Daimler AG (OTC: DDAIF) reported lower truck sales but record car sales in the third quarter to post a 3% year-over-year profit improvement
Total sales rose by 6% to 839,300 passenger cars and commercial vehicles compared with 794,700 in the July to September period of 2018. Revenue rose 8% to $48.2 billion from $44.8 billion a year ago. Earnings before interest and taxes (EBIT) were $3 billion, an 8% improvement over the year-ago $2.8 billion.
Net profits were $2.02 billion, or $1.79 per share, compared with $1.96 billion or $1.76 per share a year ago.
Sales of Mercedes-Benz cars set a third quarter record of 604,700 units including 180,000 sales in China. Daimler’s long-time sales and technology partner Beijing Automotive Group Co Ltd. (BAIC) purchased 5% of Daimler shares in July. Daimler has held a stake in BAIC’s Hong Kong-listed unit since 2013.
“Strong sales of cars and vans supported our third quarter financial performance,” said Ola Källenius, Chairman of the Board of Management of Stuttgart, Germany-based Daimler AG and head of Mercedes-Benz Cars. “However, in order to master the transformation in the next few years, we need to significantly reduce our costs and consistently strengthen our cash flow.”
Truck troubles
Sales at Daimler Trucks fell 8% to 125,400 vehicles in the third quarter compared with 136,100 in the third quarter of 2018. Volume decreases in Europe and Asia along with spending on new technologies reduced EBIT for the division. In the U.S., truck sales rose 6% to 47,307 from 44,708 in the year-ago quarter. U.S. retail sales were up 11%.
Daimler Trucks North America’s industry-leading market share in Class 8 tractors shrank 3.1 points to 36.5% from the same quarter a year ago. It lost 7 points of Class 6-7 medium-duty share to 29.6%.
Orders for new trucks plummeted in most regions with a 54% decrease in the U.S. to 22,597 compared with 49,511 a year ago. Overall, orders were down 29% despite double-digit increases in Latin America and Brazil.
“We’re not happy with that and we will not leave it there,” Harald Wilhelm, a member of the Board of Management and head of finance, said on a conference call with analysts.
Daimler Trucks is cutting fourth-quarter production and laid off 900 workers at two Freightliner plants in North Carolina on October 14. Wilhelm said workers also were released in Mexico, where Daimler manufactures trucks in Santiago Tianguistenco and Saltillo.
A faster-than-expected economic downturn in the core markets of North America and Europe in the third quarter means Daimler Trucks’s earnings will be adversely affected in the current quarter, the company said in a press release.
“The third quarter numbers demonstrate that we have challenges to tackle,” Wilhelm said.
