STUTTGART Mercedes maker Daimler (DAIGn.DE) pledged on Thursday to enhance on final 12 months’s report gross sales and revenue, regardless of slowing U.S. and Chinese automotive markets and persistently weak truck demand that led it to overlook fourth-quarter earnings forecasts.
The German group additionally signaled greater spending on electrified automobiles and internet-connected providers, including to investor considerations that earnings progress could also be tailing off.
Earnings earlier than curiosity and tax (EBIT) will enhance “slightly” in 2017, Daimler mentioned after posting 3.46 billion euros ($3.7 billion) for the fourth quarter – up 19 % however beneath the three.71 billion anticipated by analysts in a Reuters ballot.
Shares in Daimler have been down 3.5 % at 67.60 euros at 0955 GMT, inside a European auto sector .SXAP down 1 %.
Revenue edged 1 % greater to 41 billion euros, rounding off a 12 months by which Mercedes dethroned rival BMW (BMWG.DE) because the world’s main luxurious carmaker.
“We are confident that we will be able to improve on these record results once again in 2017,” Chief Financial Officer Bodo Uebber mentioned.
But quarterly adjusted earnings fell 47 % on the vans division and 38 % in vans, a mixed 112 million euros wanting the market consensus.
Profit at Mercedes vehicles jumped 22 % to 2.63 billion euros – for an 11 % working margin – and can this 12 months rise “significantly above” its 2016 complete, Daimler mentioned. The group proposed an unchanged dividend of three.25 euros per share.
The 2017 objectives level to EBIT someplace between 13.2 billion and 14.2 billion euros; the upper determine was already anticipated by analysts within the Reuters ballot.
Market expectations at the moment are “at the very high end of company guidance”, mentioned Evercore ISI analyst Arndt Ellinghorst. “There is very little room for positive earnings revisions.”
Morgan Stanley analysts cited a weak outlook exterior the Mercedes division amongst indicators to Daimler shareholders that now may very well be a great time to money in latest beneficial properties.
“The flat dividend highlights Daimler’s need for future (investment) spending to follow the electric vehicle strategy,” the financial institution added.
Daimler is pushing closely into self-driving automotive applied sciences, linked on-board providers and transmissions powered by batteries or gas cells – all areas the place mass uptake and returns on funding stay unsure.
The expertise drive will deliver greater spending on vegetation, analysis and growth in 2017-18, CFO Uebber mentioned. The 30 billion euros earmarked over two years compares with 13.5 billion invested final 12 months alone.
“This substantial expenditure is required because the automotive industry is faced with a fundamental transformation,” Uebber mentioned. “We are in an investment phase – these businesses will be profitable in the long term.”
Trucks will put a brake on efficiency this 12 months, Daimler cautioned, with divisional revenue anticipated to fall additional. North American demand continues to contract, with little signal of restoration within the blighted Brazilian and Turkish markets.
In vehicles, U.S. demand will flatten out as its present excessive degree whereas China’s market progress slows, Daimler predicted.
For 2016 total, the group reported a 5 % achieve in gross sales quantity and three % income enhance to 153.3 billion euros. Net earnings was a report eight.78 billion euros for the total 12 months and a pair of.21 billion within the final quarter.
(Writing by Laurence Frost; Additional reporting by Jan Schwartz in Hamburg; Editing by Maria Sheahan and Mark Potter)