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The Canadian Press - ONLINE EDITION

Daimler AG sees Q4 profits rise 57 per cent as Mercedes enjoys buoyant sales in China and US

By: David McHugh, The Associated Press

Posted: 02/9/2012 2:06 AM | Comments: 0 (including replies) | Last Modified: 02/9/2012 2:53 AM

FRANKFURT - Strong sales of Mercedes luxury cars in China and the United States helped German automaker Daimler AG post a stronger than expected 57 per cent increase in fourth quarter profits.

The Stuttgart-based company made net profit of €1.78 billion ($2.36 billion) during the quarter, ahead of the average forecast compiled by FactSet of €1.30 billion.

The company also recorded a record profit for the full year and increased its dividend.

But it issued a cautious outlook Thursday, saying next year's profits would only equal this year's and that the debt crisis afflicting the 17-nation eurozone would mean a flat market in Western Europe.

The company's shares jumped 5 per cent to €46.84 in morning trading in Germany.

In 2011 though, Daimler benefited from a strong sales performance of its Mercedes luxury brand, which saw sales jump in two key markets. They were up 42 per cent in China and 44 per cent in the United States. Operating earnings for the division, however, rose by a more modest 5 per cent.

The division's strong sales performance helped overall revenue rise 10 per cent to €29.06 billion from the fourth quarter of 2010, coming in above forecasts of €27.70 billion.

Daimler's Mercedes van business and its financial services division saw strong operating profit increases.

On a downbeat note, the company said the eurozone debt crisis would weigh on the European auto market, which it expects to remain flat. It said it was looking to Asian emerging markets, Japan and North America for stronger demand.

Overall, Daimler said earnings across all markets before interest and taxes from continuing businesses would only equal this year's performance. The 2011 figure came in at €8.8 billion.

European governments are struggling with a crisis over too much debt in some countries. Fears that a government default may hurt banks and choke off credit to the economy have weighed on consumer spending and business investment.

Even so, Daimler said it expected the Mercedes division to beat its unit sales of 1.38 million this year worldwide.

For the year as a whole, Daimler recorded a net profit of €6.03 billion, which represented an increase of 29 per cent from €4.49 billion in 2010.

Daimler's workers will get a profit-sharing bonuses of €4,100 ($5,442) per eligible worker.

The company's shareholders will get around 40 per cent of net profit, paid out through a proposed dividend of €2.20 per share, up from €1.85 per share last year.

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