German automaker Daimler AG (DDAIF.PK) reported Wednesday a sharp decline in first-quarter profit as revenues were hurt by weak demand in most of its units, except buses. Looking ahead to fiscal 2013, the company projects lower earnings, despite anticipated growth in revenues and unit sales.
Dieter Zetsche, Chairman of the Board of Management, said, "In the first three months of this year, many markets developed worse than expected for economic reasons, especially in Western Europe. Nonetheless, we maintained our unit sales and revenue almost at the levels of the prior-year quarter and gained market share in many segments."
In its first quarter, Daimler's net profit plunged 60 percent to 564 million euros from last year's 1.43 billion euros, with earnings per share decreasing to 0.50 euros from the previous year's 1.26 euros.
Earnings before interest and tax or EBIT fell 56 percent. According to the company, the decline in earnings reflected a shift in the regional structure of unit sales, a changed model mix at Mercedes-Benz Cars and Mercedes-Benz Vans, as well as a decrease in unit sales by Daimler Trucks. At Daimler Buses, loss narrowed with increased unit sales.
The company's first-quarter revenue of 26.10 billion euros was 3 percent lower than last year's 27.01 billion euros. Adjusted for changes in currency exchange rates, the decrease has been 1.5 percent.
The company sold 501,600 cars and commercial vehicles in the quarter, compared to 502,100 units in the prior year.
In the quarter, Daimler Buses posted good results with revenue growth of 3 percent and unit sales growth of 23 percent mainly as a result of rising demand for bus chassis in Latin America.
Looking ahead, for fiscal 2013, Daimler expects EBIT from the ongoing business to be below the prior year's, citing no further equity-method results from EADS, as well as lowered market expectations and the weaker than expected EBIT in the first quarter.
This is despite the anticipated growth in unit sales and revenue. In regional terms, above-average growth rates in revenues are anticipated in the emerging markets and North America.
Daimler expects earnings in the second half of this year to be higher than in the first half due to the stimulus from new products and the effects of the ongoing efficiency programs.
Worldwide demand for cars should grow in the range of 2 percent to 4 percent this year, driven primarily by the ongoing strong growth in demand in the United States and the further expanding Chinese market, the company believes. However, a decline is again expected in the Western European market as a result of the continuing economic weakness. Demand will thus continue to move around a 20-year low, it said.
In 2014 and the following years, Daimler expects an EBIT improvement.
On Frankfurt's Xetra, Daimler shares are currently trading at 41.38 euros, up 0.48 euros or 1.17 percent.
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