STUTTGART -- Daimler's fourth-quarter operating profit surged by 22 percent, lifted by demand for SUVs, compact cars and sales of its C class.
Earnings before interest and tax (EBIT) rose to 3.46 billion euros ($3.83 billion) in the quarter, the company said in a statement today.
Sales revenue rose 13 percent to 40.4 billion euros.
For the full year, EBIT increased 36 percent to 13.81 billion euros, helped mainly by a 23 percent jump in earnings at Mercedes-Benz Cars. The car unit's return on sales rose to 10 percent in 2015 from 8.1 percent a year earlier. Net profit was 8.9 billion euros, up from 7.3 billion.
"2015 was a good year for Daimler," CEO Dieter Zetsche said in the statement. "Getting to the top is hard, but staying at the top is even harder. That’s our ambition."
Zetsche aims to unseat BMW as the world's top-selling luxury brand by 2020 after passing Audi to claim the No. 2 spot last year, when sales of Mercedes-branded vehicles jumped 13 percent to 1.87 million. Daimler said the most important drivers of Mercedes's rising sales were the new C class, compact cars and increased sales in the SUV segment.
The company said 2015 earnings were boosted by better pricing, efficiency measures and currency effects, all of which helped to offset expenses for capacity expansion, advance expenditure for new technologies and vehicles, and the 19 million euro cost of relocating Mercedes's U.S. headquarters.
Daimler plans to spend an average of 7.2 billion euros this year and next on research and development. The extra spending on products and technology will come at the expense of free cash flow, which Daimler said would be significantly lower than last year's 5.9 billion euros.
Exchange-rate effects boosted EBIT by 900 million euros in 2015, and are expected to have a positive impact of around 400 million in 2016, Chief Financial Officer Bodo Uebber said today in an earnings call.
China No. 1 market
Daimler expects earnings will increase only "slightly" in 2016 because of China, which last year became the biggest market for Mercedes cars for the first time.
"The growth rate in China will be more moderate this year," the company said. Sales of Mercedes cars in China rose by 33 percent to 373,459 vehicles last year, compared with a 4.7 percent gain for the total market, the slowest in three years.
Zetsche said it would be wrong to classify the company's China outlook as disappointing. "We look positively into the year in China. The market forecast is for 8 percent growth and we believe we can achieve market share gains," he said.
Daimler had lagged competitors in China, a factor which helped it enjoy exceptional growth after Mercedes found a winning formula by taking the brand further upmarket and started to build C class and GLA compact cars in Beijing.
Also the world’s biggest truckmaker, Daimler’s commercial vehicle sales are set to continue to suffer from the recession in Brazil, while the U.S. market is also slowing.
Highlights for this year include the introduction of the revamped Mercedes E-class sedan, the brand's most important product. Low fuel prices also continue to favor sales of lucrative SUVs.
Daimler plans to pay a record dividend of 3.25 euros for each share, compared with 2.45 euros in 2014.
Reuters and Bloomberg contributed to this report