Daimler’s Positive Third-Quarter Results Limited by Weak Truck Market
Daimler AG reported Oct. 21 net income and revenue rose in the third quarter, but the results were limited by falling demand for heavy-duty trucks, especially in North America, the segment’s largest retail sales market.
Pushed by gains at its Mercedes-Benz Cars division, net income for the quarter ended Sept. 30 improved to $2.9 billion, or $2.64 per share, compared with $2.6 billion, or $2.43, in the 2015 period, the company said.
Revenue climbed to $42 billion, up from $40.5 billion a year earlier.
Global truck revenue, however, plummeted to $8.5 billion, compared with $10.4 billion in the 2015 period, it said.
Total truck orders fell 21% to 83,944, compared with 106,378 a year earlier.
Earnings before interest and taxes for its truck business fell to $505 million, compared with $860 million a year earlier, the Stuttgart, Germany-based company said.
The return on sales in the truck business was 5.9% in the latest quarter, down from 8.2% a year earlier.
“We need to consider further efficiency measures in the trucks business,” Bloomberg News reported Chief Financial Officer Bodo Uebber said on a call with reporters Oct. 21, noting flexible work arrangements in key plants in Germany. “We have a margin target of 8% and will continue to discuss measures to get there.”
Demand for medium- and heavy-duty trucks in a comparatively weak overall investment environment can be expected to decrease by approximately 15% in North America, it said.
In the third quarter, orders for trucks in North America were down 31% to 23,840, compared with 34,437 in the 2015 period.
U.S. retail sales of Daimler’s trucks fell 27% year-over-year to 30,392, compared with 41,551.
“There remain risks ahead” for Mercedes’s margins and an extended truck slump, Kristina Church, a London-based analyst with Barclays, said in a note, Bloomberg News reported. “So while today’s results are strong, there is a strong potential that this is the peak of Daimler’s performance for future quarters.”
