Daimler AG’s share price down, posts increasing profit due to rising demand for new models, but margins disappoint

The third-biggest luxury car manufacturer in the world – Daimler AG – made an official statement today, revealing that its earnings for the first quarter of the current financial year rose by 95% due to increased demand for new models. The company said that its earnings before interest and taxes increased from 917 million euros for the same period in 2013 to 1.79 billion (2.47 billion dollars).

According to Daimlers statement, the operating margin of its Mercedes unit was 7%, trailing some analysts forecasts and below the companys medium-term target of 10%. The deliveries of Daimlers Mercedes vehicles rose by 15% and reached 374 300 cars due to increased customers demand. The net profit of the company rose from 564 million to 1.03 billion euros (1.42 billion dollars).

Mr. Dieter Zetsche, the current Chief Executive Officer of the company said in the statement that Daimler AGs strategy of growth and efficiency programs improvement are to be “systematically continued”. As reported by Bloomberg, Mr. Zetsche said: “Our strategy is paying off; our investments are bearing fruit. As the year progresses, we will continue working systematically on our profitable growth path.”

The companys revenue was reported to have increased by 13% from 26.20 to 29.46 billion euros. Daimler AG bets on the improvement of the vehicles market in Europe, but its sales also depends on the markets growth both in China and the U.S. The third-largest luxury car maker has recently consolidated its positions on the American and the Chinese markets thanks to some changes in the sales organization, as well as to new dealerships of the Mercedes brand that have been added.

Mr. Bodo Uebber, who is the Chief Financial Officer of Daimler AG, also commented on the companys results for Bloomberg, saying: “The programs are going well. Were very optimistic that well reach the savings targets.”

Daimler AG fell by 2.07% to trade at 66.39 euros per share by 9:17 GMT, marking a one year change of +58.01%. According to the Financial Times, the 31 analysts offering 12 month price targets for Daimler AG have a median target of 75.00, with a high estimate of 86.00 and a low estimate of 58.50. The median estimate represents a 10.64% increase from the last price of 67.79.