FRANKFURT (Bloomberg) -- Daimler AG shares may advance in Frankfurt trading after the world's second-biggest maker of luxury vehicles raised its profit forecast for Mercedes-Benz cars and the truck unit.
The car division expects earnings before interest and tax of between 2.5 billion euros ($3.4 billion) and 3 billion euros from ongoing business this year, the Stuttgart-based company said in a statement late Monday. Daimler previously forecast more than 1.5 billion euros for Mercedes-Benz cars.
Chief Executive Officer Dieter Zetsche is striving to close the gap with luxury market leader BMW AG.
Daimler reported better-than-expected earnings in the first quarter after “very solid results” at the Mercedes-Benz Cars unit on “strong” sales, its model mix and pricing as well as a “favorable overall cost position,” Daimler said.
“Daimler's situation has become much better because the car market improved,” said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt, who recommends buying the stock. “The shares should react positively on the outlook and first- quarter figures.”
Daimler shares have declined 2.5 percent to 36.31 euros so far this year, valuing the company at 38.5 billion euros. That trails a 4.6 percent gain at the Bloomberg Europe Autos Index, which tracks eight carmakers.
The company's trucks division will make a profit of between 500 million euros and 700 million euros this year, up from a previous prediction of about 200 million euros.
Daimler reported preliminary first-quarter Ebit including special items of 1.2 billion euros after a loss of 1.4 billion euros in the year-earlier period. That beat the median estimate of 668 million euros, according to five analysts surveyed by Bloomberg this month.
Mercedes-Benz Cars reported Ebit of 806 million euros, while Daimler's trucks unit posted first-quarter profit of 130 million euros. The financial services business had a profit of 119 million euros. The Mercedes-Benz vans business had a profit of 64 million euros and Daimler buses reported Ebit of 41 million euros.
Group revenue was 21.2 billion euros in the period, the company said. Mercedes-Benz cars had sales of 11.6 billion euros and Daimler trucks 4.9 billion euros.
Daimler said it will release detailed first-quarter results on April 27.