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Daimler's group profits fall while truck orders bulge

BERLIN (Reuters) – Daimler (DAIGn.DE[1]) lifted the outlook for its trucks division for a second time in three months on Friday while its overall profit fell on costs related to diesel-engine updates, vehicle recalls and restructuring.

Earnings before interest and taxes (EBIT) at Daimler Trucks, the group’s second-largest unit by revenue, will significantly exceed year-ago levels after jumping by a third to 614 million euros (£725 million) in the July-to-September period, the company said.

Daimler and rivals in the truck industry including Sweden’s Volvo (VOLVb.ST[2]) and Volkswagen (VOWG_p.DE[3]) have seen rising demand this year for commercial vehicles.

In late July, Daimler said it expected EBIT at trucks operations to be flat after previously guiding for profit to fall below 2016 results.

“Truck growth is in full swing, and order books are going from strength to strength,” said Bernstein analyst Max Warburton who has an “Outperform” rating on Daimler stock.

Quarterly truck orders at Daimler surged 47 percent thanks to strong demand in North America and Asia where the German manufacturer is market leader, and increased 11 percent in Europe, according to Warburton.

Volvo’s shares hit a record high on Friday as it also raised its outlook for truck markets on both sides of the North Atlantic this year and forecast a further strong recovery in 2018.

Daimler shares were flat at 68.92 euros as of 1207 GMT.

GROUP COSTS BITE

Group operating profit at Daimler meanwhile slipped to 3.98 billion euros from 4.04 billion a year earlier, including 523 million euros in one-time costs.

FILE PHOTO: The Mercedes star logo of an E Coupe is pictured before the annual news conference of Daimler AG in Stuttgart, Germany, February 2, 2017.

REUTERS/Michaela Rehle/File Photo

Daimler spent 223 million euros last quarter to update over three million Mercedes diesel-engine models in Europe to curb pollution and help avert driving bans.

It added another 230 million euros to fund a recall of more than 1 million Mercedes models worldwide to address potential unintended air bag deployments.

Besides another 70 million euros for trucks restructuring, Daimler said it also needs to spend 100 million euros to fund a planned reorganization of its passenger-cars and trucks units.

“If special items are excluded, Daimler delivered excellent results, with trucks and luxury cars being the main drivers,” said LBBW analyst Frank Biller who has a “Buy” recommendation on the shares.

Third-quarter sales of luxury Mercedes-Benz cars rose 7.9 percent to a record 573,026 models, powered by strong demand for sport-utility vehicles such as the GLA and GLC models and the E-Class.

That beat the 1.2 percent gain to 499,467 autos at rival BMW (BMWG.DE[4]), which Mercedes last year eclipsed as the world’s biggest premium automaker by sales, and the 3.6 percent rise to 471,850 cars at Volkswagen’s (VOWG_p.DE[5]) Audi brand.

The group stuck with its guidance for a significant increase in group EBIT this year and said it expects EBIT at its finance arm to also significantly beat year-earlier levels, having previously guided for earnings to rise only slightly.

Separately, Daimler has asked the European Commission to act as principal witness in investigations of an alleged collusion among German carmakers to be exempt from potential fines, finance chief Bodo Uebber said on an earnings call.

European Union and German antitrust regulators have been investigating whether Daimler, VW, BMW, Porsche and Audi (NSUG.DE[6]) colluded to discuss prices, suppliers and standards to the detriment of foreign carmakers.

“In principle, this is about possible antitrust agreements (among German carmakers) that have been discussed in the media some time ago,” Uebber said, declining to be more specific.

Reporting by Andreas Cremer; Editing by Maria Sheahan and Elaine Hardcastle

Our Standards:The Thomson Reuters Trust Principles.[7]

References

  1. ^ DAIGn.DE (uk.reuters.com)
  2. ^ VOLVb.ST (uk.reuters.com)
  3. ^ VOWG_p.DE (uk.reuters.com)
  4. ^ BMWG.DE (uk.reuters.com)
  5. ^ VOWG_p.DE (uk.reuters.com)
  6. ^ NSUG.DE (uk.reuters.com)
  7. ^ The Thomson Reuters Trust Principles. (thomsonreuters.com)

Daimler's group profits fall while truck orders bulge

BERLIN (Reuters) – Daimler (DAIGn.DE[1]) lifted the outlook for its trucks division for a second time in three months on Friday while its overall profit fell on costs related to diesel-engine updates, vehicle recalls and restructuring.

Earnings before interest and taxes (EBIT) at Daimler Trucks, the group’s second-largest unit by revenue, will significantly exceed year-ago levels after jumping by a third to 614 million euros (£725 million) in the July-to-September period, the company said.

Daimler and rivals in the truck industry including Sweden’s Volvo (VOLVb.ST[2]) and Volkswagen (VOWG_p.DE[3]) have seen rising demand this year for commercial vehicles.

In late July, Daimler said it expected EBIT at trucks operations to be flat after previously guiding for profit to fall below 2016 results.

“Truck growth is in full swing, and order books are going from strength to strength,” said Bernstein analyst Max Warburton who has an “Outperform” rating on Daimler stock.

Quarterly truck orders at Daimler surged 47 percent thanks to strong demand in North America and Asia where the German manufacturer is market leader, and increased 11 percent in Europe, according to Warburton.

Volvo’s shares hit a record high on Friday as it also raised its outlook for truck markets on both sides of the North Atlantic this year and forecast a further strong recovery in 2018.

Daimler shares were flat at 68.92 euros as of 1207 GMT.

GROUP COSTS BITE

Group operating profit at Daimler meanwhile slipped to 3.98 billion euros from 4.04 billion a year earlier, including 523 million euros in one-time costs.

FILE PHOTO: The Mercedes star logo of an E Coupe is pictured before the annual news conference of Daimler AG in Stuttgart, Germany, February 2, 2017.

REUTERS/Michaela Rehle/File Photo

Daimler spent 223 million euros last quarter to update over three million Mercedes diesel-engine models in Europe to curb pollution and help avert driving bans.

It added another 230 million euros to fund a recall of more than 1 million Mercedes models worldwide to address potential unintended air bag deployments.

Besides another 70 million euros for trucks restructuring, Daimler said it also needs to spend 100 million euros to fund a planned reorganization of its passenger-cars and trucks units.

“If special items are excluded, Daimler delivered excellent results, with trucks and luxury cars being the main drivers,” said LBBW analyst Frank Biller who has a “Buy” recommendation on the shares.

Third-quarter sales of luxury Mercedes-Benz cars rose 7.9 percent to a record 573,026 models, powered by strong demand for sport-utility vehicles such as the GLA and GLC models and the E-Class.

That beat the 1.2 percent gain to 499,467 autos at rival BMW (BMWG.DE[4]), which Mercedes last year eclipsed as the world’s biggest premium automaker by sales, and the 3.6 percent rise to 471,850 cars at Volkswagen’s (VOWG_p.DE[5]) Audi brand.

The group stuck with its guidance for a significant increase in group EBIT this year and said it expects EBIT at its finance arm to also significantly beat year-earlier levels, having previously guided for earnings to rise only slightly.

Separately, Daimler has asked the European Commission to act as principal witness in investigations of an alleged collusion among German carmakers to be exempt from potential fines, finance chief Bodo Uebber said on an earnings call.

European Union and German antitrust regulators have been investigating whether Daimler, VW, BMW, Porsche and Audi (NSUG.DE[6]) colluded to discuss prices, suppliers and standards to the detriment of foreign carmakers.

“In principle, this is about possible antitrust agreements (among German carmakers) that have been discussed in the media some time ago,” Uebber said, declining to be more specific.

Reporting by Andreas Cremer; Editing by Maria Sheahan and Elaine Hardcastle

Our Standards:The Thomson Reuters Trust Principles.[7]

References

  1. ^ DAIGn.DE (uk.reuters.com)
  2. ^ VOLVb.ST (uk.reuters.com)
  3. ^ VOWG_p.DE (uk.reuters.com)
  4. ^ BMWG.DE (uk.reuters.com)
  5. ^ VOWG_p.DE (uk.reuters.com)
  6. ^ NSUG.DE (uk.reuters.com)
  7. ^ The Thomson Reuters Trust Principles. (thomsonreuters.com)

Road Haulage and Car Drivers Reminded Emissions Charge Goes into Effect in London from Next Week

All Motorists Should Check Vehicle Status Online to Ensure if Liable for Large PenaltiesShipping News Feature UK – Readers are reminded that as of Monday the 23rd of October, London’s new Toxicity Charge (T-Charge[1]) will be in effect. All drivers, including private motorists and those using road haulage vehicles are subject to the new charge which encompasses the existing Central Congestion Charging Zone and will apply to older cars, vans, minibuses, buses, coaches and heavy goods vehicles which do not meet with the EURO 4 standard for emissions.

Vehicles that do not meet that standard will be required to pay an additional ?10 per day to drive in the Central Congestion Charge Zone and the cost is in addition to the normal Congestion Charge. Both charges operate from 07:00 to 18:00, Monday to Friday, and the T-Charge will use the same payment and operational systems as the Congestion Charge, with eligible vehicles being identified and the driver paying for both the tolls in the same transaction.

It is important to note that vehicles that have exemptions to the existing charge, such as buses which have more than nine seats, will still be liable for the T-Charge if their emission standards do not meet the required levels. Transport for London (TfL) has a website where users can check the registration of their vehicles to see if they have to pay the additional charge, which can be found HERE[2]. Vehicles exempt from the charge are:

  • Motorcycles, mopeds and scooters that are exempt from the Congestion Charge are also exempt from the T-Charge.
  • Taxis and private hire vehicles (PHVs) are exempt from paying the Congestion Charge and the T-Charge when actively licensed with TfL.

    The exemption for PHVs only applies to private hire bookings.

  • Vehicles with a historic tax class (40 years and older) and/or commercial vehicles manufactured before 1973. These vehicles continue to be subject to the Congestion Charge.
  • Two-wheeled motorbikes (and sidecars) and mopeds that are exempt from the Congestion Charge.
  • Emergency service vehicles, such as ambulances and fire engines, which have a taxation class of ‘ambulance’ or ‘fire engine’ on the date of travel.
  • NHS vehicles exempt from vehicle excise duty, Ministry of Defence vehicles.
  • Roadside recovery vehicles and accredited breakdown vehicles registered for a 100% discount from the Congestion Charge.
  • Specialist off-road vehicles such as tractors and mobile cranes (that are exempt from Low Emission Zone).

The charge has already met with opposition[3] from motoring lobby groups and our article in February[4] outlined the impact it is likely to have on deliveries of goods in the city with the situation worsening for smaller haulage groups as the regulations evolve in the next few years. The need to clean London’s air is however paramount but no doubt the comparatively low key introduction of the T-Charge this month will produce a hefty financial return by way of fines on ill informed motorists.

Already we have discovered an anomaly in the system. As the fee payable is automatically charged it would be well for any operators of vehicles which may operate in the congestion zone to be sure of their vehicles status. A test run by the Handy Shipping Guide on an historic vehicle that is exempt according to the TfL parameters did return a result that showed the vehicle as liable for the charge.

The penalty for failure to pay the toll will be ?130, reduced to ?65 if paid within 14 days.

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References

  1. ^ T-Charge (tfl.gov.uk)
  2. ^ HERE (tfl.gov.uk)
  3. ^ met with opposition (www.handyshippingguide.com)
  4. ^ article in February (www.handyshippingguide.com)

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