Daimler revs up profit

German luxury carmaker Daimler raced back to profit last year after massive 2009 losses, and gave an upbeat outlook for 2011 on Wednesday.

Daimler revs up profit
Photo: DPA

Daimler, which owns the Mercedes-Benz brand and is the world’s leading manufacturer of heavy trucks, posted a net profit of €4.7 billion ($6.3 billion) for 2010, more than reversing a 2009 loss of €2.6 billion.

The group turned a 2009 fourth quarter loss of €352 million into a €1.1 billion profit in the last three months of 2010 and will propose a dividend of €1.85 per share, a statement said.

Daimler did not pay a dividend in 2009 but investors were unimpressed by the group’s upbeat tone this time around and its shares plummeted in midday Frankfurt trading, although profit-taking might explain part of the sell-off.

“Daimler managed an excellent comeback last year,” chairman Dieter Zetsche said in the statement.

“Our goal now is to maintain the level we have reached over the long term and to further improve it wherever possible,” he added.

It benefited last year from special items that included the sale of a stake in Tata Motors of India which added €265 million to the bottom line.

Daimler also took a charge of €237 million in connection with the stumbling Airbus A440M military transport plane owing to the automaker’s stake in Airbus’ parent company EADS.

The German car maker said core earnings soared to €7.27 billion from an operating loss of €1.5 billion a year earlier.

That was better than its own forecast of €7.0 billion but undershot analysts expectations for €7.7 billion, Dow Jones Newswires reported.

Daimler now expects core earnings this year “to surpass the level of 2010 significantly,” the statement said.

It also “assumes that its total unit sales will rise and that revenue will grow at a more moderate rate in 2011.”

The group benefited from a recovery of all its major markets last year as well as from a programme to increase production efficiency.

It sold 1.9 million vehicles with group revenue up 24 percent to €97.8 billion, thanks notably to rising Mercedes deliveries in China and the United States.

Daimler staff, who numbered 260,100 as of December 31, are to receive a special bonus of €3,150 as a result of the group’s strong performance.

Shares in the group were sharply lower in afternoon trading on the Frankfurt stock exchange, showing a loss of 2.84 percent to €54.39, while the DAX index of German blue-chips was 0.14 percent higher overall.

Auto analyst Frank Schwope at NordLB bank said “the market might have been a little disappointed by the fourth quarter but I find the reaction overdone, especially since the outlook is excellent.

“It might also be the result of profit-taking because the share has gained a lot of ground recently,” he added.


Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


From lizards to water, eco-bumps snag Tesla’s giant Berlin car factory

In the green forest outside Berlin, a David and Goliath-style battle is playing out between electric carmaker Tesla and environmental campaigners who want to stop its planned "gigafactory".

From lizards to water, eco-bumps snag Tesla's giant Berlin car factory
Tesla's gigafactory outside the doors of Berlin. dpa-Zentralbild | Patrick Pleul

“When I saw on TV that the Tesla factory was going to be built here, I couldn’t believe it,” said Steffen Schorch, driving his trusty German-made car.

The 60-year-old from Erkner village in the Berlin commuter belt has become one of the faces of the fight against the US auto giant’s first European factory, due to open in the Brandenburg region near Berlin in July.

“Tesla needs far too much water, and the region does not have this water,” said the environmental activist, a local representative of the Nabu ecologist campaign group.

Announced in November 2019, Tesla’s gigafactory project was warmly welcomed as an endorsement of the “Made in Germany” quality mark – but was immediately met with opposition from local residents.

Demonstrations, legal action, open letters – residents have done everything in their power to delay the project, supported by powerful
environmental campaign groups Nabu and Gruene Liga.

Tesla was forced to temporarily suspend forest clearing last year after campaigners won an injunction over threats to the habitats of resident lizards and snakes during their winter slumber.

READ MORE: Is Germany’s Volkswagen becoming ‘the new Tesla’ as it ramps up e-vehicle production?

And now they have focused their attention on water consumption – which could reach up to 3.6 million cubic metres a year, or around 30 percent of the region’s available supply, according to the ZDF public broadcaster.

The extra demand could place a huge burden on a region already affected by water shortages and hit by summer droughts for the past three years.

Local residents and environmentalists are also concerned about the impact on the wetlands, an important source of biodiversity in the region.

Tesla Street

“The water situation is bad, and will get worse,” Heiko Baschin, a spokesman for the neighbourhood association IG Freienbrink, told AFP.

Brandenburg’s environment minister Axel Vogel sought to play down the issue, saying in March that “capacity has not been exceeded for now”.

But the authorities admit that “the impact of droughts is significant” and have set up a working group to examine the issue in the long term.

The gigafactory is set to sprawl over 300 hectares – equivalent to approximately 560 football fields – southwest of the German capital.

Tesla is aiming to produce 500,000 electric vehicles a year at the plant, which will also be home to “the largest battery factory in the world”,
according to group boss Elon Musk.

In a little over a year and a half, swathes of coniferous forest have already been cleared to make way for vast concrete rectangles on a red earth base, accessed via the already iconic Tesla Strasse (Tesla Street).

German bureaucracy

The new site still has only provisional construction permits, but Tesla has been authorised by local officials to begin work at its own risk.

Final approval depends on an assessment of the project’s environmental impact – including the issue of water.

In theory, if approval is not granted, Tesla will have to dismantle the entire complex at its own expense.

But “pressure is being exerted (on the regulatory authorities), linked to Tesla’s significant investment”, Gruene Liga’s Michael Greschow told AFP.

In early April, Tesla said it was “irritated” by the slow pace of German bureaucracy, calling for exceptions to the rules for projects that help the environment.

Economy Minister Peter Altmaier agreed in April that his government “had not done enough” to reduce bureaucracy, lauding the gigafactory as a “very important project”.

Despite Germany’s reputation for efficiency, major infrastructure projects are often held up by bureaucracy criticised as excessive by the business community.

Among the most embarrassing examples are Berlin’s new airport which opened last October after an eight-year delay and Stuttgart’s new train station, which has been under construction since 2010.

Brandenburg’s economy minister, Joerg Steinbach, raised the possibility in February that the Tesla factory could be delayed beyond its July planned opening for the same reason.

SEE ALSO: Tesla advertises over 300 jobs for new Gigafactory near Berlin