As soon as Daimler AG lifted profit forecasts for its car and truck units, it went up to its highest price in 1.5 years in Frankfurt trading. Daimler, the world's second-biggest luxury carmaker, revealed that Mercedes-Benz Cars will post operating profit of 2.5 billion euros ($3.4 billion) to 3 billion euros this year.
Mercedes-Benz, which is Daimler's biggest unit, produces Mercedes, Smart, and Maybach passenger cars. Last February, Daimler predicted that this unit would earn over 1.5 billion euros. CEO Dieter Zetsche aims to at least get to the level that luxury market leader BMW AG is at.
In the first quarter on sales of its high-end E-Class and S-Class vehicles, Daimler posted better-than-expected earnings as well as a "favorable overall cost position."
Mike Tyndall, a European autos specialist with Nomura Securities in London, said that this may be good news for Daimler but that this shouldn't be the way of how to communicate with the market. Daimler increased as much as 7.9% to 39.17 euros, its highest price since Sept. 26, 2008.
Daimler closed the day up 7.4% to 39 euros. Its shares fell as much as 9.4% on Feb. 18 after its announcement about an unexpected fourth-quarter loss, a dividend cancellation and a conservative profit outlook.
Meanwhile, its trucks division is expected to make a profit of 500 million euros to 700 million euros this year. Previously, Daimler aimed for an operating profit of about 200 million euros for the unit, which produces Mercedes, Freightliner and Fuso heavy- duty vehicles.