Daimler fourth quarter earnings jump 10% to €2.82bn

Strong demand for Mercedes cars in China will help Daimler to deliver a big rise in sales and profit this year, the German luxury carmaker said yesterday, as forecast-beating quarterly earnings lifted its shares to a 15-year high. The company’s main Mercedes-Benz Cars division has lagged rivals Audi and BMW in terms of sales and profitability in recent years, but hot-selling new models such as the C-Class sedan are helping it to close the gap, including in China, the world’s biggest auto market. “You can see that product initiatives from the past two years are beginning to pay off,” said Stefan Bauknecht, a fund manager at Germany’s DWS. “The new C-Class as well as the S-Class are doing well, even better than expected in some cases.” Shares in Daimler rose more than 2% to a 15-year high of €84.69, leading a flat German DAX index. “Daimler is on an upward curve,” Chief Executive Dieter Zetsche told reporters, announcing the company’s biggest-ever dividend. “We plan to attain a level of earnings that has never been seen before at this company.” Daimler, which also sells trucks and vans, is the first of the big German premium carmakers to release quarterly results, with some analysts concerned that slowing Chinese economic growth could curb a major source of demand in recent years. There was little sign of that in Daimler’s fourth quarter, with earnings before interest, tax and one-off items jumping 10% to €2.82bn ($3.23bn). That beat analysts’ average forecast of €2.66bn in a Reuters poll. “It is the (Chinese) market that will determine who comes out on top in the premium segment. And Mercedes-Benz still has plenty of room to grow in China,” Zetsche said. The proposed dividend of €2.45 per share, equating to 37.6% of net profit, was also above analysts’ €2.42 forecast. Daimler said it aimed to raise its payout ratio to around 40% in coming years. Bankhaus Lampe analysts, who rate Daimler shares a “buy”, said the results confirmed their view the company would outperform Audi and BMW this year.