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Daimler AG reported Oct. 21 net income and revenue rose in the third quarter, but the results were limited by falling demand for heavy-duty trucks, especially in North America, the segment’s largest retail sales market.
Pushed by gains at its Mercedes-Benz Cars division, net income for the quarter ended Sept. 30 improved to $2.9 billion, or $2.64 per share, compared with $2.6 billion, or $2.43, in the 2015 period, the company said.
Revenue climbed to $42 billion, up from $40.5 billiona year earlier.
Global truck revenue, however, plummeted to $8.5 billion, compared with $10.4 billion in the 2015 period, it said.
Total truck orders fell 21% to 83,944, compared with 106,378 a year earlier.
Earnings before interest and taxes for its truck business fell to $505 million, compared with $860 million a year earlier, the Stuttgart, Germany-based company said.
The return on sales in the truck business was 5.9% in the latest quarter, down from 8.2% a year earlier.
“We need to consider further efficiency measures in the trucks business,” Bloomberg News reported Chief Financial Officer Bodo Uebber said on a call with reporters Oct. 21, noting flexible work arrangements in key plants in Germany. “We have a margin target of 8% and will continue to discuss measures to get there.”
Demand for medium- and heavy-duty trucks in a comparatively weak overall investment environment can be expected to decrease by approximately 15% in North America, it said.
In the third quarter, orders for trucks in North America were down 31% to 23,840, compared with 34,437 in the 2015 period.
U.S. retail sales of Daimler’s trucks fell 27% year-over-year to 30,392, compared with 41,551.
“There remain risks ahead” for Mercedes’s margins and an extended truck slump, Kristina Church, a London-based analyst with Barclays, said in a note, Bloomberg News reported. “So while today’s results are strong, there is a strong potential that this is the peak of Daimler’s performance for future quarters.”
