Daimler posted a 13-percent drop in earnings before interest and taxes (EBIT) to EUR2.24 billion ($2.7 billion) in the second quarter of 2012 from EUR2.58 billion in the same period in 2011. The figure was comparable to the EUR2.2 billion average of 13 analyst estimates compiled by Bloomberg.
The carmaker logged a decline in earnings despite posting a 10-percent increase in sales to EUR28.9 billion as it continues to invest to expand the line-up of Mercedes-Benz compact cars. In March 2012, Daimler opened a new factory in Hungary in March 2012. This was followed by a recent announcement that it would double its investment in a German compact-car site to EUR1.2 billion as part of its plans to roll out five new compact models.
Daimler’s Mercedes-Benz unit is trying to acquire the crown as the world's best seller of luxury cars, a title currently held by BMW, with Audi as a runner and Mercedes at third.
Daimler’s expansion in Europe is a contrast to the current economic crisis in the continent that has been negatively affecting the demand for vehicles. The carmaker’s move also contrasts recent efforts by volume-market rivals like PSA/Peugeot-Citroen and General Motors to close factories in the continent.
In fact, the company is doing all it can to achieve its goal of increasing sales in 2012 and to match its operating profit from ongoing business of EUR9 billion in 2011. Analysts, however, are not as optimistic.
The average of 21 analyst estimates compiled by Bloomberg sees Daimler posting EUR8.5 billion in EBIT this year. Daimler chief executive Dieter Zetsche took note of the existing economic uncertainty, saying that the carmaker will remain vigilant in its monitoring of general economic developments and the volatile markets.