Daimler saw second-quarter EBIT surge 12% thanks to Mercedes-Benz S-Class

Article by Andrew Christian, on July 24, 2014

Daimler posted a 12-percent surge in earnings before interest and taxes (EBIT) in the second quarter of 2014 to EUR2.46 billion ($3.32 billion) from EUR2.19 billion, boosted by a significant rise in deliveries of the Mercedes-Benz S-class. EBIT margin at its Mercedes-Benz Cars division -- including Smart – grew to 7.9 percent of revenue from 6.4 percent.

Daimler chief executive Dieter Zetsche said in a statement that their “strategy is bearing fruit," adding that they are optimistic with the future thanks to its product offensive and continuation of efficiency programs.

Zetsche wants Mercedes become the best-selling premium brand in the world by the end of the decade, and generate an EBIT margin of 10 percent of revenue. Daimler strategy entails introducing 30 new models and cutting spending by EUR2 billion in the two years through 2014.

Daniel Schwarz, an analyst at Commerzbank, remarked that Mercedes should be able to reach a higher margin level than BMW, since it could charge higher prices than its rivals while making improvements on the cost side. Mercedes used to dominate global premium sales, until it was overtaken by BMW in 2005 and fell to second place.

Audi overtook Mercedes-Benz it in 2011. In 2013, Mercedes updated and expanded its compact lineup while introducing a new version of the S class and a revamped E-class sedan.

For the first six months of 2014, Mercedes posted a 13-percent jump in sales to 783,500 vehicles, outpacing even its main two rivals. Despite that, Mercedes is still behind BMW by almost 103,000 deliveries in the period.

Mercedes, BMW and Audi are all aiming to post record sales this year. Meanwhile, second-quarter EBIT at Mercedes-Benz Cars surged 35 percent to EUR1.41 billion, while Daimler Trucks jumped 4.8 percent to EUR455 million.

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