FRANKFURT Feb 5 Germany's Daimler is
expected to post a surge in fourth-quarter profit on Thursday as
its rejuvenated Mercedes-Benz model range helps Chief Executive
Dieter Zetsche to turn around a legacy of profit warnings.
Automakers are upbeat about global sales this year.
Worldwide, auto sales in 2014 are seen rising 3.4 percent,
according to research firm IHS, while LMC Automotive sees an
increase of 5 percent. Premium auto makers are expected to
benefit disproportionately from such growth.
Daimler, the Stuttgart-based maker of cars and trucks is
expected to report its adjusted earnings before interest and tax
(EBIT) rose 34 percent to 2.32 billion euros ($3.14 billion) in
the fourth quarter, a Reuters poll showed.
Mercedes is enjoying a sweet spot in its product cycle,
having launched a refreshed E-Class and an all new S-Class
flagship sedan in 2013, it will roll out a new version of its
best-selling model, the C-Class, this year.
Having dropped to third place in the luxury-sales rankings
behind German rivals BMW and Volkswagen's
Audi in 2011, Daimler narrowed the gap in 2013 thanks to its
In the twelve months Daimler's shares have risen nearly 40
percent and the stock is now trading on a forward
price-to-earnings ratio of 10.6, compared with 9.9 at Bavarian
rival BMW and 7.9 at Volkswagen, the parent company of Audi.
Zetsche's goal is for Daimler to become the world's biggest
premium carmaker by the end of the decade. But he was forced to
scrap margin targets at Mercedes-Benz Cars in late 2012.
Earnings goals have been repeatedly scrapped as Mercedes failed
to match rivals' scale and efficiency in smaller cars, or their
advances in China.
Daimler's supervisory board last year agreed to extend
Zetsche's contract by three years instead of an expected five,
to soothe investor concerns over his failure to meet guidance
and keep up with rivals.
"We continue to believe that the majority of good Mercedes
Cars news is priced into the stock. Valuation and lack of
earnings momentum leave limited upside," analysts at ISI Global
said in a note, adding that they believed Daimler results would
be solid and even beat consensus expectations.
"It remains a fact that Mercedes Cars de facto employs 40
percent more workers to sell 20 percent fewer cars compared to
BMW," ISI said.
Daimler has also suffered problems at its sales organisation
in China, causing it to fall behind BMW and Audi in the largest
car market in the world.
In 2013, deliveries of Mercedes-Benz luxury cars rose 10.7
percent to 1.46 million autos, lagging BMW, which sold 1.65
million BMW branded cars, up 7.5 percent on the year-earlier
period. Volkswagen's premium car brand Audi saw sales surge 18.4
percent to 1.57 million cars in the same period.
Daimler also lags its rivals in terms of profitability. In
the third quarter, BMW's EBIT margin for its cars division was
at 9 percent, compared with 9.4 percent at Audi and 7.3 percent
at Daimler's Mercedes-Benz division.
Daimler late last month announced the surprise resignation
of Andreas Renschler, head of manufacturing at Mercedes-Benz
Cars, in a move that tightens Zetsche's grip on the company
because Renschler's departure removes a candidate who might have
The issue of succession at Daimler won't become acute until
closer to 2016, when Zetsche's contract expires.
(Reporting by Edward Taylor; Editing by Elaine Hardcastle)