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Daimler to Update Targets After Weak Start to 2013

April 10, 2013

Daimler to Update Targets After Markets Start Year Weaker

Two Smart compact automobiles, produced by Daimler AG, are seen on the company's stand at the 83rd Geneva International Motor Show in Geneva, Switzerland on March 4, 2013. Photographer: Valentin Flauraud/Bloomberg

Daimler AG (DAI), the world’s third- largest maker of luxury vehicles, will update its targets for 2013 when it reports first-quarter earnings later this month after many auto markets started the year weaker than expected.

Daimler still expects higher earnings in the second half than the first lifted by new products, even as the European market shows no signs of recovery, the Stuttgart, Germany-based company said in a statement today.

“Many markets were weaker than expected at the beginning of 2013,” the company said in the statement ahead of the company’s annual shareholders meeting in Berlin today. “That applies in particular to the markets for cars and commercial vehicles in Europe.”

Chief Executive Officer Dieter Zetsche, whose contract extension was cut short to three from a planned five years because of investor concerns about the company’s growth strategy, has vowed to regain the top spot in luxury-car sales by the end of the decade. Daimler postponed long-standing profit targets in October and initiated a cost-cutting plan because of the slowdown in Europe.

The German manufacturer today didn’t reiterate an earlier target to match last year’s earnings before interest and taxes from the ongoing business of 8.1 billion euros in 2013. Chief Financial Officer Bodo Uebber in late March said that first- quarter earnings would be significantly below the fourth quarter.

Second-Half Boost

The shares fell as much as 1.5 percent to 40.25 euros and were down 1.1 percent at 9:04 a.m. in Frankfurt trading. The stock has declined 2.1 percent this year, valuing the company at 43.2 billion euros ($56.6 billion).

Daimler, also the world’s largest commercial-vehicle maker, is expecting new models like the CLA four-door compact coupe and an updated version of the E-Class executive sedan to boost earnings in the second half, the company said today.

“The objective for this year is to stay the course, continue our growth and enhance our efficiency,” Zetsche said.

Mercedes global sales gained 3.5 percent to 324,898 vehicles in the first quarter, while Audi’s deliveries climbed 6.8 percent and BMW’s 7 percent. The brand’s effort to catch up gained some traction in March, when Mercedes grew by 6.5 percent versus 3 percent for Audi and 4.4 percent for BMW.

Shareholders are voting today on a dividend proposal of 2.20 euros for 2012, unchanged from the previous year. Investors are also being asked to approve the appointment of Andrea Jung, the former CEO of cosmetics maker Avon Products Inc. (AVP:US), to Daimler’s supervisory board.

To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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