Daimler raises 2010 earnings target to £6 bn

A remarkable recovery by luxury car makers has led German Daimler to ramp up output and forecast huge profits this year, underscoring the country's export prowess.

Daimler yesterday raised its core earnings outlook for 2010 to €6 billion as second-quarter net profit pulled from a loss to hit €1.3 billion.

"We are expecting a marked progression in our 2010 sales and are aiming for an operating profit of €6 billion," a German-language statement quoted Daimler chairman Dieter Zetsche as saying.

The group had initially forecast earnings before interest and tax (Ebit) of €4 billion this year.

Its second-quarter net profit compared with a loss of €1.06 billion in the same period of 2009.

Daimler shares were nonetheless slammed by profit taking on the Frankfurt stock exchange, since the group had already announced it would upgrade its forecast two weeks ago.

On July 16, the auto giant posted a second-quarter operating profit of €2.1 billion, reversing a year-earlier loss of €1 billion and exceeding market expectations.

The group said then that sales in the three months to June jumped to €25.1 billion from €19.6 billion a year earlier.

The results were led by Mercedes-Benz Cars, Daimler's auto division, and by stronger heavy truck sales, a sector in which Daimler is the world leader.

Yesterday, the group underscored "recovering automotive markets around the world, strong growth in major car and commercial-vehicle markets, an attractive product portfolio and the implementation of efficiency improvements".

Mr Zetsche said that "our strategy is paying off: We have a very dynamic development of unit sales and revenue in all divisions".

In the second quarter, Daimler sold 496,500 cars and trucks worldwide, a leap of 27 per cent from the same period a year earlier.

Mercedes-Benz unit sales climbed by 19 per cent to 342,500 vehicles to mark its strongest second quarter ever, the statement said.

This year, the group forecast total sales would "increase significantly" from the 2009 figure of 1.6 million vehicles.

Its auto business in China and the US has picked up markedly, while demand for heavy trucks has strengthened in Brazil, Europe, Indonesia and the US.

Daimler shares lost 1.75 per cent to €42.4 in midday Frankfurt trading however, topping the list of falling stocks as the DAX index of leading shares was 0.53 per cent higher overall.