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.
Continue Reading Below
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.
Data source: Daimler AG. "Adjusted EBIT" excludes the impact of special items.
The chart below shows the number of vehicles sold in each of Daimler's industrial divisions.
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.
10 stocks we like better than Daimler AG When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and DAIMLER AG ORD wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of January 4, 2017