Daimler gives subdued 2010 outlook, shares slip
FRANKFURT (Reuters) - Daimler AG (DAIGn.DE) painted a bleak picture for auto and commercial vehicle markets in 2010 as a hangover from global recession continues to weigh on the world's biggest truckmaker and second-biggest premium carmaker.
The end of government incentives for motorists to splash out on new cars and a fragile investment environment meant hopes for a broad and quick automotive sector rebound were misplaced, the German maker of Mercedes-Benz cars and Freightliner trucks said.
Global demand for cars should fall this year by only around 10 percent thanks to state incentives, it said on Tuesday in a third-quarter report that featured a return to a net profit after two consecutive quarters of billion-euro-plus losses.
"Negative effects on demand can be expected when the state support programs are phased out in the following years, particularly in the volume segments of more mature markets," the company said in a statement.
Daimler shares, which have outperformed the DJ Stoxx European car sector index .SXAP by nearly 11 percent this year, fell 0.98 percent to 35.48 euros by 1230 GMT.
"The problem is the outlook for 2010: (Chief Executive Dieter) Zetsche still sees a difficult market environment and little prospect for a recovery in the sector, which has been swirling around for the past few weeks. All in all, a sobering outlook," said BHF-Bank analyst Alexsej Wunrau.
POSITIVE Q4 EBIT FROM OPERATIONS
Incentives to junk old cars and buy new, fuel-efficient models have done little for Daimler and other makers of high-powered German premium cars such as BMW (BMWG.DE), Porsche (PSHG_p.DE) and Volkswagen's (VOWG.DE) Audi unit.
Unit sales of its Mercedes-Benz Cars premium division fell 15.7 percent in the first three quarters of the year to 825,600 vehicles, with China the only bright spot.
BMW vehicle sales also fell 15.7 percent but edged up in September for the first gain this year. Truckmakers on both sides of the Atlantic also hit the skids when the credit crunch and sharp economic slump blasted demand for goods transport. They have responded by slashing costs and chopping output until demand revives.
"From a global perspective, the gradual recovery of truck markets that now seems to be starting will probably be only moderate due to the difficult conditions for investment," Daimler said.
Volvo (VOLVb.ST), the world's second-biggest truckmaker, said last week the market was recovering but only slowly from the worst downturn it had ever seen.
Swedish peer Scania (SCVb.ST) has said it did not expect a quick truck market rebound in Europe next year.
Daimler forecast its ongoing businesses would generate positive earnings before interest and tax in the fourth quarter but warned the economic downturn and its impact on dealerships and suppliers could weigh on the bottom line.
The German group forecast negative cash flow in the fourth quarter due to higher payments to suppliers and a seasonal inventory increase at year's end.
"We are now very well positioned and can look with confidence to the coming year, which will remain challenging due to the still-difficult situation of automobile markets worldwide," Zetsche said in a statement.
Daimler posted a third-quarter net profit of 56 million euros ($83.4 million).
Last week Daimler released key numbers showing third-quarter earnings before interest and tax withered to 470 million euros on sales of 19.3 billion and forecast its industrial operations would generate free cash flow in 2009. [ID:nLJ110512] Based on 2010 estimates compiled by StarMine, which weights analysts' estimates by their forecasting success, Daimler trades at 24 times earnings per share, in line with BMW (BMWG.DE) on 23 times and a premium to Volkswagen (VOWG.DE) on nearly 17 times.
BMW, the world's biggest premium carmaker, reports third-quarter results on November 3.
Japan's Honda Motor Co (7267.T), the world's seventh-biggest carmaker, nearly tripled its annual profit forecast.
(Additional reporting by Christoph Steitz and Peggy Kropmanns, editing by Marcel Michelson)
