(Corrects lead to say higher Q4 profit, not lifting forecast)
* Daimler Q3 adj EBIT 2.23 bln eur vs Rtrs poll 2.12 bln
* Mercedes Q3 EBIT margin 7.3 pct vs Rtrs poll 6.9 pct
* 2013 adj EBIT to fall 8 pct vs last year's 8.13 bln eur
* Shares up 3.2 pct
By Christiaan Hetzner
FRANKFURT, Oct 24 German automotive group
Daimler forecast higher fourth-quarter profit after a
rejuvenated model range and cost-cuts in the core luxury car
business helped it to post better than expected results on
While earnings growth is being driven primarily by the new
Mercedes-branded cars that lift sales volumes and reduce harmful
price discounts, the company is also improving profitability
through the elimination of waste.
Finance chief Bodo Uebber said that the two-year programme
aimed at cutting a combined 3.1 billion euros ($4.3 billion) in
costs at its luxury cars and commercial trucks divisions is on
schedule and would provide it with a good start for next year.
"We anticipate further earnings improvements in the future,"
the Daimler CFO said, adding that it has achieved 70 percent of
the 600 million euros in savings planned for Mercedes this year,
up from 30 percent at the end of the second quarter.
Shares in Daimler rose 3.2 percent in early trading, putting
them among the top performers on Germany's blue chip DAX
index and beating its European auto peers.
"Reported earnings exceeded market expectations in every
division," wrote LBBW analyst Frank Biller in a research note.
Third-quarter group earnings before interest and tax (EBIT)
and excluding one-off items rose 15 percent to 2.23 billion
euros ($3.07 billion), beating an estimated 2.12 billion in a
Reuters poll of 12 banks and brokerages.
Daimler's Mercedes luxury car business expanded its EBIT
margin, a benchmark for comparing profitability with rival BMW
, by nearly a full percentage point to 7.3 percent,
surpassing expectations of 6.9 percent.
Worried that the recent improvement is solely down to
Daimler's product cycle, some analysts argued that it could
struggle to close the gap on BMW and Volkswagen's
Audi. BMW and Audi had margins of 9.8 percent and 10.5 percent
respectively in the first half, against 4.9 percent at Mercedes.
"There's no reason to think that Mercedes - after this
catch-up phase with new models - can outgrow BMW and Audi,
especially given brand, cost and productivity issues," wrote
Bernstein analyst Max Warburton after the results announcement.
The 14 percent gain in third-quarter car sales, the 420
million euros in Mercedes cost cuts already achieved this year
and a stronger final three months would not be enough to offset
a disastrous start to 2013, the company conceded.
Daimler reaffirmed that underlying profit would drop this
year, indicating a fall of about 8 percent to around 7.5 billion
euros, in line with the Reuters poll.
Explosive growth in premium car sales in China has helped
Mercedes, BMW and Audi to escape the worst of the misery in
their home European market, where demand has plunged to 20-year
By comparison, volume brands such as Ford are bleeding
red ink in Europe and are now eyeing the upmarket segment as a
solution to their troubles. U.S. carmaker Ford, which plans to
launch a new Vignale premium sub-brand, will give an update on
its 2013 forecast for a $1.8 billion pretax loss in Europe when
it publishes quarterly results later on Thursday.
While Mercedes remains more profitable than most volume
carmakers, its earnings strength has fallen short of both BMW
and Audi because of internal problems including, until recently,
a dearth of compact and high-end luxury models.
But Mercedes is finally starting to hit the sweet spot of
its model cycle after relaunching its A-Class compact late in
2012 and unveiling the newest version of its flagship S-Class
limousine in July. Unlike consumer electronics companies,
carmakers can only afford to revamp their products every seven
years or so.
Mercedes is also adding all-new models to its range, such as
the CLA compact four-door coupe, which made its debut this year.
That will be followed by next year's entry into the booming
compact SUV segment with the GLA. Even its Smart brand is due to
overhaul its ForTwo microcar next year and launch a four-seater
based on the Renault Twingo..
Daimler's progress has lifted its shares by more than 40
percent this year, making it the third-best performer among
German blue-chip companies. The shares are now valued at 10.7
times forward earnings, against a sector average of 9.1 percent,
according to Thomson Reuters data.
Daimler is the first major European carmaker to publish
quarterly profits. Results from Fiat as well as
Volkswagen and its stable of brands are due on Oct. 30, with BMW
is scheduled to report on Nov. 5.
($1 = 0.7256 euros)
(Editing by David Goodman)