Daimler profit gains 45% on higher CLA, S-class demand

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STUTTGART (Bloomberg) -- Daimler today posted a 45 percent surge in fourth-quarter profit as customers scooped up the new Mercedes-Benz CLA and revamped S-class flagship sedan.

Earnings before interest and taxes from ongoing operations rose to 2.53 billion euros ($3.42 billion) from 1.74 billion euros a year earlier, Daimler said in a statement. Revenue increased 7.6 percent to 32.1 billion euros.

Daimler forecast today a "significant" increase in 2014 operating profit from continuing operations from the 7.92 billion euros achieved in 2013 on demand for the new GLA compact SUV and redesigned C-class sedan, Mercedes's best-selling model. Both models go on sale in Europe this spring.

"We expect significant growth in all our vehicle business units in 2014," Daimler CEO Dieter Zetsche said at the group's annual results press conference today.

The company expanded car sales faster than Volkswagen Group's Audi in the final months of 2013 and for the first time since 2010 posted a higher delivery growth rate last year than BMW.

Zetsche has vowed that Mercedes will regain the top spot in luxury-auto sales by the end of the decade after losing it to BMW in 2005 and ceding second place to Audi in 2011.

"Daimler is improving in the areas where they previously lagged behind, and their strategy seems to work," Daniel Schwarz, a Frankfurt-based analyst with Commerzbank, said prior to the release of earnings. "It's not all down to the new models, Daimler is also making progress at reducing costs."

Cost reductions

Daimler, also the world's biggest truckmaker, is in the middle of a two-year effort to reduce spending by 2 billion euros at the carmaking division, which is scheduled to conclude at the end of 2014.

The Fit for Leadership program includes lowering material costs, tightening production efficiency and using funds more flexibly. Zetsche said last month that the effort was ahead of schedule and may exceed the original target.

Mercedes in March will roll out a new version of the mid-sized C-class sedan as well as the GLA, a compact SUV with no predecessor model. The automaker is also starting to offer an electric version of the B-class compact in the United States, and will debut a coupe variant of the S class.

Daimler today proposed increasing the 2013 dividend to 2.25 euros per share from the 2.20 euros per share for 2012.

To catch up with Audi and BMW in China, Mercedes plans to accelerate its retail-network expansion and add 100 dealers this year, compared with 75 new outlets in 2013.

Daimler bought a 12 percent stake last year in Beijing Automotive Group Co.'s auto division, its local production partner in the country, to pave the way for BAIC's planned initial public offering.

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