BERLIN (Bloomberg) -- Daimler AG raised its full-year profit forecast after net income beat analysts' estimates on demand for top-of-the-line E- and S-Class sedans in China and the U.S.
Third-quarter net income rose 28-fold to 1.61 billion euros ($2.21 billion) from 56 million euros a year earlier, the carmaker said today. Analysts predicted profit of 1.09 billion euros, according to the average of nine estimates. Sales climbed 30 percent to 25.1 billion euros.
CEO Dieter Zetsche raised his target for 2010 earnings before interest and taxes to more than 7 billion euros from a forecast of 6 billion euros previously. Through the first nine months, the manufacturer recorded an operating profit of 5.7 billion euros.
Daimler's luxury-car sales are rebounding after the financial crisis as demand advances in China and the U.S., the world's two largest auto markets. The recovering global economy has also boosted deliveries of heavy trucks at Daimler, the world leader in commercial vehicles.
“It's strong results all across the board,” said Jose Asumendi, a London-based analyst with Royal Bank of Scotland. “Consensus is way too low; it's really lagging this story.”
Sales in China, which overtook the U.S. in 2009 as the world's biggest auto market, rose 19 percent last month. Mercedes outpaced the market by doubling deliveries.
U.S. auto sales in September rose to a seasonally adjusted annual rate of 11.8 million, the fastest pace since the end of the “cash for clunkers” program. Mercedes outsold BMW AG and Toyota Motor Corp.'s Lexus in the U.S. last month.
Daimler predicts strong demand for high-end E- and S-Class models, which start at $49,400, will boost Mercedes sales by more than 10 percent this year. Still, its growth pace is slower than competitors. Daimler's September sales worldwide gained 13 percent to 128,700 autos. Volkswagen AG's Audi increased deliveries 16 percent to 102,650 vehicles, while sales at luxury leader BMW climbed 17 percent to 142,950 cars.
“Investors worry about fading momentum at Mercedes and the impact of new competitor models,” such as the revamped BMW 5- Series and X3 and the new Audi A7, said Adam Hull, a London- based analyst with WestLB prior to the report. “We expect a falling margin in 2011 and 2012.”
The revamped CLS luxury coupe and SLK hard-top roadster, as well as cleaner engines, will help Mercedes have a “successful” 2011, Joachim Schmidt, the car unit's top sales chief, said in an interview last month. Daimler, which aims to increase Mercedes car sales to 1.5 million by 2015, didn't comment on prospects for next year in the statement today.
The Mercedes car unit, which also includes the Smart city car and the ultra-luxury Maybach nameplate, posted third-quarter Ebit of 1.3 billion euros, compared with 355 million euros a year earlier. The growth was driven by demand in China, where the unit's sales have more than doubled this year to become its third-largest market after Germany and the U.S.
“The results show that Daimler is well-positioned in the lucrative growth regions,” said Marc-Rene Tonn, an analyst at M.M. Warburg in Hamburg who recommends buying the stock. “They're not bracing for any noticeable slowdown in business.”
Daimler's earnings were boosted by 401 million euros in gains from health-care and pension benefits in the U.S. and after winning a lawsuit.
The manufacturer's trucks division, which makes Mercedes, Freightliner, and Fuso vehicles, posted a profit for a third consecutive quarter. The unit, the company's second-largest, recorded an operating profit of 500 million euros after a loss of 127 million euros a year earlier.
The unit closed factories in Asia and North America and cut jobs to return to profit after posting losses in every quarter in 2009.
“The world economy is not yet as stable as it was before the recession, but we are confident that we will continue to operate successfully in our markets,” Zetsche said in today's statement.