Daimler's First-Quarter Profits Double, but Trucks Not a Big Factor
First-quarter business rose and profits doubled for German manufacturer Daimler AG, but new truck sales were generally not part of the equation, and especially not in North America, the company reported April 26.
Quarterly operating profit jumped at least 19%, year-over-year, at all five major divisions and there were also some one-time benefits for the parent company of Freightliner and Western Star Trucks and Detroit Diesel Corp.
As a whole, Daimler earned the equivalent of $2.98 billion, or $2.70 a share, on quarterly global sales of $41.31 billion. Net income was $1.55 billion, or $1.39, on revenue of $36.68 billion during the first three months of 2016.
The truck division, Daimler’s second-largest behind Mercedes-Benz cars, earned the equivalent of $711.7 million in operating profit, up from $569.6 million, even though quarterly revenue declined by 3% to $8.46 billion and unit sales fell 11% to 94,007 commercial vehicles.
Truck-making was the only division not to post a gain in revenue, even though profits rose. The company said truck profits rose primarily due to a gain from a real estate sale in Japan during the quarter just ended.
The company also said it benefited from efficiency gains at the truck division, as operating margin improved to 8.4% from 6.3% in the year-ago quarter.
Mercedes-Benz led the Daimler growth with a 14% surge in quarterly revenue and a 60% leap in operating profit.
In assessing the coming months and demand for trucks in North America, “We expect a continuation of the cyclical market slow down in the full year [2017]. An overall decrease in the magnitude of 5% is to be expected in Classes 6-8, and we anticipate and even more substantial weakening of demand in the segment of heavy-duty trucks.
“Nonetheless, we assume that the market will gradually stabilize as the year progresses,” the report said.
The company is more bullish on the world and U.S. economies.
“The outlook for the world economy continues to be favorable at the beginning of the second quarter of 2017, so global growth could accelerate slightly this year. Recent forecasts for full-year 2017 are at the upper end of a range from 2.5% to 3%,” he report said.
Switching to the United States, management said, “Compared to its weak performance in 2016 with growth of just 1.6%, the U.S. economy should revive significantly and grow by approximately 2.3%,” featuring stable private consumption and increased corporate investment.
