Daimler Reports Mercedes Expected to Hit Sales Record

Company turns profits despite sluggish global economy.

by on Oct.23, 2014

Dieter Zetsche said Daimler's Q3 profits were due in large measure to strong sales by Mercedes-Benz.

Daimler AG used a surge in sales of new Mercedes-Benz models to boost its revenue by 10% in the third quarter despite the soft global economy, which the company expects to slow further by the end of the year.

Daimler Group AG net earnings also increased significantly to 2.82 billion euros compared with 1.89 billion euros in the third quarter of last year and Mercedes-Benz cars is on its way to record sales this year.

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The group’s third-quarter revenue of 33.1 billion euros was 10% above the prior-year level; adjusted for exchange-rate effects, revenue increased by 11%.

With its quarterly financial statement, the German automaker also reported a profit of 600 million euros from its sale of its stake in the electric automaker Tesla this month while it invested another 1 billion euros in the its principal Chinese partner, Beijing Automobile Industries Corp. or BAIC.

“Our strategy is paying off. We are growing profitably and look to the future with optimism also beyond the full year,” said Dr. Dieter Zetsche, chairman of the Board of Management of Daimler AG and head of Mercedes-Benz Cars. “In all our divisions, both the product offensives and the efficiency programs are taking effect. We are confident that we will achieve the targets we have set on a sustained basis.”

The Daimler Group also continued to re-invest in the car, truck, van and bus business. It reported 1.2 billion euros in new plants and equipment during the third quarter, compared with 1.1 billion euros in the same period a year ago.

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The main area of capital expenditure was on production preparations for new models, in particular the new C-Class and its derivatives, the new SUV coupe, and investments for new transmissions and engine versions. Another area of capital expenditure was for the ongoing expansion of the international production and component plants.

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The Daimler Group’s research and development spending in the third quarter also increased to 1.4 billion euros from 1.3 billion euros during the same period in 2013. Approximately two thirds of the research and development spending was for the Mercedes-Benz cars segment. The main areas were new models, especially fuel-efficient and environmentally friendly drive systems, and new safety technologies.

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One major concern is the global economy, which continues to develop at significantly below its long-term growth potential, Daimler noted in its quarterly financial report.

The available leading indicators currently do not suggest that a sustainable improvement can be expected by the end of the year. In particular, economic indicators in the European Monetary Union (EMU) point towards a rather difficult fourth quarter.

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