Daimler AG revealed a gain of 71 percent on its operating profit for the first quarter of 2011. One contributing factor identified is the increasing wealth in China that has boosted sales of the Mercedes-Benz S-class sedan. Specifically, the company’s earnings before taxes and interest reached 2.03 billion euros ($3.01 billion) compared to the 1.19 billion euros recorded on the same period last year.
The company’s result is at par with the 2 billion euro average from the estimates of 12 analysts compiled by Bloomberg. The company achieved sales of 24.7 billion euros, a 17 percent gain. Daimler remained firm to its estimate for “significantly” higher 2011 EBIT compared to the 7.2 billion euros from last year.
Daimler is expecting its sales prospects for Mercedes-Benz's revamped SLK roadster and updated C-class sedan to outperform the potential effects of the March 11 earthquake in Japan. The company’s net income increased almost 100 percent to 1.18 billion euros for the first quarter.
The positive economy in China is increasing demand for automobiles from Volkswagen AG's Audi, Mercedes and BMW AG, which are the top three automakers of luxury cars. They are also targeting record sales this 2011.
Furthermore, the Lamborghini supercar brand from VW is expected to sell more units in China than in the United States in 2011 for the first time. As for Daimler, the company is targeting to hit 1.5 million cars in deliveries by 2015, supported by a doubling of sales in China to 300,000 vehicles.
The 125-year-old German vehicle manufacturer is contemplating on selling more than 1.3 million Mercedes-Benz and Smart cars this 2011 versus the 1.28 million last year. First-quarter deliveries increased 13 percent to 281,000 units, with the 78 percent surge in demand and the 25 percent jump in S class deliveries in the Chinese market as contributing factors.
Mercedes-Benz Cars has built on the success it enjoyed in 2010 by posting further business growth figures for the first quarter of this year. Car unit sales showed a 12% increase to 310,700 from 277,100 in 2010 Q1. Corresponding first-quarter revenue also rose 20% to euro 13.9 billion.
Mercedes-Benz Cars posted a first quarter EBIT of euro 1,288 million, equivalent to a 60% increase from the prior-year period. This is marked by a 9.3% return on sales compared to 7.0% for Q1 2010.
Increased unit sales from the SUV, premium and luxury car segments were the major contributors to the company’s increased earnings. Geographically, the Chinese market was the notable performer as Mercedes-Benz’s renowned vehicle lines attracted the country’s high-end consumers. The excellent product selection with competitive pricing worked with the country’s strong currency as positive factors in the company’s performance.
On the other hand, there was increased spending due to more expensive raw materials, higher research and development costs, and more extensive resource usage for facilitating new vehicle ramp-up. These were the negative factors for the company.
Daimler Trucks was also a strong performer in 2011 Q1, with unit sales increasing 27% to 89,300, and revenue up by 28% to euro 6.2 billion.
The division also posted a marked EBIT increase to euro 415 million from the prior-year euro 130 million. Return on sales went up to 6.6% from the prior-year 2.7% figure.
Daimler’s business development, especially in the American and Western European markets, was seen as the primary factor for its earnings growth. This was sufficient to offset the negative factors for earnings for the first three months of 2011, which included increased advanced product marketing and promotional expenditure. The earthquake in Japan also caused earnings charges worth euro 49 million accounted for in the first quarter of 2011, mostly due to production losses and damaged assets in March 2011.
Mercedes-Benz Vans also showed growth in terms of year-on-year unit sales, where figures posted were 16% better. 54,000 Sprinter, Vito/Viano and Vario models were sold in Q1 2011. Revenue rose to euro 2.0 billion from the prior-year’s euro 1.7 billion.