Daimler to pay €2bn to investors

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Daimler sent its share price down with slightly lower than expected full-year results, in spite of delighting investors with a pay-out of almost €2bn.

Daimler end-of-year results 2010
SalesNet profitEarnings per shareDividend
€97.8bn€4.7bn€4.28€1.85
↑19.4%↑€7.3bn↑€6.91

The Stuttgart-based carmaker said it would pay a dividend of €1.85 a share, slightly exceeding analysts’ expectations, while posting a net profit of €4.7bn ($6.4bn), which was slightly below market forecasts.

Daimler shares in Frankfurt dropped by as much as 4.3 per cent to €53.59 in early morning trading before recovering to €54.28 in mid-morning, 3.04 per cent below the opening price.

The pay-out highlights how the global economic recovery has quickly refilled industrial groups’ purses. A year ago Daimler shocked the investor world when it slashed its dividend after a deep sales decline that left it with a loss in 2009.

It said revenues had increased by almost a quarter to €97.8bn, while sales volumes had risen 22 per cent to 1.9m cars and trucks.

Daimler has in the past year profited from rapidly rising demand for premium cars in China, while the US – still the world’s largest market for these products – also returned to stronger growth in the course of the year.

Customers in those regions are particularly keen on Daimler’s top-of-the-range S and E-Class saloons, which have the highest sales margins.

Dieter Zetsche, Daimler’s chief executive, said the carmaker expected this year to “significantly” surpass the operating profit level of 2010.

“Our goal is now to maintain the level we have reached over the long term and to further improve it wherever possible,” he said.

He added that the group aimed to lift unit sales further and to achieve moderate revenue growth this year.

All three German premium car brands – Daimler’s Mercedes-Benz, Audi and BMW – have reported strong growth in January on the back of Chinese and US demand.

But Daimler warned that there were still challenges to these growth opportunities, such as higher investment spending, rising oil and raw material prices and volatile exchange rates.

The group said it aimed to achieve on a sustained basis an annual return on sales of 9 per cent for its automotive businesses and 10 per cent for the Mercedes car unit by 2013.

Last year Mercedes-Benz reached an 8.7 per cent profit margin.

This margin beat every other independent carmaker apart from Honda, the Japanese mass market producer, according to industry executives.

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