Daimler logs 95% rise in EBIT in first quarter of 2014 thanks to compact Mercedes-Benz models

Article by Christian A., on May 1, 2014

Daimler AG posted a 95-percent surge in earnings before interest and taxes (EBIT) in the first quarter of 2014 to EUR1.79 billion ($2.47 billion) from EUR917 million in the same period in 2013. Adjusted EBIT from ongoing business more than doubled to EUR2.07 billion from EUR949 million. First-quarter revenue also jumped 13 percent to EUR29.5 billion despite unfavorable exchange rates.

Daimler chief executive Dieter Zetsche remarked that the carmaker was off to good start in 2014, and as the year progresses, the company will continue working systematically on its profitable growth path.

Daimler’s Mercedes cars division more doubled its return on sales from ongoing operations to 7 percent in the first quarter of 2014, thanks to the arrival of new models like the A- and B-class, GLA and CLA compact cars as well as its flagship S class. According to Daimler, it targets to hike the figure to 10 percent in the medium term.

The division posted a 14-percent jump in deliveries in the first three months of 2014 to a record 389,500 units with revenues surging 21 percent to EUR17 billion. The Mercedes cars division also more than doubled its first-quarter EBIT from EUR460 million to EUR1.183 billion.

Daimler said in a statement that its earnings development in the first quarter mainly reflects growth in unit sales, especially in China and the United States. Hans-Peter Wodniok, an analyst with Fairesearch, described Daimler’s results as “exceptionally good numbers."

Wodniok noted to Automotive News Europe that Daimler’s volume growth and higher average prices have helped it “tremendously."

Mercedes sold vehicles at a faster pace than rivals BMW and Audi in the first quarter of 2014, a good sign for its drive to regain its crown as the best-selling luxury carmaker in the world. Mercedes is intending to introduce 30 Mercedes models by 2020, including a dozen vehicles with no predecessors.

In February, Daimler said it was planning to cut sales incentives on Mercedes-Benz vehicles and hike prices of some models as demand for them continues to outpace supply. As revealed by Zetsche, it was expected that pricing would improve significantly in 2014. Daimler posted a 44-percent increase in deliveries of compact vehicles and a 43-percent jumped in sales of the S class in the fourth quarter of 2013.

Daimler is expecting its operating profit in 2014 to exceed the EUR7.9 billion ($10.7 billion) logged in 2013. Zetsche has vowed to make Mercedes retake the luxury-car sales throne by 2020, after losing it to BMW in 2005. Mercedes yielded second place to Audi in 2011.

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