Daimler, Volkswagen seen on bumpy road in Q3

Wed Oct 26, 2011 7:01pm EDT

* Daimler, Volkswagen Q3 results due

* StarMine sees negative earnings surprises

* Analysts see headwinds from raw materials, economy

By Maria Sheahan

FRANKFURT, Oct 27 (Reuters) - Daimler (DAIGn.DE) and Volkswagen (VOWG_p.DE) are expected to show that the road became more bumpy in the third quarter, strewn with weak economic growth and soaring raw material costs.

Thomson Reuters StarMine, which gives more weight to analysts whose estimates have historically been more accurate, predicts that both will fall short of consensus for operating profit, when they report third-quarter results on Thursday.

Car sales growth has been shrinking in Europe, with Germany the only major market in the region to expand in September, and the boom in China that has bolstered German car makers in recent quarters has tempered to a milder pace for now.

France's PSA Peugeot Citroen warned of pricing pressure in a tougher European market this week that was hurting its profits.

Volkswagen's third-quarter operating profit is seen up 31.5 percent at 2.61 billion euros ($3.6 million), a Reuters poll showed.

The core automotive division's operating margin is seen widening year-on-year to 7.3 percent from 6.1 percent, but narrowing from the 8.0 percent posted in the second quarter due to raw material costs and negative currency effects.

Ford , the second-biggest U.S. car maker, reported lower quarterly earnings on Wednesday, partly due to misjudging the threat of higher commodity costs.

Analysts on average see Daimler reporting a 10 percent gain in quarterly earnings before interest and tax (EBIT) to 2.67 billion euros, according to a Reuters poll, helped by more profitable sales of vans and buses.

Operating profit from the automotive business is seen down 6.5 percent, weighed down by weak sales and rising costs.

The slump comes just as Daimler fired the head of Mercedes-Benz USA, leaving the business in turmoil after reaching record monthly sales figures of almost 24,000 vehicles in September.

Prospects for the trucks business, which generates more than a quarter of Daimler's revenues, are also dim after Volvo (VOLVb.ST), the world's No. 2 truck maker, this week sounded a warning on global truck markets this.

Volvo said on Tuesday that growth was slowing in the emerging regions that have helped truck sales since the previous slowdown, with China's construction equipment market set to cool off and a forecast weakening of Brazil's truck market next year.

Metzler analyst Juergen Pieper cut his recommendation on Daimler to "sell" from "buy", citing a negative read-across from Volvo and easing sales momentum at Mercedes-Benz Cars. ($1 = 0.719 Euros) (Editing by Helen Massy-Beresford)

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