Daimler growth slows and shares fall on cautious outlook for 2017

February 06, 2017

Daimler’s momentum slowed to only a 3% earnings increase in Q4, despite Mercedes-Benz overtaking decade plus-long leader BMW to take the crown for global luxury car sales in 2016. This was a goal chief operating officer Dieter Zetsche floated in 2011 as Audi beat it to second place. The claim was greeted with much scepticism at the time but the company has actually achieved its aim four years early.  

It also gave a ‘slight’ rise outlook for profit in 2017 as aggressive spending to develop next-generation cars holds back gains and heavy truck sales slump in North America and face ‘intense competition’ in Europe.  

Research and development spending – already self-confessed as ‘very high’ – increased by 15% in 2016 to €7.6 billion as Daimler invests heavily in electric cars, shared and autonomous driving features and digital connectivity. Zetsche said: ‘Each one of these areas has the potential to turn the industry on its head. We at Daimler want to lead in all of them.’ Car2Go, Daimler’s car sharing platform, is already the largest in the world with 2.2 million customers across 29 countries.  

Adjusted earnings before interest and taxes rose to €3.58 billion in Q4 and operating earnings increased 19% to €3.86 billion, with revenue rising 1% to €41 billion. Growth for 2016 was 5% in unit sales and 3% in revenue to €153 billion but shares fell on the tame 2017 outlook and as it announced a flat dividend of €3.25 per share. This comes despite a near-€5 billion fresh cash pile in 2016 as Daimler wants to invest heavily from a stronger balance sheet. 

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