Daimler AG share price up, Q2 revenue, profit top projections

German automotive group Daimler AG reported on Thursday better-than-expected second-quarter revenue and profit, driven by strong performance at its Mercedes-Benz luxury car division.

The company said that group sales in the three months ended June rose by 19% to €37.5 billion from €31.5 billion a year earlier, while operating profit from ongoing businesses soared 54% to €3.8 billion from €2.5 billion in Q2 2014. Albeit at a slower pace, net profit still grew 8% from a year earlier to €2.4 billion.

“I think the numbers speak for themselves” said in a conference call Chief Executive Dieter Zetsche.

Daimler said the Mercedes-Benz division achieved a 10.5% return on sales, surpassing a 10% target for the first time in years and beating projections. Results received a boost by the launches of new models and strong sales growth in Western Europe, China and the US. Unit sales for the quarter grew 14% from a year earlier to 714 800.

“We achieved our targeted margin for Mercedes-Benz Cars in the first half of the year,” Mr. Zetsche said. “In all other automotive divisions, we are about to achieve our margin targets. We will systematically continue along the path we have taken.”

The company also benefited from a weaker euro and a cost-savings program that is expected to boost earnings by €4 billion this year. It reiterated its forecast that revenues and operating profit would rise significantly in full-year terms, after Q2 EBIT at the Mercedes-Benz unit surged to €2.227 billion from €1.409 billion a year earlier, while the truck unit saw EBIT surge to a new high of €682 million from €455 million in the second quarter of 2014.

And although China has become a much more difficult market for German premium auto makers, Daimler continued to perform well after addressing issues with its distribution network which had previously dragged on sales, whereas its main competitors BMW and Audi had enjoyed strong growth.

Ola Kaellenius, board member for Mercedes-Benz Cars sales, told investor magazine Boerse Online that the luxury car division is confident on its good performance in China. Although there could be some short-term volatility, “our attractive brand, strong portfolio and expansion of our dealer network all point to a good second half of the year” he added.

“As a result of the course we set in the past, we continue to grow profitably and are on the right track to fulfill our forecasts for the year 2015” said Bodo Uebber, Chief Finance Officer.

Daimler AG traded 0.37% higher at €84.57 per share at 09:25 GMT in Frankfurt, marking a year-on-year jump of 28.96%. The automotive group is valued at €90.14 billion. According to the Financial Times, the 26 analysts offering 12-month price targets for Daimler AG have a median target of €101.00, with a high estimate of €111.00 and a low estimate of €75.00. The median estimate represents a 19.87% increase from the previous close of €84.26.