Daimler Second-Quarter Revenue Increases, Profits Flat; Truck Unit Sputters

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Transport Topics  /  July 26, 2017

Diversified manufacturer Daimler AG reported higher revenue and flat profits during the second quarter, with a strong performance from its Mercedes-Benz car division but sputtering results from the global truck division.

The corporation as a whole had net income equivalent to $2.76 billion, or $2.51 per share, on total revenue of $45.31 billion. In the 2016 second quarter, the original equipment manufacturer had net income equivalent to $2.77 billion, or $2.56, on sales of $43.61 billion.

Based in Stuttgart, Germany, Daimler reports in euros, and quarterly net income increased by 2% year-over-year, but the gain turned into a loss when converted into dollars. The company reported its earnings July 26.

The truck division, the world’s largest maker of them, had a 4% revenue gain in euros to the equivalent of $9.94 billion from $9.79 billion in the 2016 quarter. Operating income for trucks fell over the same time to $597.7 million from $701.2 million.

The quarterly return on sales from the truck division declined to 6% from 7.2%.

The earnings report attributed the truck earnings decline to “customer service measures at Mercedes-Benz Trucks.”

Beyond the profitability issues, Daimler’s second-quarter truck sales improved globally by 8% more vehicles, and in North America by 4% more Classes 6-8 trucks. The company’s outlook for the rest of the year forecasts sluggish progress.

“Following the cyclical downturn of the prior year for the truck market in the NAFTA region, demand can be expected to recover gradually as the year progresses. In full-year 2017, sales in Classes 6-8 are likely to be slightly lower than in 2016, however. We anticipate a rather weaker development in the segment of heavy-duty trucks, Class 8,” the report said.

If there is any further decay in volumes, Daimler expects it will be minimal, saying, “The North American market seems to have bottomed out.”

The truck division’s best market was Asia, where second-quarter sales by number of vehicles grew by 17%. The European Union market was the slowest market, growing by 0.25% year-over-year.

Mercedes-Benz cars make up Daimler’s largest division, and quarterly sales measured in euros rose by 7% as operating income soared by 70% over the 2016 second quarter.

The corporation’s two smallest major manufacturing divisions are Mercedes-Benz vans and Daimler Buses. All four manufacturing divisions, plus Daimler Financial Services, posted second-quarter profits.