Daimler AG set to increase global sales, market share this year

Markets should gather momentum in second half of 2013

Daimler AG set to increase global sales and market share this year
Daimler AG

Daimler AG’s truck division, which includes the Mercedes-Benz, Freightliner and Fuso brands, aims to increase global vehicle sales, profit and market share this year on its expansion in emerging markets and demand in Brazil.

“The year 2013 will be challenging on the whole and business has been rather sluggish in the first few months,” said Andreas Renschler, head of the trucks unit, at a press conference on Wednesday in Woerth, Germany. “However, in the second half of the year, the markets should gather momentum.”

“We’ve done relatively well in a difficult situation.We substantially increased sales and revenues despite volatile markets, thus demonstrating once again that we are properly positioned. That’s because our global presence enables us to offset the effects of weak markets more effectively.”

The division’s earnings before interest and taxes (EBIT) amounted to €1.7-billion, which was around 9% lower than in the prior year, due to lower sales in Brazil and western Europe as well as scheduled expenses for the current product offensive.

Although some of the markets presented difficult conditions, Daimler Trucks’ innovative range of cutting-edge products met with a good customer response and enabled it, as the global market leader, to increase its share of core markets.

In spite of the sovereign debt crisis, the division continued to boost its leading position in Europe (EU 29) to 22.6% (2011: 21.7%) and increased its share of the German market by an even greater percentage to 39.2% (37.5%). In North America, the division strengthened its domination of the market for medium- and heavy-duty trucks (Class 6-8), which it has held for many years.

“In 2012 we countered the headwinds with a fantastic product range that enabled us to remain among the top three manufacturers in all of the core markets and, in some cases, to even improve our position,” says Renschler.

In the development and expansion of its product range, Daimler Trucks proceeds as globally as possible and as locally as necessary. Through the rollout of global platforms and modules, Daimler Trucks can exploit the advantages of its worldwide presence extremely well and offer an optimal product lineup for each customer and market. One example of this is the heavy-duty truck platform on which the Mercedes-Benz Actros, Antos, and Arocs trucks are based.

Daimler Trucks is rigorously implementing its shared parts and module strategy, for example in the new models it has launched over the past two years. As a result of the recently presented new Atego, Daimler Trucks became the first manufacturer in the sector to complete the launch of a full range of Euro VI-compliant trucks. What’s more, this was achieved eight months before the new emissions standard goes into effect on 1 January 2014.

Demand in Brazil is expected to increase as much as 10% this year, helping offset a decline of as much as 5% in Europe and a weakening of the North American market by 5% to 10%, Daimler said on Wednesday.

According to Bloomberg, Daimler is still lagging behind Volvo AB and Scania ABin profitability. The truck unit scrapped plans last year to increase the percentage of EBIT to sales to 8% by 2013 and posted a 2012 margin of 5.5%. To close the gap, the division began a programme in June to lower costs by 1.6-billion euros ($2.1-billion) by the end of next year.

“The scope for market share gains is limited,” said Marc-Rene Tonn, a Hamburg-based analyst with Warburg Research. “Mercedes might win a little on new models, but I don’t expect great leaps.”

Daimler dropped as much as 61 cents, or 1.3%, to 45.10 euros and was trading down 0.4% as of 2:11pm in Frankfurt today. The stock has gained 10% this year, valuing the company at 48.6-billion euros, Bloomberg commented.

EBIT last year fell 9% to 1.71-billion euros as revenue climbed 9% to 31.4-billion euros, making up about 27% of Daimler’s sales. After selling 462 000 trucks in 2012, the manufacturer targets more than 500 000 deliveries in 2015 and 700 000 vehicle in 2020.

To adjust production to demand, the company is eliminating 1 300 factory jobs in North America and slashing 800 non-production jobs on a voluntary basis in Germany.

The current order intake in North America is a little better than expected, Renschler said. Higher orders in China, Africa, the Middle East and Southeast Asia may help balance the lower demand in Europe, he said.

Renschler will swap responsibilities with board member Wolfgang Bernhard next month to lead the Mercedes-Benz passenger car division’s purchasing and production operations.

Daimler has two joint ventures in Russia with Kamaz, the local market leader for heavy trucks. Daimler took a 10% stake in Kamaz in 2008 and currently owns 11% directly and votes the 4% holding of the European Bank for Reconstruction and Development.

“We’re talking to Kamaz and aim to increase our stake gradually,” said Renschler “We will not take the majority in the next step, but from a strategic point of view it will make sense someday.”

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