German automaker Daimler (NASDAQOTH: DDAIF) reported on Feb. 2 that its net income rose 18% in the fourth quarter on strong global sales of Mercedes-Benz passenger vehicles.
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But profit was down significantly at Daimler's heavy-truck and commercial-van units, and the company's forecast for 2017 was subdued.
Daimler earnings: The raw numbers
All financial numbers are shown in billions of euros. As of Feb. 2, 1 euro = about $1.08.
|Metric||Q4 2016||Q4 2015||Year-Over-Year Change|
|Adjusted EBIT margin||8.7%||8.6%||0.1 ppt|
Data source: Daimler AG. "Adjusted EBIT" excludes the impact of special items.
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The chart below shows the number of vehicles sold in each of Daimler's industrial divisions.
|Business unit||Q4 2016||Q4 2015||Year-Over-Year Change|
|Total Daimler Group||799,031||776,625||3%|
Data source: Daimler AG.
Daimler's Mercedes-Benz Cars unit builds and sells Mercedes-Benz passenger vehicles (cars and SUVs) in markets around the world. Its earnings before interest and tax, excluding special items ("adjusted EBIT") at Mercedes-Benz was 2.63 billion euros ($2.84 billion) in the quarter, up 22% from a year ago.
Sharply styled new models and highly profitable versions like this AMG E43 have helped boost Mercedes-Benz Cars' profits and margins. Image source: Daimler AG.
A series of dramatically styled and upgraded new models including a revamped midsize E-Class line have helped boost margins and draw buyers away from rival luxury-car brands. Sales of premium high-performance AMG models have also been rising, CEO Dieter Zetsche said, again helping to boost the unit's margins.
Mercedes-Benz Cars' adjusted EBIT margin rose to 11% in the quarter, up from 9.6% a year ago.
Daimler Trucks builds and sells medium and heavy trucks under several brands, including Mercedes-Benz, Western Star, and Freightliner. Its fourth-quarter adjusted EBIT of 365 million euros ($394 million) was down 47% from the year-ago period. Results were hurt by a big drop in sales in Latin America, mainly due to the recession in Brazil, and intensifying competition in Europe.
Daimler Trucks' adjusted EBIT margin fell to 4.3% from 6.8% a year ago.
As its names suggests, Daimler's Mercedes-Benz Vans unit builds and sells vans, mostly to commercial customers around the world. Its fourth-quarter adjusted EBIT of 185 million euros ($200 million) was down 38% from a year ago, but that doesn't tell the full story. CFO Bobo Uebber said 2016 was the unit's best-ever year for sales and EBIT. Its fourth-quarter results reflected the effects of ramped-up investments in new products and technologies.
Mercedes-Benz Vans' fourth-quarter adjusted EBIT margin fell to 5.3% from 8.5% a year ago.
Daimler Buses's brands include Mercedes-Benz Buses and Coaches, Setra, and Thomas Built (a leading brand of school buses). The unit's fourth-quarter adjusted EBIT totaled 78 million euros ($84.2 million), up nearly fourfold from the 20 million euros it earned a year ago. Good results in Europe more than offset declines in recession-hit Brazil and Argentina.
Daimler Buses' adjusted EBIT margin in the fourth quarter was 6.1%, up from just 1.7% a year ago.
Daimler Financial Services
Daimler's in-house financing arm earned adjusted EBIT of 390 million euros ($421 million), up 1% from the year-ago period. Its return on equity was 15.2% in the fourth quarter, down from 16% in the year-ago period.
Looking ahead: A cautious outlook for 2017
For 2017, Daimler expects "slightly higher" sales for its Mercedes-Benz Cars and Vans units, a flat year-over-year result for heavy trucks, and "significantly higher" sales of buses, Zetsche said.
The group's EBIT is expected to "increase slightly" as significant profit gains for Mercedes-Benz Cars will be partially offset by year-over-year drops in EBIT from the heavy truck and van units, he said -- as well as by continued heavy investments in advanced technologies such as autonomous driving and electric propulsion.
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