Daimler AG has posted record figures for unit sales and EBIT adjusted for special items in the second quarter of 2016. The Group’s worldwide unit sales increased to 761,300 passenger cars and commercial vehicles, thus surpassing the prior-year number by 7%. In the first half of the year, 1.445 million vehicles were sold, which is 7% more than in the prior-year period. 

The Group’s net profit rose to €2,452 million/ Rs 18,160 crore (Q2 2015: €2,372 million/ Rs 17,566 crore). Net profit attributable to the shareholders of Daimler AG increased to €2,429 million/ Rs 18,000 crore (Q2 2015: €2,269 million/ Rs 16,800 crore) and earnings per share rose to €2.27/ Rs 168 (Q2 2015: €2.12/ Rs 157).

Further, the Group revenue increased by 3% to €38.6 billion (Rs 286,000 crore) in the second quarter. Adjusted for exchange-rate effects, revenue grew by 5%. The Group EBIT for the second quarter amounted to €3,258 million/ Rs 24,130 crore (Q2 2015: €3,718 million/ Rs 27,530 crore). Group EBIT adjusted for special items reached its highest level so far of €3,973 million/ Rs 29,420 crore (Q2 2015: €3,764 million/ Rs 27,870 crore). 

Commenting on the company’s performance, Dr Dieter Zetsche, chairman of the board of management of Daimler AG and Head of Mercedes-Benz Cars said, “We are starting the second half of the year with record unit sales and will systematically continue along our path. The development of earnings once again shows that our company is extremely well positioned in all areas and that our long-term strategy is paying off on a sustained basis. We are ensuring Daimler’s long-term success with our global presence, our broad-based product portfolio across all divisions and our systematic development of mobility services. At the same time, we continue to set standards for safety, sustainability and technology leadership.”

“We continue to grow profitably and are well on the way to achieving our forecasts for the full year. We intend to make 2016 into another successful year for Daimler. However, the markets remain volatile. That makes it even more important for us to strengthen our financial performance and make targeted investments in the future,” stated Bodo Uebber, member of the board of management of Daimler AG responsible for Finance & Controlling and Daimler Financial Services.

Investments in 2016

The Daimler Group invested €2.5 billion (Rs 18,510 crore) in property, plant and equipment in the first six months of this year (H1-2015: €2.1 billion/ Rs 15,550 crore). Most of that investment, €1.8 billion (Rs 13,330 crore), was at the Mercedes-Benz Cars division (H1-2015: €1.6 billion/ Rs 11,850 crore). The main focus of capital expenditure was on production preparations for new models, in particular the new E-Class and its derivatives and the derivatives of the C-Class, as well as investments for new transmissions and engine versions. Another area of capital expenditure was for the ongoing expansion of the international production and component plants. At Daimler Trucks, the main investments were for engines, transmissions and new vehicles, as well as the optimization of the worldwide production network.

The Daimler Group’s research and development spending in the first half of the year amounted to €3.6 billion/ Rs 26,660 crore (H1-2015: €3.1 billion/ Rs 22,960 crore), of which €1.1 billion was capitalized (H1-2015: €0.8 billion/ Rs 5,925 crore). More than two thirds of the research and development spending was at the Mercedes-Benz Cars segment. The main areas there, as at Daimler Trucks, were new vehicle models, particularly fuel-efficient and environmentally friendly drive systems, and the intensification of the modular strategy.

Outlook for the markets

According to Daimler, the worldwide demand for cars is likely to increase from its high level by about 3% in 2016. As in the previous year, the Group sees the Chinese market as the biggest contribution to this global growth, which is likely to grow again significantly. For the US market for cars and light trucks, Daimler anticipates a volume in the magnitude of last year. Slight growth is anticipated for the Western European car market. This growth should continue to take place on a relatively broad basis, whereby the greatest need to catch up exists in markets such as Italy, France and Spain. Uncertainty in the United Kingdom following the referendum result in favor of exit from the European Union is likely to primarily affect the British market. Only a slight impact is to be expected on the overall market of Western Europe. In Japan at best, stabilisation of demand is to be expected following the significant market correction of 2015. Prospects for the large emerging markets remain mixed. In India, market growth is likely to remain solid. In Russia, however, the ongoing recession is likely to cause another significant drop in car sales.

Demand for medium- and heavy-duty trucks in the regions important for Daimler should be perceptibly below the prior-year volume. In North America, weak overall investment is having a significant impact on the truck market. From the Group’s current perspective, demand for Class 6-8 trucks is likely to decrease by approximately 15%. But the European market seems to be fairly unaffected so far by political turbulence and the uncertain development of the world economy, and should continue its recovery with growth in the magnitude of 10% this year. Daimler Trucks currently does not expect the United Kingdom’s planned exit from the EU to have a significant impact on demand for trucks in Europe this year. The Brazilian market shows no signs of improvement. Due to the ongoing economic recession, further market contraction in the magnitude of 25% has to be anticipated.

The situation in the Russian market will remain difficult, so demand there is expected to fall again. Demand in China is likely to recover significantly after last year’s sharp market contraction. Demand in Japan for light-, medium- and heavy-duty trucks is likely to be relatively solid; in a rather sluggish economic environment, market volume should be at about the prior-year level. The Indonesian truck market is likely to contract once again; from today’s perspective, contraction of approximately 15% is anticipated. In India, further significant growth is to be expected in the segment of medium- and heavy-duty trucks.

Daimler now expects significant growth in the market for midsize, large and small vans in Western Europe in 2016. Also in the United States, significant growth in demand for large vans is anticipated. In Latin America, however, further significant contraction in the market for large vans is expected, while in China, more lively demand is anticipated in the market addressed there.

Daimler expects a slightly larger market volume for buses in Western Europe in 2016 than in 2015. Following the substantial drop in demand for buses in Brazil, the bus division anticipates further significant market contraction there in full-year 2016.