Daimler AG was not able to keep up with rivals in the second quarter of this year, recording truck profits that trailed Volvo AB and forecasting slower sales growth than BMW AG. Specifically, the company increased its 2011 sales target by 50,000 units, which is lower than the BMW's growth of 100,000 cars.
The company’s profit margins for trucks unit lagged behind Volvo by 3.1 percentage points. Volvo is the second largest truck manufacturer in the world next to Daimler.
Currently, Daimler is constructing a plant in Hungary and expanding facilities in the U.S. and in China after it was beaten by Audi as the second biggest manufacturer of premium vehicles this year.
Moreover, Mercedes has struggled to manufacture enough cars to be at par with the growth of Audi and BMW. According to CEO Dieter Zetsche, a higher capacity would have boosted the sales of Mercedes. Analyst Arndt Ellinghorst at London-based Credit Suisse shared that as of the moment, the “delta to Daimler's peers is widening,” which is the reason why the stock is underperforming.
He said that the company has to make sure that the trend changes. This month, BMW increased its 2011 sales forecast from 1.5 million to 1.6 million vehicles, exceeding the 2015 target of Mercedes. On Wednesday, Daimler stated that deliveries will probably be beyond 1.35 million, versus an earlier forecast of 1.3 million.
Operating margin for Daimler trucks in the second quarter was 7.1 percent versus the 10.2 percent of Volvo. In addition, Daimler's earnings before interest and taxes for the second quarter increased 23 percent to 2.58 billion euros, while net income increased 30 percent to a record 1.7 billion euros as sales leaped 5 percent to 26.3 billion euros.