Daimler logs EUR2.13 billion for first quarter of 2012

Article by Anita Panait, on April 28, 2012

Daimler recorded 4.9 percent increase in its earnings before interest and taxes from EUR2.03 billion in the first quarter of 2011 to EUR2.13 billion for the same period this year. The company also posted a 9.2 rise in overall revenues to EUR27 billion, thanks to record sales in March. Also, the German company’s strong performance in the January-March 2012 fiscal period was strongly attributed to the record-breaking feat of its luxury car unit, Mercedes-Benz.

Daimler’s first quarterly profit was significantly higher than the EUR1.94 billion average estimate of eight analysts surveyed by Bloomberg News. Because of Daimler’s positive results, chief executive Dieter Zetsche reconfirmed the full-year goals of expanding sales as well as matching its EUR9 billion operating profit for continuing operations in 2011.

Zetche has been describing 2012 a transition year for meeting profitability targets for 2013. In a statement, Zetsche remarked that Daimler was able to begin 2012 with a strong first quarter, despite higher investment in future growth and a challenging market environment. During the first quarter, the margin for the Mercedes-Benz car brand dived by around 90 basis points to 8.4 percent.

Mercedes Cars -- which includes the Mercedes and Smart brands – aims to increase its operating margin to at least 10 percent of sales next year from around 9 percent in 2011.

Daimler’s neighbor and rival Volkswagen AG, meanwhile, said that its Audi luxury unit increased it operating margin by 80 basis points to 11.4 percent for the first three months of 2012. Daimler attributed the lower operating margin to a seasonal increase in inventories, after spending around EUR2 billion for its industrial operations during the first quarter of 2012. This effectively reduced its free cash EUR10.1 billion at the end of March.

In 2011, Daimler posted a record EUR6.03 billion in net income. This figure represents a surge of 29 percent over the previous year.

Daimler, which is also the largest maker of heavy-duty vehicles in the world, estimated an EBIT for 2012 "in the magnitude of last year." The company has vowed to take back its lead in the luxury vehicle segment from BMW, after slipping last year to third place behind Audi and BMW. In 2011, Mercedes-Benz sold around 1.26 million vehicles, behind Audi with 1.3 million units sold and BMW with 1.38 million deliveries.

Despite logging a record-breaking profit in 2011, Daimler cut the compensation of its chief executive officer, Dieter Zetsche. Zetche’s remuneration for 2010 amounted to EUR8.69 million but in 2011, his pay was EUR8.65 million ($11.5 million). This figure already included fixed salary, bonuses and long-term stock options.

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