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Daimler Q2 revenues disappoint

Daimler Q2 revenues disappoint
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First Published: Wed, Jul 27 2011. 12 35 PM IST
Updated: Wed, Jul 27 2011. 12 35 PM IST
Frankfurt: German car and truck maker Daimler’s second quarter revenues fell short of expectations, indicating that demand for cars in emerging markets may be starting to cool.
Second-quarter revenues rose about 5% to €26.34 billion ($38.12 billion), Daimler said on Wednesday, missing an average estimate of €27.99 billion in a Reuters poll.
Premium and mass-market carmakers have looked to fast-growing markets such as China to make up for sluggish sales growth in more mature markets, particularly in Europe.
But China’s car market — the world’s biggest — is expected to cool this year, partly due to rising fuel prices and tighter rules on car registrations after sales there surged by a third to a record in 2010.
Sales growth at Mercedes-Benz Cars in China slowed significantly to 8% in the second quarter from 82% in the first.
Daimler chief executive Dieter Zetsche last month warned of growing economic risks in emerging markets such as China that could cause the auto industry’s growth engine to sputter.
Emerging markets have generated almost three quarters of world growth over the past two years, but there is rising concern that inflation in China, the world’s second-largest economy, could prompt a slowdown in emerging markets across the board.
“Demand for cars in the major emerging markets of China, India, Brazil and Russia will probably continue to grow. But rates of growth in China and India are likely to be distinctly lower than last year,” Daimler said on Wednesday.
Its second-quarter earnings before interest and tax (EBIT) rose 23% to €2.58 billion ($3.73 billion), which beat an average estimate of €2.49 billion in a Reuters poll.
Daimler was upbeat on the rest of the year, saying business had developed better than expected.
“In light of the better than anticipated performance in the first half of 2011 and the currently good market demand, the Daimler Group now targets EBIT from the ongoing business in 2011 that will be better than we previously expected and will very significantly exceed the level of 2010,” the company said.
It said it now expects 2011 EBIT to very significantly exceed the year-earlier level. Analysts on average see 2011 group EBIT at €9.15 billion, up almost 26% from a year earlier.
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First Published: Wed, Jul 27 2011. 12 35 PM IST
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