Daimler profits crumble on ′high expenses′ | Business| Economy and finance news from a German perspective | DW | 25.07.2012
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Business

Daimler profits crumble on 'high expenses'

German luxury carmaker Daimler has reported a sharp drop in second quarter profits, despite record sales. The company has made huge investments to become fit for more volatile markets in future.

Daimler booked a net profit of 1.52 billion euros ($1.83 billion) in the months from April through June, down 11 percent on the second quarter of 2011, in which the German auto giant posted a profit of 1.7 billion euros.

However, revenue had grown by 10 percent to 28.9 billion euros, the Stuttgart-based company said Wednesday, on the back of sales of 570,300 vehicles in the quarter.

Daimler growth was primarily driven by the firm's truck division, which saw sales soar by 34 percent compared with the previous year.

In addition, company flagship Mercedes-Benz also set a record for sales with 370,400 of its luxury cars delivered to customers - up four percent.

"We achieved strong growth in unit sales and revenue," said Daimler Chief Executive Dieter Zetsche. However, he noted that profits were hit by "high expenses."

The German auto maker is due to launch new versions of its A-Class and B-Class models - both Daimler top sellers in which the company has invested heavily.

On Tuesday, Daimler said it had hired additional production capacity from Finland's Valmet Automotive to meet strong demand for the A-Class model, for which the firm had allegedly received 40,000 pre-sale orders.

Therefore, Daimler said it would hold on to its 2012 forecast in spite of "economic uncertainty and risks existing in nearly all regions."

In 2011, the carmaker earned just short of nine billion euros before interest and taxes - a result, towards which Daimler Chief Financial Officer Bodo Uebber said the company was "well on track" in view of 4.4 billion euros earned in the first half of 2012.

uhe (Reuters, AFP, dpa)