Daimler Turnaround Nears – US-FOREX.US
Good news from Stuttgart. German carmaker Daimler may be poised to return to profitability after expectation-beating second quarter earnings.
Shares of Daimler
rose 5.2%, or 1.57 euros , to 31.66 euros in morning trading in Frankfurt as investors saw signs of a sustained recovery in the premium cars sector, even as the maker of Mercedes-Benz reported an operating loss of 1.1 billion for the second quarter.
The rate of deterioration appears to be slowing. In the previous two quarters, the car maker reported a loss of 1.4 billion and 1.5 billion euros respectivey. For the quarter ending in June, analysts surveyed by Thomson Reuters had expected a loss of 1.5 billion euros “There is a chance that the carmaker returns to profit already in the third quarter,” said Tim Schuldt, an analyst at Equinet, who added that this wouldn’t however translate into a profit for the full year. “My gut feeling is that this is a clear sign that the turnaround is here and we will be back to profitability soon.”Daimler hasn’t guided on whether it will be profitable in the third quarter but instead forecasts that all divisions bar trucks will be profitable in the second half of the year. “The company will report a profit later this year, but probably in the fourth quarter,” said Michael Tyndall, an analyst with Nomura International in London.
During the quarter sales fell 25% to 19.6 billion euros compared with 25.4 billion euros last year, while profitability was also hurt from charges derived from its stake in Chrysler. The maker of Maybach and Smart gave up a 19.9% equity stake in Chrysler on June 3.Daimler could be one of the first carmakers to speed ahead of rivals after the recession, thanks to a considerable improvement in the luxury car sector in European. Luxury sales as a proportion of the total European market is on the rise, at 16.3% in June, from 15.9% in April, according to JPMorgan. Shares of BMW
rose 3.8%; while Volkswagen was up 0.7% in Frankfurt on Wednesday. Renault
rose 6.2%, and shares of PSA Peugeot Citroen
rose 8.4% in Paris.
The Associated Press and Thomson Reuters contributed to this article.