Luxury cars and vans help shore up Daimler’s profits

FRANKFURT, Germany (AP) — Germany’s Daimler AG, the maker of Mercedes-Benz cars, said yesterday that stronger sales of luxury cars and higher profits in its van business helped shore up third-quarter profits.

The company said its net profit rose by a modest three per cent from the year before, to EUR1.81 billion. That was ahead of analyst estimates of EUR1.68 billion as compiled by financial information provider FactSet.

The Stuttgart-based maker of cars, vans, trucks and buses returned to profitability in the quarter after losing EUR1.2 billion in the second quarter as the company booked one-time charges for troubles with diesel autos and airbag recalls, its first quarterly loss in a decade.

Shares rose 6.3 per cent on yesterday’s earnings report to EUR53.63 in morning trading in Europe.

Revenues rose eight per cent to EUR43.27 billion, with operating earnings at the Mercedes luxury car division, a pillar of the company’s finances, rising four per cent to EUR1.42 billion.

The profit margin, however, declined to six per cent from 6.3 per cent.

The company’s finances were boosted by a rebound at its Mercedes-Benz Vans division, where operating profit reached EUR113 million after a EUR93 million loss a year earlier.

CEO Ola Kallenius warned that the company would need to “significantly reduce” costs to stay on top of the industry’s shift toward electric cars and other new technologies.

Kallenius, who took over from Dieter Zetsche in May, plans a meeting with analysts and investors on November 14 in London to lay out his plans to reduce costs and improve profitability.