 10:05 am, October 24, 2019

THE maker of Mercedes-Benz cars said today stronger sales of luxury cars and higher profits in its van business helped shore up third-quarter profits.

Daimler AG said that its third-quarter net profit rose by three per cent from the year before to 1.81 billion euros (circa £1.56 billion). That was ahead of analysts’ estimates of 1.68 billion euros (circa £1.45 billion) as compiled by financial information provider FactSet.

The Stuttgart-based maker of cars, vans, trucks and buses returned to profitability in the quarter after losing 1.2 billion euros (circa £1.04 billion) in the second quarter as the company booked one-time charges for problems with diesel vehicles and airbag recalls – its first quarterly loss in a decade.

Shares rose by 6.3 per cent on today’s earnings report to 53.63 euros (circa £46.31) in morning trading in Europe.

Revenues rose eight per cent to 43.27 billion euros (£37.37 billion), with operating earnings at the Mercedes luxury car division, a pillar of the company’s finances, rising four per cent to 1.42 billion euros (£1.23 billion). The profit margin, however, declined to six per cent from 6.3 per cent.

The company’s finances were boosted by a rebound at its Mercedes-Benz Vans division, where operating profit reached 113 million euros (circa £97.6 million) after a 93 million euro (circa £80.3 million) loss a year earlier.

Chief executive Ola Kallenius, pictured, warned that the company would need to ‘significantly reduce’ costs to stay on top of the industry’s shift towards electric cars and other new technologies.

Kallenius, who took over from Dieter Zetsche in May, plans a meeting with analysts and investors in London on November 14 to set out his plans to reduce costs and improve profitability.

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