Daimler AG (DAI.XE), the maker of Mercedes-Benz luxury cars, sharply raised its outlook for the year as it reported on Wednesday that net profit doubled, fueled by surging sport-utility vehicles sales and an improved outlook for the company's vans and financial services divisions.
On the back of a strong outlook for the global economy and steady worldwide growth in new car sales, Daimler raised its overall forecast, saying revenue, sales and pre-tax profit would "increase significantly" in 2017.
"We expect to significantly increase group sales this year and achieve a new record," chief finance officer Bodo Uebber told reporters.
Net profit in the three months to the end of March doubled to 2.70 billion euros ($2.96 billion) from EUR1.35 billion the year before, driven by sharply higher Mercedes-Benz sales of SUVs and E-class models. Revenue rose 11% to EUR38.8 billion as unit sales rose 10% to 754,259 cars, trucks, vans and buses.
There were few surprises in the numbers after Daimler released preliminary figures on April 11, which showed that strong sales at Mercedes-Benz cars and one-off gains including the sale of a 15% stake in digital mapping service Here to Intel Corp drove earnings higher in the quarter.
After release of the detailed report, analysts noted that the lion's share of additional earnings momentum is likely to come from vans and financial services, while the outlook for cars and trucks remains unchanged.
Daimler shares were trading about 1.4% higher at EUR68.70 in Frankfurt.
Daimler continues to produce strong profit growth even as the company invests heavily in new models and new technology to develop self-driving cars and digital mobility services.
In the face of the steep costs to develop self-driving cars, Daimler recently announced it would team up with supplier Bosch GmbH to develop technology for robo-taxis, self-driving taxis, that could launch at the beginning of the next decade.
Mr. Uebber declined to comment on ongoing investigations in the U.S. and Germany over allegations that Mercedes-Benz may have installed cheat devices to manipulate emissions in some of its diesel vehicles.
Daimler warned in its interim report that it couldn't rule out that U.S. authorities could conclude that Mercedes-Benz employed illegal defeat devices. But Mr. Uebber characterized the statement as standard information about potential risks for the company's investors.
Daimler has repeatedly maintained that the company didn't engage in the kind of emissions fraud to which Volkswagen AG (VOW.XE)pleaded guilty to in the U.S. and agreed to pay nearly $25 billion in fines, penalties, fees and compensation for consumers.
Mr. Uebber said the company expects an increase of 1% to 2% in global new car sales, with slight growth in China, steady demand at about 17 million cars and light trucks in the U.S., and a slowdown of growth in Western Europe after the strong recovery in recent years.
Strong demand for the GLC crossover, GLC coupe, the GLA and E-Class coupe is expected to drive sales at Mercedes-Benz to a record high in 2017, Daimler said.
Sales of Daimler Trucks are expected to be at the previous year's level, benefiting from steady demand in North America and Europe and a stabilization of demand in Brazil.
Daimler forecast that pre-tax profit at Mercedes-Benz would be significantly higher in 2017, while earnings at Daimler Trucks and Daimler Vans would dip slightly below the previous year. Daimler said earnings at Daimler Buses and the financial services unit would be slightly higher this year.
(Friedrich Geiger contributed to this article.)
-Write to William Boston at William.Boston@wsj.com
(END) Dow Jones Newswires
April 26, 2017 04:08 ET (08:08 GMT)