warot
Track Technician
Oct. 23 (Bloomberg) -- Daimler AG, the world's second- biggest maker of luxury cars, cut its full-year earnings forecast by 1 billion euros ($1.3 billion) after third-quarter profit fell short of analyst estimates on plunging auto sales.
Earnings before interest and tax will be more than 6 billion euros in 2008 compared with a previous forecast of at least 7 billion euros, Stuttgart, Germany-based Daimler said in a statement today. Net income last quarter was 213 million euros, missing analyst predictions for a profit of 818 million euros.
Daimler's earnings are under pressure as the global financial crisis and economic slowdown hurt demand for its upscale autos. Unit sales fell 6 percent at the Mercedes-Benz Cars division, sending Ebit down 92 percent to 112 million euros. The company said full-year group revenue may now show a ``slight decrease'' and suspended a share buyback to preserve cash.
``This is symptomatic of the dire straits that the auto industry finds itself in on a global scale,'' said Stephen Pope, the London-based chief global strategist at Cantor Fitzgerald. ``Automakers have no real price control and even at the luxury end consumers are spoiled for choice.''
Daimler fell as much as 2.13 euros, or 8.8 percent, to 22 euros in German trading before trading down 2.6 percent at 23.49 euros as of 12:24 p.m. in Frankfurt. The stock has declined 65 percent this year, giving a market value of 22.2 billion euros.
Revenue Drops
Third-quarter revenue fell 7 percent to 23.8 billion euros, also short of the 24.8 billion euros anticipated by analysts surveyed by Bloomberg News. Net income was equal to 21 cents a share, compared with a year-earlier loss of 1.53 billion euros, or 1.47 euros a share, when earnings were wiped out by costs from the disposal of a 80.1 percent stake in Chrysler LLC.
Daimler cut its earnings forecast hours after Fiat SpA, Italy's largest carmaker, forecast that net income may plunge as much as 85 percent next year if the global financial crisis continues to sap credit and depress auto demand.
Daimler's focus on luxury models has left it struggling to sustain sales as the credit crunch constricts customers' access to loans. At the same time, higher steel prices and spending on fuel-saving technology are adding to costs. The automaker has reacted by scaling back production by 45,000 cars and announcing plans to close two truck factories in North America.
`Very Challenging'
``We recognize that the situation is very challenging indeed,'' Daimler Chief Executive Officer Dieter Zetsche said in the statement. ``We press ahead consequently with our cost efficiency programs in all our businesses.''
Auto sales in the U.S., the company's biggest market after Germany, fell for an 11th straight month in September, dropping 27 percent in the steepest slide since 1991. European car sales slumped 8.2 percent in September as part of the market's worst decline since 2005.
Third-quarter earnings at Mercedes-Benz Cars were burned by a 449 million-euro charge for declining value of vehicles returned from lease. The unit is now aiming for full-year earnings of 2.5 billion euros, giving an estimated return on sales of 5 percent, down from a previous target of 8 percent.
``The report doesn't surprise me after all the nightmare news of the past few weeks,'' said Juergen Meyer, a Frankfurt- based fund manager with SEB Asset Management, who holds Daimler shares. A 5 percent profit margin at Mercedes is ``in this environment still an enviable target.''
Daimler's van and bus unit reported a 100 million-euro loss for the quarter compared with a 319 million-euro profit. Of the company's manufacturing divisions, only trucks showed an improvement in earnings, with Ebit increasing 6 percent to 510 million euros.
Chrysler Drag
Daimler's remaining 19.9 percent stake in Auburn Hills, Michigan-based Chrysler still dragged Ebit down by 351 million euros, including restructuring charges and writedowns on vehicles leased out by the third-largest U.S. automaker.
Daimler has been in talks with Chrysler's majority owner, Cerberus Capital Management LP, about selling the buyout firm the last of its holding. Cerberus, in turn, has been in talks with Detroit-based General Motors Corp. about a merger or partnership with Chrysler, people familiar with the talks have said. A sale by Daimler would end a 10-year relationship that that cut the German company's market value by $12.6 billion.
Additional Costs
Daimler's lower profit outlook for this year doesn't include Chrysler-related expenses, costs from 3,500 job losses at the North American truck division, expenses from management changes, or 818 million euros in charges from revaluing leased vehicles. The target also excludes 569 million euros in gains from the sale of real estate in Berlin.
Suspension of the 6 billion-euro share buyback program may mean the company falls short of repurchasing the targeted 10 percent of stock by next April, it said today.
Turin-based Fiat said earlier that net income may fall to as little as 400 million euros in 2009 if demand drops 20 percent. That compares with a forecast profit of 2.6 billion euros this year. Third-quarter profit rose 1.9 percent to 440 million euros, buoyed by sales of autos, tractors and combine harvesters to emerging markets.
Every company is struggling right now. 2009 is going to be such a headache and we are still 2 months away
Earnings before interest and tax will be more than 6 billion euros in 2008 compared with a previous forecast of at least 7 billion euros, Stuttgart, Germany-based Daimler said in a statement today. Net income last quarter was 213 million euros, missing analyst predictions for a profit of 818 million euros.
Daimler's earnings are under pressure as the global financial crisis and economic slowdown hurt demand for its upscale autos. Unit sales fell 6 percent at the Mercedes-Benz Cars division, sending Ebit down 92 percent to 112 million euros. The company said full-year group revenue may now show a ``slight decrease'' and suspended a share buyback to preserve cash.
``This is symptomatic of the dire straits that the auto industry finds itself in on a global scale,'' said Stephen Pope, the London-based chief global strategist at Cantor Fitzgerald. ``Automakers have no real price control and even at the luxury end consumers are spoiled for choice.''
Daimler fell as much as 2.13 euros, or 8.8 percent, to 22 euros in German trading before trading down 2.6 percent at 23.49 euros as of 12:24 p.m. in Frankfurt. The stock has declined 65 percent this year, giving a market value of 22.2 billion euros.
Revenue Drops
Third-quarter revenue fell 7 percent to 23.8 billion euros, also short of the 24.8 billion euros anticipated by analysts surveyed by Bloomberg News. Net income was equal to 21 cents a share, compared with a year-earlier loss of 1.53 billion euros, or 1.47 euros a share, when earnings were wiped out by costs from the disposal of a 80.1 percent stake in Chrysler LLC.
Daimler cut its earnings forecast hours after Fiat SpA, Italy's largest carmaker, forecast that net income may plunge as much as 85 percent next year if the global financial crisis continues to sap credit and depress auto demand.
Daimler's focus on luxury models has left it struggling to sustain sales as the credit crunch constricts customers' access to loans. At the same time, higher steel prices and spending on fuel-saving technology are adding to costs. The automaker has reacted by scaling back production by 45,000 cars and announcing plans to close two truck factories in North America.
`Very Challenging'
``We recognize that the situation is very challenging indeed,'' Daimler Chief Executive Officer Dieter Zetsche said in the statement. ``We press ahead consequently with our cost efficiency programs in all our businesses.''
Auto sales in the U.S., the company's biggest market after Germany, fell for an 11th straight month in September, dropping 27 percent in the steepest slide since 1991. European car sales slumped 8.2 percent in September as part of the market's worst decline since 2005.
Third-quarter earnings at Mercedes-Benz Cars were burned by a 449 million-euro charge for declining value of vehicles returned from lease. The unit is now aiming for full-year earnings of 2.5 billion euros, giving an estimated return on sales of 5 percent, down from a previous target of 8 percent.
``The report doesn't surprise me after all the nightmare news of the past few weeks,'' said Juergen Meyer, a Frankfurt- based fund manager with SEB Asset Management, who holds Daimler shares. A 5 percent profit margin at Mercedes is ``in this environment still an enviable target.''
Daimler's van and bus unit reported a 100 million-euro loss for the quarter compared with a 319 million-euro profit. Of the company's manufacturing divisions, only trucks showed an improvement in earnings, with Ebit increasing 6 percent to 510 million euros.
Chrysler Drag
Daimler's remaining 19.9 percent stake in Auburn Hills, Michigan-based Chrysler still dragged Ebit down by 351 million euros, including restructuring charges and writedowns on vehicles leased out by the third-largest U.S. automaker.
Daimler has been in talks with Chrysler's majority owner, Cerberus Capital Management LP, about selling the buyout firm the last of its holding. Cerberus, in turn, has been in talks with Detroit-based General Motors Corp. about a merger or partnership with Chrysler, people familiar with the talks have said. A sale by Daimler would end a 10-year relationship that that cut the German company's market value by $12.6 billion.
Additional Costs
Daimler's lower profit outlook for this year doesn't include Chrysler-related expenses, costs from 3,500 job losses at the North American truck division, expenses from management changes, or 818 million euros in charges from revaluing leased vehicles. The target also excludes 569 million euros in gains from the sale of real estate in Berlin.
Suspension of the 6 billion-euro share buyback program may mean the company falls short of repurchasing the targeted 10 percent of stock by next April, it said today.
Turin-based Fiat said earlier that net income may fall to as little as 400 million euros in 2009 if demand drops 20 percent. That compares with a forecast profit of 2.6 billion euros this year. Third-quarter profit rose 1.9 percent to 440 million euros, buoyed by sales of autos, tractors and combine harvesters to emerging markets.
Every company is struggling right now. 2009 is going to be such a headache and we are still 2 months away
Thanks. PalBay
Thanks! PalBay
